Posted Sep 08, 2009 04:53 pm CDT
Some big law firms are cutting annual pay for new associates from $160,000 to $145,000, but the cuts need to go deeper, according to a law firm consultant.
Writing at Cotterman on Compensation, one of the consulting firm’s principals, Jim Cotterman, says pay is still out of line, and it should drop to $125,000 or even $100,000.
Lawyer compensation will take a hit in other areas too, Cotterman predicts. He says signing bonuses are likely to be cut, benefits reduced and bonuses made more difficult to attain.
The impetus for the changes will be client demands, he says. “Services will be competitively bid, outsourced, offshored, converged, internalized, re-engineered, and even forgone.” Add alternative fee arrangements into the mix, he says, which transfer risk to law firms. “All of this will bring the major line item in any law firm—the cost of people—under assault. This will affect total employment, wage scales and job expectations.”
Cotterman sees a bright side, however. As law firms create new bonus policies, they will define what it is they are seeking from associates, possibly creating multiple career paths. “Time to rethink up or out, tiered ownership and the array of tactics deployed over the past 20 years,” he writes. “The trade-off for associates—lower remuneration hopefully mitigated by better career development and opportunity.”