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…
We’ve done a number of reports over the last few weeks on salary cuts of 2009 that are being reversed in 2010. Sure, some firms are still trying to be cute when it comes to associate pay. But many Biglaw firms are back on the $160K scale for associate salaries, at least in major markets.
Apparently Foley & Lardner hasn’t received the memo. While New York associates will start at $160K, associates in other big-market Foley offices (like D.C., California, and Chicago) remain stuck at $145K.
Back in November, Baker Botts told us that they would be moving away from a lockstep associate compensation system and instituting a new merit-based system. Yesterday the firm released the base salary levels for its new four-tiered system. Here’s the statement from the firm regarding the basic changes:
The next phase of a talent management program — moving from a lockstep to levels format to track associate progress at the firm — was announced today by Baker Botts Managing Partner Walt Smith. This new format is the latest enhancement of a multi-year plan to better manage associate development at all experience levels.
“Implementing this program will allow us to remain competitive in our efforts to recruit and retain the best and brightest lawyers,” Smith said. “Importantly, it will help us foster an environment that emphasizes the attributes we believe are essential to our firm’s culture.”…
The compensation aspects of the program will be effective August 1, 2010. Base annual salary for entry-level lawyers will remain at $160,000.
The firm wouldn’t officially release the salary levels for more senior associates, but tipsters gave us the inside scoop…
It started with DLA Piper. After offering recession salaries to associates for a while under the guise of merit-based compensation, DLA relented earlier this month and restored the $160K base salary scale to its associates. Yesterday, WilmerHale announced that while it too is going forward with a merit-based compensation plan, it will be offering base salaries along the established $160K scale.
It seems that this little experiment of using merit-based compensation to undercut the market for base associate salaries is dying a quiet death. Today we have news that Akin Gump’s 2011 compensation model will once again include base salaries that match the market and are not tied to performance.
And even better, a tipster reports that all Akin Gump offices will be put on the New York market, $160K scale — which should represent a significant bump in salary for some associates…
The heady days of the “mutual assured destruction” approach to associate compensation by Biglaw firms are behind us. But some associates would still like to see how they are doing in comparison to their colleagues at other firms. A tipster recently wrote us:
Can you do a post requesting commenters to post grade schedules a la greedyassociates back in the day showing salary per year. This would make comparisons easier. I’ll start:
1st year 145K
then it gets vague with a range from 240-265K.
Some of this information is available in the firm profiles on the Above the Law Career Center. But as good greedy Sheppard-ite must know, comparing salaries is much more complicated these days due to some firms instituting merit-based compensation models.
WilmerHale is one of those firms. Yesterday, Wilmer released its projected salary structure for 2011. We’ll see if it’s a merit-based market leader…
A year ago, Howrey announced that it was slashing first-year starting salaries and radically changing its first-year program. Drinker Biddle had adopted a similar “apprenticeship” approach a few weeks before Howrey. Aside from Howrey, Drinker Biddle, and some firm in Kentucky, no other law firm has tried to sell below market salaries and intensive “training” to new recruits.
Despite the paucity of firms attempting to remake the first year experience, the press remains fascinated by the experiment. In April, the Washington Post did a feature on Howrey’s first year experiment. Today, the National Law Journal has a full breakdown of the year-old program:
Proponents hail the programs as a positive step away from the sink-or-swim environment many young attorneys encounter when they show up at large firms, and as a practical response to the growing cost-consciousness of clients. The firms bill at much lower rates or not at all for work performed by the apprentices, who earn lower salaries than the industry standard.
The three firms that have gone in this direction claim that the apprenticeships are working. But since nobody is following their lead, it’s evident that the rest of Biglaw is not at all convinced…
Sonnenschein isn’t going to let the recession slow down its expansion. Back during the heart of the recession, Sonnenschein saved around 100 lawyers from the sinking Thacher Proffitt.
Today brings news that Sonnenschein has expanded its reach across the Atlantic Ocean. The firm has proposed a merger with U.K.-based Denton Wilde, to form SNR Denton. From the new firm’s press release:
SNR Denton would be a top 25 law firm worldwide by size, with approximately 1,400 lawyers and fee earners on four continents, a presence in 18 countries, and its two largest offices in London and New York…
SNR Chairman Elliott Portnoy, who will become co-CEO of SNR Denton, said: “This combination is the next step in our vision to create an elite, client-focused international firm that is about one thing – quality. Both firms have long enjoyed reputations as being world class, and now together we’ll have the assets and professional resources to carry that forward to new sectors, new practices, and new markets. As one firm, we will be able to serve our clients better.”
‘Tis the season for transatlantic mergers? The Sonnenschein news comes on the heels of Ho-Love (a.k.a. Hogan Lovells) beginning operations…
Back in February, we wrote about various compensation developments over at Pillsbury Winthrop. At the time, the firm said it was considering moving away from a lockstep model in favor of a more performance-based compensation system.
The firm has not yet killed killed lockstep — a move that has historically generated mixed to negative reviews from associates at other firms. Instead, it has done something that has proven much more popular.
Last month, the Pillsbury dough boy baked up some delicious-smelling pay raises. Nothin’ says lovin’ like money from the oven!
Nixon Peabody is one of the firms that has moved towards a merit-based pay structure. The firm also cut starting salaries down to $145K a year ago. So you’d think that any information on a Nixon Peabody salary raise would be greeted favorably.
Not so much. A tipster tells us:
I can confirm that I received a raise. I can confirm that it sucks. Anything else?
Oh boy, that doesn’t sound good. Is anybody feeling like a winner at Nixon Peabody?
Last June, we reported that Howrey decided to make a big change to the law firm business model. The firm cut first year starting salaries to $100,000. In exchange, the first year program would involve a heavy emphasis on training. Associate billables would be capped at 700 hours and Howrey reduced the rates charged to clients for first year work. The low-salary/training emphasis carried on into the second year.
So you spent a considerable amount of time courting, selling and maybe even doing some friendly stalking of that attractive lateral partner candidate with a sizable book. After he or she ignored your emails and didn’t return your calls, a few weeks go by and you read a press release in the legal media announcing the recent move to a competing firm.
Rats. Another one got away from you. You cringe when you consider how much time was spent in meetings that did not bear fruit. Your heart aches when recall how you were led to believe this was a marriage made in heaven.
You have been rejected.
The sting of rejection is painful, even for fancy law firms. But you need to find a way that you can turn this disappointment into a legitimate learning experience.
No, this isn’t a pre-party before we come back next fall for the real thing. This IS the real thing. Quinn Emanuel is pushing the envelope on recruiting. The party is now. This is when you meet the partners and associates face to face. This is when we begin the dance that could land you an offer for your second summer BEFORE school starts in the fall.
First: You come to the party. Second: If you like us, you send your resume after June 1, 2014. Third: If we like each other, you get an offer.
We’re not waiting for fall. We’re not doing the twenty minute thing. This party is the real thing!
We hope you’ll join us, and look forward to meeting you.
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months (Robert Kinney and Evan Jowers will be in Hong Kong again March 15 to 23), and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.
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