We’re a week or so into 2008, which raises the question: a new year, a new associate pay raise?
One might expect pay raises to be announced around fall recruiting time, to entice the 2Ls. Historically, however, the last two base salary increases were announced in January (perhaps in an effort to reduce the post-bonus exodus of associates). In January 2007, Simpson Thacher announced its new pay scale, with a $160,000 starting salary. The prior raise, by Sullivan & Cromwell to $145,000, was announced in January 2006.
But don’t expect more of the same in January 2008. From the National Law Journal:
As law firms wrapped up operations for 2007, the associate compensation picture looked eerily similar to the boom before the bust seven years ago.
The ratio of bonuses to base salaries for first-year associates at the nation’s top law firms in 2007 was on par with the figures in 2000, a year that precipitated a dramatic plunge in those annual perks that help to make the punishing associate hours more tolerable.
For 2007, beginning associates made as much as $45,000 in bonuses in addition to the $160,000 in base pay at top firms in New York and on the West Coast, with some shops doling out “special bonuses” and getting bragging rights ahead of competitors.
But all that cheer in 2007 may become a distant memory as 2008 is looking increasingly leaner.
“There’s more concern out there now than there was in the summer,” said James Cotterman, an attorney-compensation consultant with Altman Weil. “There’s more talk about a recession.”
Indeed. If we’re not already in a recession, we’re about to enter one. Sure, some firms have strong countercyclical practices. But litigation and bankruptcy never make as much as transactional work and M&A in boom times.
More doom and gloom, plus the promised digression on billables, after the jump.