Are Layoffs Looming If Some Firms Match Milbank's Associate Salary Increase?

Cross your fingers and pray that your firm doesn't follow Milbank -- lest you enjoy the schadenfreude of layoffs.

Everyone knows that Milbank announced associate raises yesterday, but the real question is whether anyone is going to match the firm’s new $190K salary scale. Boutique firm Hueston Hennigan has already matched, but that’s because the highly profitable firm is smaller, so it can afford to do so. We’ve yet to see a true Biglaw firm match Milbank’s money.

What will happen when firms that can’t necessarily afford the extra expenses of this associate raise match Milbank anyway? It’s summer associate season, after all, and there’s no better way to convince them to give their lives to the firm than to increase their prospective first-year associate salaries.

It’s been speculated that fewer firms will follow Milbank’s move, creating  bifurcated market for Biglaw salaries, but there are far worse things that associates may have to worry about. Are layoffs (stealth or otherwise) looming on the horizon?

Dan Binstock, a partner and recruiter at Garrison & Sisson, says that there are unexpected consequences for firms that adopt the 2018 associate salary raise. While Milbank’s raise definitely “applies to a certain segment of firms,” other firms outside of the “super elite” are “feeling rate pressure” in certain practice areas, meaning that if they were ro increase associate salaries, they’d struggle to justify the increased billing rates necessary to finance the salary raise to their clients.

As a result, the pressure will mount for associates to keep up with with their billable hours. Underperformance in any way, shape, or form may become a surefire ticket to the unemployment line, as flexibility could very well fly out the window. Here are the depressing details from Binstock’s chat with the New York Law Journal:

“I’ve literally heard managing partners say since we raised salaries to $180,000, we don’t have the luxury of giving associates six to nine months to catch up on their hours,” [Binstock] said. Instead, firms may now give three to six months before they start a termination process, he said.

“With this increased compensation always comes an increased financial pressure that is often not evident at first blush but is occurring on the back end in order to make things work,” Binstock said. “Partners only have a limited willingness to dip into profitability.”

If you like your job and the limited flexibility you have when it comes to your billable-hours targets and you think your firm may have jumped the gun when it adopted the 2016 associate salary raise, you better cross your fingers and pray that it doesn’t follow Milbank — lest you enjoy the schadenfreude of layoffs.

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As always, if/when your firm matches, please text us (646-820-8477) or email us (subject line: “[Firm Name] Matches Milbank”). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.

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Fewer Firms Expected to Follow Milbank’s Associate Pay Boost [New York Law Journal]


Staci ZaretskyStaci Zaretsky has been an editor at Above the Law since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

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