Associate Salaries

As we said yesterday, there’s still time left in the year for associates to crank out some billable hours to hit their targets. There’s still time to participate in our hours survey, where the early returns suggest that many of you are quite busy.

That’s a good thing, especially if you are at Mayer Brown, New York. No, the firm hasn’t released bonus information yet. In fact, the firm hasn’t even released its 2011 payscale.

But Mayer Brown is telling people how many hours they need to hit in 2010 in order to be eligible for a 2011 raise…

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It’s November 1. That’s supposed to mean it’s time for Biglaw bonus season. Here at Above the Law, we’re ready for it. Not only are we expecting emails to flow in about bonuses which should be better than last year (tips@abovethelaw.com), we’re also using our Google Voice account (646-820-TIPS) to accept text messages about bonuses.

We expect bonus season to get rolling in earnest soon. Last year, Cravath announced on November 2nd.

But while we wait for bonuses, it seems we still have some firms that are trying to catch up in regards to base associate compensation. After spending most of the year as salary stragglers, Foley & Lardner seems ready to come back to the pack…

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A recent study by economists at UC Berkeley gives employers a nice argument for keeping salaries a secret. Well, luckily for you, I’m not your employer. Therefore I have no qualms about sharing with you Part 2 of the results from our small-firm salary survey.

In your emails following Part 1, many of you asked that I take the practice experience element of the survey and show how it correlates to salary. Good point. I actually had that in mind from the start, but ended up pushing it into my Part 2 draft when I decided to split up the post.

But you don’t care; you just want the numbers. So, with the final caveat that I’m sure I’ll never be able to fully satiate your salary hunger, here’s the latest snack…

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Over 650 of you responded to last week’s salary survey. In poring over the results, I learned several lessons:

(1) Don’t make salary questions fill-in-the-blank. It creates a host of problems, including the inadvertent omitting/adding of zeroes, and makes data compilation and analysis unnecessarily difficult.

(2) Do include open-ended “anything else” questions; people write all sorts of amusing things given the chance.

(3) Don’t misspell “where” on question number seven.

So, let’s get to the $64,000 question: How much money are small firm lawyers making?

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Biglaw salaries are no secret. You can find numbers all over the internet, including places like oh, I don’t know, Above the Law (not just the home page, but also the Career Center).

But what about information for everyone else? You already know what I made during my time at a small firm, but that doesn’t really help unless you’re looking for a job at my old firm (surprise, they’re not hiring).

Those looking to smaller firm options need information — law students especially. The OCI music has stopped, and there are plenty of people left standing. The good news is that there are other places to sit down. The bad news is that nobody can tell whether sitting in those seats will earn them enough to keep their creditors at bay.

With that and a general interest in the dissemination of information in mind, please take this short survey, so I can begin compiling some hard numbers on small firm salaries. As always, survey responses are kept completely confidential. I’ll sort, analyze and package the results in some kind of eye-pleasing manner.

Please click HERE to take the SURVEY. And please pass the survey along to any of your friends at small firms; the more responses I get, the more accurate and reliable the findings will be.

If you’d like to offer any other salary-related information or clever commentary, or have tips or story suggestions, please email me at Little Richard at gmail dot com. Thanks!

Earlier: Prior ATL coverage of small law firms

Yes, yes it is. At least that’s what I gather based on the relative volume of commentary I received on the subject since the inception of this column about small law firms. I’ve been avoiding the topic, mostly because salary discussions usually degenerate into little richard-measuring contests but, in addition to the comment wars that spilled out of my posts on hours worked and billable hours, I’m still getting emails like this one:

I’m not sure all this “small law, low pay” stuff is accurate. Certainly, it’s true if we are assuming the small/mid law is in the same market as Big Law, but I’m not sure how often that is the case. Small/mid-sized legal market tends to have a much lower cost of living, which means the magnitude of the paycheck tells you little about its value. How about a post that captures and attempts to balance this concept?

Okay, fine. Now that I’m back from the Canadian wilderness, let’s talk about it…

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A Comparison of Biglaw v. Small Firm Compensation”

On January 22, 2007, Above the Law reported that Simpson Thacher & Bartlett raised starting associate salaries in New York to $160,000.

That was almost four years ago — 1,326 days ago, to be exact (2008 was a leap year). But here we are, in the fourth quarter of 2010, and a new NALP report is telling us top Biglaw salaries in New York have re-established themselves at $160K. Partner profits haven’t generally remained stagnant for four years, at least at certain firms. Law school tuition certainly hasn’t remained stagnant for four years. But the upper end of associate compensation has been stuck in the mud. Back in 2007, I could go to a movie for $10.50. Now it goes all the way up to $11! I’m outraged!

I’m not actually outraged (well, I am about movie prices, but that’s because at $11 you’d think something besides Inception wouldn’t blow). And you won’t find too many associates outraged that their compensation hasn’t kept pace with growing partner profits at some firms. That’s because most associates are recovering from the terror of layoffs and salary deflation. NALP explains it this way:

NALP’s 2010 Associate Salary Survey shows that, although the $160,000 salary for first-year associates still prevails at large firms in a number of markets, including Chicago, Los Angeles, New York, and Washington, DC, in other markets, such as Boston and San Francisco, the median has dropped back to $145,000, reflecting salaries ranging from $110,000 to $160,000.

Sorry about your tiny pink paycheck, Boston and San Fran.

For the rest of us, let’s take a look at the full salary scale according to NALP’s research…

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While expressing a commitment to maintain its new, incredibly transparent, merit-based salary structure, Orrick is moving its base salary back to reaffirming its commitment to $160,000 for first-year associates working in major markets. That’s right, the time for $145K in big offices is almost at an end.

UPDATE: Initially spokespeople from Orrick termed the move as one back to $160K, but our previous reporting didn’t indicate that Orrick ever came off the $160K starting salary — even after its switch to merit-based compensation. Sources now confirm that Orrick was at $160K all along; today’s salary announcement will primarily affect veteran associates.

From the memo associates received from Orrick’s CEO, Ralph Baxter:

I am pleased to announce an increase to our 2011 base salary schedule for partner track associates in our US offices. This salary schedule will be effective January 1, 2011. We will continue to monitor the legal market and will make any further adjustments necessary to remain competitive.

This change in our salary scale reinforces our continued commitment to be competitive with the world’s leading law firms and to attract and retain the best legal talent. We will continue to ensure that your total compensation reflects the increasing value you contribute to our clients and the firm through the new talent model’s performance-based career progression and bonuses that are driven by merit rather than solely by billable hours.

And there’s more good news: Orrick bumped up each of its associate “tier” levels. This means that, assuming Orrick associates get promoted “on time” relative to their peers at lockstep firms, Orrick’s base salary will once again match the market…

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It must be a slow news week over in mainstream media land. Earlier this week, the New York Times did a survey piece about American salary cuts that tangentially touched on lawyer salaries — old news for people on top of the legal market, but probably new to a more general audience.

Today, the Boston Globe is getting in on the lawyer pay action. Its report focuses on the move towards merit-based associate compensation that’s been happening for at least a year:

Boston’s top law firms are dramatically changing how they pay young lawyers, adapting to a changing market by adopting Wall Street-style compensation systems that rely on performance bonuses for large shares of annual earnings.

Major law firms have traditionally hired junior lawyers at six-figure salaries and awarded annual increases based on the number of years at the firm, a system known as “lockstep.’’ But several of Boston’s largest and best-known firms are telling associates that they no longer can count on automatic raises. Instead, they will receive salaries and bonuses based on how partners assess their performance.

Wall Street-style compensation, is it? Well then, I guess we should expect bonuses in Boston this year to be all over the map, instead of in strict lockstep with what peer firms end up paying…

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The New York Times has a nice survey piece about all the salary cuts imposed upon American workers. It’s a story that anybody holding down a job through this recession is probably aware of:

Local and state governments, as well as some companies, are squeezing their employees to work the same amount for less money in cost-saving measures that are often described as a last-ditch effort to avoid layoffs.

Yeah, we know, things are crappy.

But in its zeal to show that things are difficult for almost all workers, the Times seems to lump Biglaw in with the group of companies that are trying to cut costs by slashing salaries. As regular readers of Above the Law know, that might have been true in 2009. But in 2010, most Biglaw firms are not cutting associate salaries….

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