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More Law Firms Likely to Freeze Associate Salaries, Consultants Say

Posted Dec 17, 2008 7:45 AM CST
By Debra Cassens Weiss

Latham & Watkins may be the first large law firm to confirm it is freezing associate salaries, but it probably won't be the last.

One law firm that hasn't ruled out a pay freeze is Arent Fox, reports The BLT: The Blog of Legal Times. Chairman Marc Fleischaker told the blog the law firm is considering the options. A freeze is “definitely on the table as a possibility, but nothing’s been decided yet,” he said.

Legal consultants say more law firms could follow Latham's lead, the Recorder reports. Those making the prediction include Bradford Hildebrandt of Hildebrandt International and consultant Richard Gary.

"This move by Latham is a sign of how difficult the times are going to be,” Gary told the Recorder. “Latham is at the very top of the U.S. legal services industry. For them to be taking a step like that says to me that no one is going to escape the effects of the economic downturn."

Latham was the country’s second-highest grossing law firm last year, according to the Recorder article. Its chairman Robert Dell issued a statement Tuesday confirming that it is freezing associate salaries as part of a “prudent business strategy.” Associates who would have gotten a raise in 2009 will earn the same base pay as they did in 2008.

Beginning in January, all first- and second-year associates at Latham will earn $160,000 in base pay. The salary increases for those with more experience and tops out at $265,000 for eighth-year associates. That compares to $280,000 top pay for associates at other New York firms that haven’t frozen salaries, according to Above the Law, the blog that first broke the news of Latham’s salary freeze.

Comments

1.

Brrr... it's cold out there...
Dec 17, 2008 8:31 AM CST

Better to have a frozen salary than a layoff, I suppose…  I am sure several posters will jump all over me and claim it is just sour grapes (believe me, I wish my salary was frozen at $160k, rather than being frozen at $45k at my mid-size firm) but really, I hope the tanking economy will help to stabilize associate salaries.  Really, truly they have gotten out of hand.  I know most (all?) of the top 10 law school grads feel they “deserve” such high salaries.  But this business model, and yes, as much as we like to call law a “profession” and the purists get upset when it is called a “business,” let’s face it, a firm exists, not only to provide a service, but to make money…  Law is a business, and the current business model used by much of BigLaw is clearly failing…

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2.

B. McLeod
Dec 17, 2008 11:28 AM CST

I think the “consultants” are starting to stray into the “futurists’” territory (although, we haven’t heard from a “futurist” for a few weeks now).

You have to love these big firms, though.  When these guys are selling pencils on the street in battered straw hats, they’ll still be trying to convince disinterested passersby how “successful” they are.

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3.

associate
Dec 17, 2008 2:01 PM CST

Brrr, I fully agree.  When those top starting salaries bested 110, that set of some serious bells and whistles in my head.  I’m glad that my firm didn’t get in on that nonsense, or we’d probably be looking at layoffs as well.  Even so, I think our starting salary is a bit higher than it should be, but our partners believe in paying for capacity, so they’ll probably just wait out any slow down without rocking the boat.

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4.

Barney of Syracuse
Dec 19, 2008 7:40 AM CST

How many “eight year associates” are there?  Anybody that has been there for eight years or more and is still an employee attorney means they are too unproductive to be asked to be a partner or are to unambitious to look for a better opportunity elsewhere.  Unless “eight year associate” is just a euphemism for “mommy-track”?  It would make economic sense for employee lawyers to peak at some point, such as six years, and then the salary would drop if they decide to stick around despite not being partnership material.  By the way, a quarter million a year is more than most partners make here in Northern New York!

Maybe now the inflated associate salaries for these top grossing firms will resume to a saner level, much like the price of crude oil has done recently.

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5.

re: Barney
Dec 19, 2008 7:53 AM CST

8-year associate is something that happens when big firms move their PS track to 10 years.  But it can also happen when someone is highly experienced, highly productive, and simply doesn’t want to deal with all of the ancillary aspects of PS.  Maybe it’s people with Asperger’s syndrome or savants who are great in their office, but don’t deal well in face-to-face situations.  That being said, if I had worked somewhere for 8 years and wasn’t going to see some equity from it I would be out the door (except, of course, right now when there’s nowhere to go).

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6.

B. McLeod
Dec 19, 2008 7:54 AM CST

Firms that are slow-minded may need as long as eight years to decide whether to admit an “associate” to the hallowed Hall of Partners.  After all, it is such a high honor, not to be conferred lightly (and God bless England).

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7.

Einstein
Dec 19, 2008 8:02 AM CST

The reason you don’t see many 8th year associates is because most firms just give them a title like “non-equity shareholder” or “junior partner”. That is just a euphemism for old associate. It’s rare to see someone 8 years from law school with a million dollars in originations.  I am sure you need at least that amount for a few years for a big law firm to even consider you as an equity shareholder.

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8.

Boston IP
Dec 19, 2008 8:18 AM CST

Brrr…, you are right on the money (only B. McLeod smells of sour grapes).  It bothers me to no end when first year associates think they are “entitled” to the high salary, and then moan when you ask them to work past 5.  A law firm, no matter how big or small, is still a business and you have to make money to pay not only the associates, but the malpractice insurance, the rent, the lights, the many important assistants and paralegals, etc. etc.  And yes, partners deserve to make a little money, too, despite what some bitter people out there think. 

And as for 8th year associates, I have known many people through the years who didn’t care to make partner - hey, why worry about originating clients, dealing with those clients and all the other bs that goes along with being a partner when you can make $300k just doing other people’s work?  Not a bad gig for a lot of people.

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9.

JFS
Dec 19, 2008 8:33 AM CST

A salary freeze makes sense.  As for 8th year associates, I work for BigLaw and a 10-12 year partnership track is becoming the norm.

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10.

MidwestIP
Dec 19, 2008 8:36 AM CST

It will be interesting to see the PPP charts when they come out.  Does anyone else think those won’t be lower or even with prior years?  Yep, it’s only the associates that are greedy.

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11.

New York IP
Dec 19, 2008 8:38 AM CST

Who moans about leaving at 5:00?  People I know feel like they are playing hookie when they leave at 8:00 pm. 

Personally, I want to set the pace on where I want my caseload to be and not someone else.  I’m thinking about an “of counsel” position now instead of partnership. I agree with Boston IP on that.  In my field, it’s unheard of to go solo or even small firm and it might be the closest thing to having my cake and eating it too.

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12.

B. McLeod
Dec 19, 2008 8:49 AM CST

The “moaning” thing is only in Boston IP’s firm.  For those who were hoping that firm was Gunderson, and that Boston IP was their Boston layoff, you will have to learn to live with disappointment.

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13.

Boston IP
Dec 19, 2008 9:25 AM CST

Seems B. McLeod would know a thing or two about living with disappointment.

Luckily the evil BigFirm I work for lets us go home to our families at somewhat reasonable hours (usually).  I have encountered several newer associates that moan about the long hours they have to put in, and then complain they are making $5000 less then their friend at another firm.

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14.

B. McLeod
Dec 19, 2008 9:39 AM CST

Yet, B. McLeod takes solace in at least not being a non-revenue “associate” who has to flatter firm partners by vacuous posts extolling the grandeur of the firm.

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15.

UT BigLaw
Dec 19, 2008 10:21 AM CST

Wow…some really uninformed comments here.  I can’t think of any of my friends or colleagues at Texas BigLaw firms who leave at 5:00.  We all work 10-12 billables M-F and often work either Saturday or Sunday each and every week.  Sure, we’re entitled to 2-3 weeks of vacation, but most of us hardly take one.  Working at a big law firm and putting in the kinds of hours that are expected and oftentimes required is more than just a job, it is a complete lifestyle choice, and high associate salaries recognize and appreciate that reality.

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16.

Boston IP
Dec 19, 2008 10:52 AM CST

It is absolutely a lifestyle choice and I agree that the high salaries recognize that fact.  But that is why it annoys and surprises me when I hear associates complain, which I do at work and on these posts.  My favorite post once was some associate saying as long as they bill 1 cent more than they were paid, they were profitable for the firm.  That’s a poor attitude and bad business model.  My last firm was the 12-14 billable hour/day, 7-days a week firm.  I made a choice to move to the 10 hour/day firm and take a pay cut.  Point being don’t complain, change your situation if you don’t like it.  NY IP has the right idea.  Or we can all just beat up on how stupid we all are for working at a big, evil firm, like some people.  Oh, I almost forgot - my firm is great and the partners are so smart and great.  Please look at me, my partners.

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17.

B. McLeod
Dec 19, 2008 11:07 AM CST

Left out “I abase myself, your Supremacies!”

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18.

Pontificator
Dec 19, 2008 12:37 PM CST

Boy… it is amazing how bitter B. McLeod is.  It seems pretty apparent that B. McLeod does not like big law firms because he probably got fired from one.  As someone that previously worked at two national law firms and is currently a partner at a third, I have to admit that having a top tier firm on your resume opens doors and provides opportunity.  I worked at a VERY aggressive IP law firm (arguable the best in the country) and it was VERY difficult… but I stuck it out for longer than I needed to (to ensure that no one thought that I didn’t make it and got fired).  And when I hire people for my group, I look for similar kinds of experiences.  I have a feeling the if B. McLeod’s resume crossed my desk… a ding letter would be forthcoming.

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19.

Boston IP
Dec 19, 2008 1:26 PM CST

Come on, Pontificator.  Clearly B. McLeod is far superior to you and me.  He is too smart to work for a big firm and be beat down by the partners.  It is clearly his choice to work out of his home office and be his own person.  We are but drones who foolishly work to make evil, rich partners richer.  We are stupid for working long hours and making a good living.  It is his choice not to.  Please don’t crush his little fragile world.

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20.

Big Law Chicago
Dec 19, 2008 2:04 PM CST

The whole Big Firm vs Small Firm thing has always seemed like a total and utter waste of time and energy by attorneys.  Small Firm people are so sensitive that Big Firm people are stuck up or think they are better, and Big Firm people cannot conceptualize that there is another way to practice law.  Different strokes for different folks.  Should we spend our energy in doing something more noble (anything really) which our fine profession gives us the tools to do than bittering on the ABA website about whether big or small law is better?

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21.

interested
Dec 19, 2008 2:16 PM CST

Many firms have a 7.5 year partnership track meaning that one gets promoted to partner in the January/February following your seventh year. Therefore, associates make the 8th year pay until thay make partner during that year.

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22.

B. McLeod
Dec 19, 2008 2:57 PM CST

Of course, even if I wanted to go work for a firm, I would never send a resume to a practice group I would not care to work for.  This would include, generally, anyone whose crafty “analyses” are founded on baseless speculation.  Also, I am thinking, it would include anyone daft enough to admit he kept a job he hated so that people would not think he “got fired.”  On the issue of “fragile worlds,” it seems to me that another one of the stories online today was indeed about something being “fragile,” but as I recall, it was big firms.  The recent dissolutions, staff cuts, freezes, and of course, the whole Dreier fiasco, simply underscore the biggest problem with big firms, which is that the individual lawyer (especially the non-revenue “associate”) is just a passenger on the plane.

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23.

SEAttorny
Dec 19, 2008 4:25 PM CST

I think the entitlement/whining issues are, unfortunately, largely based on the culture of law schools and laypeople soon-to-be lawyers encounter before entering practice. They get the impression that working in a law firm is “hard” but don’t really have a conception of what that means, or that it might mean that 80% of your waking hours occur at work. They get dazzled by high salaries without any thought to what they are trading for it, or what they might want out of their life besides work and how to make those things work together. They see their non-lawyer friends working 40 hours a week or less, and expect that they will basically get to do the same thing, but at a more difficult job that they believe law school has completely prepared them for, and that their intelligence and training entitles them to the high salary. Of course, these are often the same people who don’t want to accept training-level assignments and think that they are already a more brilliant litigator than anyone they know or will ever know.

I personally am thankful I worked in a non-legal capacity in a firm for several years before going to law school and had the opportunity to encounter different attitudes towards work and compensation. At least I had some idea of what I was REALLY getting into before I even started the education process, and have been able to land at a firm whose overall attitude works pretty well with my own. There was no $160,000 starting salary involved, but I don’t have to trade as much time away as some other associates.

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24.

J.D.
Dec 19, 2008 6:17 PM CST

BREAKING NEWS: Kenya Gov’t tells Obama family it needs permission before speaking with media about Obama; ensures “better flow of information.”

http://allafrica.com/stories/200812110079.html

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25.

B. McLeod
Dec 19, 2008 7:58 PM CST

J.D., man, it’s a non-starter.  Move on.

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26.

Rocco
Dec 20, 2008 9:37 AM CST

Hey all you hot-shot corner office associates in fear of losing your job, just celebrated my 5th yr at the public defenders office.  Nice raise, a new high profile murder case assigned, and NO law school debt!!! Life is great!!!

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27.

B. McLeod
Dec 20, 2008 1:52 PM CST

Rocco, what jurisdiction do you practice in?  I have a few friends who might like to head your way.

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28.

Anonymous
Dec 22, 2008 2:06 AM CST

Rocco- I wish I had gone that route. Now I am a “paralegal” at a top tier law firm (yes I have a JD and passed the bar but I have a kid) making just enough money to make the minimum payment on my $200K in law school debt (from my top 10 law school) and day care for my kid. And I am praying that I don’t get laid off. I would certainly prefer a hiring freeze.

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