Flashback Friday: A Look At Associate Compensation In The 1990s (Part 1)

Some of our readers are old enough to remember the 1990s. It was, in my opinion, a glorious decade for popular music. (I have a collection of beloved cassette singles from that era.)

But we’re here to talk about the legal profession, not pop music. What were the nineties like for Biglaw?

Also glorious. There was a recession in the early 1990s, but for the most part, times were good. This was especially true near the tail end of the decade, when the booming dot-com economy filled the coffers of many large law firms (before the arrival of the early 2000s recession).

How much of that wealth trickled down to the associates? Let’s find out….

As I mentioned in last week’s Flashback Friday post, a look at the most prestigious law firms of 2008 and 1998, I’m a pack rat. So I happen to own old editions of a great book from the pre-ATL, pre-Vault era: The Insider’s Guide to Law Firms. Unfortunately, it’s no longer around; it seems that it stopped publishing around the year 2000 (affiliate link). I own the 1993-94 edition, copyright date 1993, and the third edition, copyright date 1997.

I flipped through both books to check out what associate compensation at major law firms looked like back then. I came across the names of many firms that no longer exist, at least not in the same form. Some dissolved, like Brobeck, Phleger & Harrison; some merged, like Wilmer Cutler and Hale and Dorr; and some merged and then dissolved, like Dewey Ballantine and LeBoeuf Lamb. But a fair number of firms are still alive and kicking — a testament to the longevity of Biglaw.

Compensation data points for various prominent firms appear below. I’ve organized them by city because that’s how they’re organized in the guide. This week we’ll look at Atlanta, Boston, Chicago, Dallas, Houston, and Los Angeles. At some point in the future, we’ll look at New York, Philadelphia, Pittsburgh, San Francisco/Palo Alto, and Washington, D.C.

I’ve compiled this data by simply pasting in the “Associate Salary” section for each firm from my two editions of the Insider’s Guide. As you’ll see, the information isn’t standardized. The applicable years differ firm by firm, based on what the guide editors could obtain, and the level of detail varies as well.

The salary figures come from one of four years: 1992, 1993, 1996, or 1997. For your reference, according to the Bureau of Labor Statistics’ CPI Inflation Calculator:

• $1 in 1992 has the same buying power as $1.70 in 2014.
• $1 in 1993 has the same buying power as $1.65 in 2014.
• $1 in 1996 has the same buying power as $1.52 in 2014.
• $1 in 1997 has the same buying power as $1.48 in 2014.

Here are a few general observations:

1. Associate compensation varied a lot more in the past, both by firm and by city. Perhaps this is a result of greater transparency about compensation. In an age where salary and bonus information can be easily accessed online, it’s harder for firms to get away with paying below-market rates for talent — or, put another way, firms feel greater pressure to pay the prevailing market rate.

2. Looking at the figures posted below, without adjusting for inflation, first-year salaries ranged from a low of $52,000 (Akin Gump, Dallas, 1993) to a high of $86,000 (Fish & Richardson, Boston, 1997; three cheers for IP work). Excluding Fish, the highest first-year salary listed below is $83,000 (Gibson and O’Melveny, Los Angeles, 1997). For reference, Cravath in New York paid a starting salary of $83,000 in 1993 and $85,000 in 1997, and its peer firms in New York offered comparable compensation (but not always exactly the same; we’ll take a closer look at the NYC market in a subsequent post).

3. If you adjust for inflation and convert these figures to 2014 dollars, you end up with the equivalents of $88,400 (Akin Gump, Dallas 1993); $127,280 (Fish & Richardson, Boston, 1997); $122,840 (Gibson and O’Melveny, Los Angeles, 1997); $136,950 (Cravath, New York, 1993); and $125,800 (Cravath, New York, 1997). If we now take $160,000 as the default starting salary for Biglaw in 2014, then entry-level associate compensation has improved significantly over the years, even accounting for inflation. (Let’s not discuss how much law school tuition rates and profits per partner have gone up since the 1990s; it will only upset our associate readers on this lovely summer day.)

4. Merit-based compensation is not new. Sometimes we think of individualized compensation tied to performance as something that gained traction just in the past few years, especially during and after the Great Recession. But as you can see from the data points below, some firms were using individualized, merit-based compensation back in the last millennium.

5. What happened to profit sharing? A number of firms employed profit sharing back in the 1990s; today such arrangements are rare. Perhaps these payments have simply been converted into bonuses that vary from year to year depending on firm performance, which could be be viewed as a form of “profit sharing.”

The city-by-city stats — for Atlanta, Boston, Chicago, Dallas, Houston, and Los Angeles — appear below. We’ll look at the other major markets in a later post.

Please share your own observations in the comments. If you have any follow-up questions or special requests, feel free to email us, and we’ll see what we can do. Thanks!

ATLANTA

Alston & Bird

1993: First year $60,000; annual increments approx. 10%; all associates are eligible for a year-end bonus based on firm profits.
1996: First year $67,000

King & Spalding

1992: First year $60,000; second year $70,000
1996: First year $67,000

Sutherland Asbill & Brennan

1993: First year $60,000; annual increments approx. $2000
1996 First year $67,000; salaries are lockstep for first 2 years, then progress on a merit-based scale with a range of salaries per class

Troutman Sanders

1992: First year $60,000
1997: First year $67,000; merit increases

BOSTON

Bingham Dana & Gould (now Bingham McCutchen)

1993: First year $66,000
1997: First year $79,000

Fish & Richardson

1992: First year $68,000
1997: First year $86,000

Foley Hoag

1992: First year $66,000
1997: First year minimum of $76,000

Goodwin Procter

1992: First year $66,000 plus $2,000 signing bonus; associates share in the firm’s profits after three years
1997: First year $79,000; second $87,000

Hale and Dorr (now WilmerHale)

1992: First year $66,000; fifth year $96,000
1997: First year $80,000 plus $2,000 graduating bonus

Ropes & Gray

1993: First year $66,000
1997: First year $79,000

CHICAGO

Baker & McKenzie

1993: First year $70,000; first-year litigation associates $65,000 plus bonus
1997: First year $75,000; second $80,000; third $86,000; fourth $88,000; fifth $90,000; sixth $92,000; seventh $94,0000; eighth $96,000

Jenner & Block

1992: First year $70,000; annual increments of approximately $5,000
1996: First year $73,000

Jones Day

1992: First year $70,000; salaries set firmwide by each department
1997: First year $74,000 plus stipend

Kirkland & Ellis

1992: First year $70,000; fifth $100,000
1997: First year $73,000 plus an average bonus of $5,000; fifth $100,000 plus an average bonus of $32,000

Mayer Brown

1992: First year $70,000
1997: First year $73,000

McDermott Will & Emery

1992: N/A
1997: First year $73,000

Sidley & Austin

1992: First year $70,000; lockstep increments for first two years; thereafter salary is determined case-by-case based on performance
1997: First year $73,000; lockstep increments for first two years; thereafter salary is determined case-by-case based on performance

Sonnenschein Nath & Rosenthal (now Dentons)

1992: First year $70,000
1997: First year $73,000

Winston & Strawn

1992: First year $70,000
1997: First year $73,000

DALLAS

Akin Gump

1993: First year $52,000
1997: First year $76,200 package

HOUSTON

Baker Botts

1993: First year $63,000
1997: First year $75,000 (package)

Fulbright & Jaworski (now Norton Rose Fulbright)

1993: First year $62,000
1997: First year $75,000 (package)

Vinson & Elkins

1992: First year $62,500
1996: First year $70,500

LOS ANGELES

Brobeck Phleger & Harrison (now defunct)

1993: $70,000; merit bonus system tied to billable hours
1997: $77,000; second $80,000; third $84,000; fourth $88,000; fifth $95,000; sixth $103,000; seventh $108,000 (salaries under review at time of printing)

Gibson Dunn

1993: First year $75,000
1997: First year $83,000

Irell & Manella

1992: First year $70,000 plus bonus ($1,000 in 1992); second year $76,000 plus bonus ($5,000 in 1992); third $82,000 plus bonus ($14,000 in 1992); fourth year and above associates are paid a base salary plus they share in the profits of the firm
1997: First year $80,000 plus year end bonus of $3,000; second $83,000 plus bonus of $7,000; third $86,000 plus bonus of $17,000; fourth $88,000 plus profit sharing; fifth $90,000 plus profit sharing; sixth $100,000 plus profit sharing

Latham & Watkins

1993: First year $70,000
1996: First year $78,000; second $83,000; third $92,000; fourth $95,000 (plus 15 profit sharing units); fifth $101,000 (plus 20 units); sixth $108,000 (plus 25 units); seventh $115,000 (plus 30 units)

Morgan Lewis

1992: First year $70,000; salary increases by approximately $5,000 per year for the first three years, after which increases depend heavily on merit
1997: First year $80,000; salary increases by approximately $10,000 per year for the first five years, after which increases depend heavily on merit; eligibility for merit-based bonus beings to accrue at third year

Morrison & Foerster

1993: First year $70,000
1996: First year $80,000

Munger Tolles

1992: First year $72,500 plus bonus ($5,000 in 1992); fourth year $85,000 plus bonus ($35,000-$40,000); seventh year $100,000 plus bonus ($65,000-$85,000)
1997: First year $80,000; second $85,000; third $90,000 plus bonus; fourth $95,000 plus bonus; fifth $100,000 plus bonus; sixth $100,000 plus bonus; seventh $100,000 plus bonus

O’Melveny & Myers

1993: First year $70,000; third year $85,000
1997: First year $83,000; second $90,000; third $101,000; fourth $115,000; fifth $135,000; sixth $160,000; seventh $170,000; eighth $177,000

Paul Hastings

1992: First year $70,000; salary increments are lockstep for first three years, after which they depend greatly on performance
1997: First year $75,000 (increased to $79,000 effective February 1 after starting in the Fall); second $79,000; third $85,000; fourth $90,000; fifth $98,000; sixth $111,000; seventh $125,000

Sidley & Austin

1992: First year $72,000
1997: First year $74,000, increases to $78,000 effective upon passing the bar; year end bonus of approx. $5000; bar review course and bar exam fees paid; $8500 stipend for use while studying for the bar

Skadden Arps

1992: First year $81,000; annual increments of approx. $7,000 to $8,000
1997: First year $91,000

Earlier: Flashback Friday: The Nation’s 15 Most Prestigious Law Firms — In 2008 And 1998