Associate Salaries, Biglaw, Money

Biglaw Firm Finally Reveals Compensation For Midlevel And Senior Associates -- And They Are Pissed

Associates are pissed about the newly announced compensation scale.

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Broken piggy bankWhen last we checked in with Reed Smith, first- and second-year associates had gotten raises, but there was no official word on the fate of midlevel and senior associates. But folks there weren’t optimistic.

The general feeling was that RS would use this opacity to compress the salaries of older associates who would wind up with below-market salaries, despite the the newbies getting the attention-grabbing market rate. And people were pissed:

Second time in two years these offices have backhanded their senior and midlevel associates in exchange for their years of hard work — and given the people doing their cite-checks an unearned windfall.

And now the other shoe has fallen.

Reed Smith had an associates’ meeting yesterday, and insiders report they kept the associates in the meeting room for over an hour, and dropped the compensation bomb in the last five minutes. A tipster reports:

Everyone was groaning and rolling their eyes (in front of the summers) at this point.

And the news wasn’t great:

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As per the associate meeting, the new salary ranges for “big markets” incl NY, CA, Houston (HOUSTON?) are:
First Year 180
Second Year 190
Third Year Midlevel 190+
Midlevel 200-260
Senior 225-300+

Ranges are never good, since there is no downside to having a high side of the range that few, if any, actually receive. This is all part of a savvy play to make it seem like you are paying market rate when, for the majority of associates, you are not.

So, taking a closer look at the ranges the firm revealed, it is clear only first- and second-year associates are protected by the changes to the compensation structure. Third-years won’t make less than second-years, which… maybe counts as a win? Perhaps having a floor is reassuring, but third-years at rival firms know they’ll be pulling in more. And telling senior associates that their minimum is $225,000 is the opposite of reassuring — let’s not forgot fifth-year associates on the Cravath scale are pulling down $260,000. And then there’s that giant, $35,000 overlap between the top of the midlevel compensation range and bottom of the senior range, so the firm can promote you to “senior” but not have to pay you any more money. Nifty trick, and one that tipsters say the firm has used in the past.

Reed Smith also tried to sell associates on the notion that “merit-based compensation” is really where it’s at, but associates weren’t buying:

Head of associates’ compensation, Mike Lynch, gets up and stammers all over himself about how we aren’t lockstep and we believe in “merit-based compensation,” which works great when you’re a firm that pays above market to people but not when your justification is that “we have senior associates who are 10+ years in practice” and the top of your range is “$300k+”

What does merit-based compensation mean?

The firm will continue to use the compensation system to deny raises to people for arbitrary reasons (written off hours; transferring hours to partners; clients who don’t pay – yes, this is blamed on associates).

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Apparently Lynch also told associates they’re going to have to “work harder” for their raises, thought exactly what that means was left ill-defined. The firm has a 1950-hour requirement, which, as of yet, hasn’t changed, but associates are left with little direction as to what it will take to actually make market-level salaries.

Though most of the market has been making the new and improved salary scale for nearly a month now, the compensation discussion has hardly ended at Reed Smith. The firm is scheduling additional meetings with compensation committee members, but if they are hoping to actually pay market rates (though it sure doesn’t seem like they want to), they’d best act fast; recruiting season is almost here.

But for those already at RS, morale is low and getting lower. Talk of “walking out” and meetings with recruiters are apparently swirling through the halls. Unsurprising when associates feel undercompensated for the work that they do.

Earlier: Biglaw Firm Does Right By Junior Associates, Mid-Levels and Senior Associates Not So Much
No, You Are Not Matching The Market: 1st Years To $180K Doesn’t Tell The Whole Story

Kathryn Rubino is an editor at Above the Law. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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