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‘Meganumbers’ Pay for Lawyers Is On the Wane, Recruiter Says

Posted May 18, 2009 8:49 AM CDT
By Debra Cassens Weiss

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Even after the recession ends, lower pay for lawyers may continue to be the norm.

Recruiter Jerome Kowalski of Kowalski & Associates tells the Legal Intelligencer that client pressures are among several factors depressing lawyer salaries, and the change is likely to be lasting. "These meganumbers in terms of compensation are just going to disappear," he told the publication.

He outlines other reasons salaries are one the wane. There is a surplus of lawyers. Law firms have an increased need for capital, he said, even as they change their billing structures and respond to client demands for lower bills. And law firms that felt compelled to pay high salaries to compete with the high pay of investment bankers are now noting that the pay of other professions is also taking a hit.

In past economic recoveries, Kowalski said, partner profits spiked because law firms had cut staff and lawyers during the downturns. Kowalski doesn’t think that will happen when the current recession ends because clients are scrutinizing their bills more closely.

Kowalski made his prediction as more law firms are reducing pay for associates and cutting partner draws. DLA Piper announced on Friday that it is cutting pay for its new associates in top markets from $160,000 to $145,000. Associates in smaller markets who started out at $145,000 will now make $130,000. The firm also is moving to a merit-based compensation system for associates.

Ballard Spahr Andrews & Ingersoll is also considering a merit system for associates and planning changes to its partnership compensation system, the story says. In the past, so-called nonequity partners were paid a fixed salary, even though they had voting rights and contributed capital. Now "there will be no fixed income, even for the newest partner," chairman Arthur Makadon told the Intelligencer. Instead, all partners will be paid on a draw and bonus system, he said.

Too often, partners at law firms feel entitled to their salaries. Now firms have to "separate the wheat from the chaff," Makadon told the Intelligencer.


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