Associate Salaries

Well, it’s about time. On April 13th, a small claims court in Florida will deal with a case where an associate is suing his former law firm over allegedly deferred compensation. Only $2,000 is at issue, but this is a battle of principle. The Daily Business Review (subscription) sets it up:

The salary deferral imposed by [Becker & Poliakoff] in May 2008 was temporary and necessary in order to avoid layoffs during the economic downturn, managing partner Alan Becker said….

Former Becker associate Richard Valuntas sued the firm last August, alleging Becker committed breach of contract and fraudulent misrepresentation by refusing to repay him the 12 percent deducted from his paycheck for several months. He also alleges Becker’s deferrals violated its own employment contract and policy manual.

You see, the firm promised restitution of the salary cut, and they did eliminate the cut in August of 2008 and gave associates make-whole payments. But only associates still at the firm received full restitution. Valuntas left Becker that August and apparently missed out on one of these restitution paychecks.

Despite the small amount of money involved, both litigants are going to the mattresses…

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During the recession, Mintz Levin froze associate salaries and deferred 2009 summer associates all the way until 2012. Not good times.

But the recession is starting to lift its death grip on law firms and the lawyers who work there, and Mintz Levin is in the mood to share the wealth. We spoke with Mintz Levin Managing Partner Robert Bodian today. He told us that the firm enjoyed a strong fiscal year — which ended this past Saturday:

Revenue and profits per partner were up around 3% [last year].

He said that work was picking up and the second half of last year was good for the firm.

Which means it’s time to give some money back to the hard working Mintz Levin associates…

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An article in today’s New York Times, by former WSJ Law Blog writer Dan Slater, discusses changing law firm business models. Much of the piece covers ground that will be familiar to ATL readers. But the article contains some interesting new information about Kaye Scholer (where Slater once worked).

According to the Times article, it appears that the firm essentially lied to some of its new associates:

In the summer of 2008, Kaye Scholer’s New York office extended offers of full-time employment to 31 students, many from top schools. They would return to law school for their third years, they thought, then graduate, take the bar exam and begin at the firm in January 2010, at a base salary approximating the current level of $160,000.

About two months before the start date, however, the firm notified 18 of the 31, a group including law graduates from Columbia, New York and Northwestern Universities, that they would be relegated, upon arrival, to the firm’s public interest group. There, they would work on pro bono matters and make $60,000 a year.

All 18 accepted the revised offer.

In March, about two months after starting, 17 of the 18 were assigned to a document review project, for a paying client, and told to bill 40 hours a week. For this, these associates will make an extra $30 an hour, approximately the hourly rate of their base salary.

We reported on Kaye Scholer’s $60,000 a year, pro bono associate plan back in October. How did the firm characterize it to us at the time?

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And some reflections on the changing Biglaw business model.

We have good news for Morgan, Lewis & Bockius associates. Salary information is in and most people are getting raises. True-up raises at that. The class of 2008 pulled the short straw, but everybody else seems relatively happy. A tipster reports:

Please post that yesterday MLB essentially unfroze salaries (most ’08 grades only went up to 165 though) but otherwise made everyone whole, retroactive January 1, 2010.

The double-bump raise for veteran associates comes a couple of months after MLB announced big time raises for a select few associates — while most of the firm’s associates were left to wait and wonder. In January, we reported this message from Morgan Lewis Chairman, Francis M. Milone:

After considering all of these factors, we awarded base salary increases of up to $25,000 and incentive bonuses of up to $35,000 to our highest performing associates. As I advised in my November video presentation, we did not reduce associate base salaries.

According to the firm, the decision to give true-up raises to mostly everybody is in keeping with MLB’s new merit-based strategy …

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covington burling logo.jpgI’ve got some good news and some bad news. The good news: Covington & Burling is thawing out salaries in California. Yay!

The bad news: Covington is keeping salaries frozen in D.C. Why? Because they can. Many tipsters report:

FYI, Covington’s Management Committee informed the associates last Tuesday that it was increasing salaries (retroactive to March 1), but only in its California offices. Mentioned as justification that Latham and Munger are its “peer” California firms, while Steptoe, Howrey, and A&P are its “peer” DC firms.

For the record, Covington never froze New York salaries in the first place — so the thaw only affects California, and the continued freeze only adversely affects D.C.
We’ve got a statement from the firm about this West Coast bias …

double red triangle arrows Continue reading “At Covington, It’s Always Sunny in California. On the East Coast, Not So Much.”

Chapman logo.jpgLate last week, Chicago based Chapman & Cutler released its 2009 bonus news. It’s not that impressive. But the firm also previewed what it will pay in bonuses for 2010. It’s … not that impressive. A tipster reports:

[T]his year the vast majority of associates did not receive any bonus whatsoever. So apples to apples, we fell way short of our competition (which management likes to tout as Mayer Brown but in reality is other second-tier Chicago firms). As an encore, they have already released next year’s bonus numbers and they’re still low for our peer group. They have the nerve to note they are meeting the 2008 bonuses like it’s a good thing, which is ridiculous as those bonuses too were low since they went out just after the economic crash. As upset as we are, I would be irate if I were a second year. Though it’s somewhat hidden in the memo, they have decided to completely eliminate all hours-based bonuses for second years.

Actually, screwing over second-years is not at all buried in the memo. Chapman makes it pretty clear….

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Katten logo.JPGLast week, we told you that Katten Muchin was delaying its decision on associate salaries. The firm finally got around to telling people how much they’re paid this week, and we can see why there was a long delay. See, when you try to do 1,001 different things all that same time, it gets pretty complicated.
All of the salary news was communicated via individualized firm memos, so a tipster explains the top line news: Katten is moving down to a $145K pay scale:

They went down to the 145K scale (145,000; 160,000; 170,000; 185,000; 210,000; 230,000; 250,000; 250,000; 250,000). And no, those last 3 numbers are not errors.

Well, for Katten associates that were frozen last year, the new scale still gives some of them a pay bump, if they moved up a class year.
But not every Katten associate will be moving up a class year …

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Sonnenschein logo.jpgBack in December, Sonnenschein announced the outlines of its new merit-based compensation structure. At the time, the firm promised its associates more details in March.
The firm is true to its word: we’re now in March, and we have more details. Above the Law talked with a spokesperson for Sonnenschein. Here’s the top line news:

  • First year compensation returns to $160,000 for first year associates.
  • 12% – 15% of that compensation will be paid out as a “base bonus” in 2011.
  • There are no hours or competency requirements to achieve the base bonus in 2011
  • 2010 raises for veteran associates will be in accordance with Sonnenschein’s merit based tier system

According to Sonnenschein, the decision to pay 12% – 15% of 2010 associate compensation as part of a 2011 bonus will help them transition to their new compensation model. The firm wants a greater percentage of total compensation to be paid out as merit-based, end-of-the-year bonus. That new system will be fully operational in 2011, so the firm is viewing 2010 as a transition year. Again, the firm emphasized to us that there would be no hours or merit requirements for associates to receive this 12% – 15% of 2010 money next year.
Sound good? Let’s see what the tipsters have to say.

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Katten logo.JPGIt’s March and Katten Muchin is coming into it like a very meek lamb. The firm froze salaries in 2009. So far in 2010, it has sent a series of memos trying to explain why it can’t get its act together. A tipster reports:

You may recall that most associates had their salaries frozen and then cut in 2009. We continue to receive frozen-then-cut salaries at this time, although the memos state that we will get retroactive payments back to January 1 on “any increase” that occurs. All the other Chicago firms have spoken (with double bumps), but Katten is waiting on something…we guess. At this point we’re wondering whether we’ll know our 2010 salaries in 2010!

Check out the memos. They’re a case study in “we’re waiting for others to tell us how to run our business.”

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Winston Strawn LLP logo Above the Law blog.jpgFriday brought good news and bad news for Winston & Strawn associates.

The good news is that the double salary freeze, which has apparently resulted in first- through third-year associates at Winston all earning $160,000, may be thawing. Managing partner Thomas Fitzgerald sent a memo — this time to its intended recipients — indicating that raises are on the way.

The bad news is that Winston associates don’t know how much of a raise they’ll be getting — and the most they can hope for is a salary that matches the market. The memorandum contains the standard $160K salary scale — 160-170-185-210-230-250-265-280 — but states that “[s]alary levels in each associate class will range up to the maximum base compensation levels set forth” in the memo (emphases added).

The Winston associates we’ve heard from are upset. They’re unhappy not just about the move away from lockstep, but over the firm’s failure to set forth in detail how salaries will be determined. Most of the other firms that have abandoned lockstep have set forth elaborate systems for evaluating associates to determine their compensation and advancement. The Winston memo simply states: “Individual associate salaries will be determined on a case by case basis based on seniority, performance and productivity factors and will be communicated separately to each associate.”

This is a “black box” approach to compensation. It’s used by other big firms — e.g., Jones Day — but it’s a significant departure from Winston’s historical practice. It’s not what Winston associates signed up for when they joined the firm.

But then again, thanks to the Great Recession, lots of Biglaw associates aren’t getting what they expected when they joined their firms. And if associates aren’t happy, with compensation or any other aspect of their employment, their firms will tell them: you’re free to leave. In the words of an unemployed woman quoted in this weekend’s New York Times, “There are no bad jobs now. Any job is a good job.”

There’s a little more bad news about Winston associate salaries. Find out what it is, and read the full Winston & Strawn memo, after the jump.

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