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Law Practice Management

Most Firms Now See $160K Starting Salary ‘Makes No Sense,’ Managing Partner Says

Posted May 6, 2009 3:01 PM CST
By Martha Neil

In the latest signpost pointing the way toward a possible sea change in associate compensation, the managing partner of a 300-attorney Texas-based law firm says it's time to cut the $160,000 starting salary for first-year associates that was a largely unquestioned BigLaw industry standard only last year.

"It simply makes no sense, and we decided to stop," says Steve Good of Gardere in a written statement provided to Above the Law. And, he predicts, other firms will be following the lead of Gardere and a small but growing number of other well-known law firms that have recently cut associate salaries.

"As most law firms are recognizing, starting salaries for new associates that begin at $160,000 just do not make sense in the current economic environment, and probably did not make sense even before the downturn," Good writes.

At his firm, first-years will be making $145,000 instead of $160,000 as of May 1. And second-years will be making $150,000, he tells Above the Law.

Particularly in Texas, where there is no state income tax and the cost of housing is low compared to the rest of the country, paying associates the same salary as their counterparts working in New York City defies economic reality, according to Good. By cutting associate pay, the firm will encourage clients to permit first- and second-year associates to work on their matters, he says.

"Many firms around the country are making the same or similar decisions, and we expect that as other firms approach their associate salary evaluation dates, they will come to the same conclusion," he concludes, noting that Gardere has moved to cut associate pay ahead of its Texas-based competitors. "If not, we still think that we have made the correct business decision

Comments

1.

Duh.
May 6, 2009 4:15 PM CST

Law school teaches nothing about the practice of law.  Hence, no new attorney is worth $160,000, regardless of how illustrious or shiny his or her degree is.  Heck, they (and I am one of them) aren’t worth $40k.  Maybe that’s why I’ve seen the price floor for new attorneys in my major northeastern market drop from $40k to about $28k.

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2.

B. McLeod
May 6, 2009 4:35 PM CST

It did seem to take firms awhile to pick up on that “makes no sense” point, even while clients, smaller firms, bloggers, B. McLeod, other commentators and (eventually) even their consultants were telling them $160,000 starting salaries made no sense.  Indeed, they resisted the conclusion even as cashflow problems were forcing some firms paying these salaries to dissolve, or prune 8%-15% of their attorneys.  Now, though, they understand that $160,000 starting salaries make no sense.  This is a sign of hope, and it may even mean they will now slowly get onto the concept that $145,000 staring salaries make no sense either.

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3.

HAL
May 6, 2009 5:09 PM CST

and probably did not make sense even before the downturn,” Good writes..

Well, in that case i am sure the clients are delighted to know that they have been paying for riduculous salaries. I am sure they will be getting a refund for all their money from this law firm….ah thought not. More lip service bs from Biglaw.

Even if they cut salaries, the question is are they passing on the savings to clients by cutting billing rates?

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4.

AB
May 7, 2009 1:45 AM CST

Hey now, the ridiculous salaries are published, and the clients of Big Firms know the deal.  They use the most expensive firms voluntarily—whether that’s smart, crazy, or something else.  The clients control everything.

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5.

TN
May 7, 2009 5:35 AM CST

160k not make sense??? hahahaha.  Well, I wonder how long cutting salaries will last. 

Once the recession is over and law firms are back to their old ways in a few years, then we will see articles on Big Law raising salaries again to 160k and beyond and then they will spew the usual bromides of “we have to raise salaries to compete for talent”  ...  where talent=the top 5% at the top 10 schools.

Actually, what i want to see is that if BigLaw is cutting salaries, does this mean that the average starting salary stat in the US News rankings for specific Law Schools will actually drop?  We all know law school tuition will not drop though.

As we all agree, it made no Effin sense that a 25 year old law grad working their first real job was getting paid over 100k…none whatsoever.

Anyway, a JD is a worthless degree unless one actually practices law and even then, for the majority of the law grads, a JD is not worth the cost.

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6.

$40K lawyer
May 7, 2009 10:19 AM CST

I wonder if my law school will refund part of my tuition now, because the only way $30K/year tuition made sense was that we were all looking at $150K+ salaries when we graduated….

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7.

B. McLeod
May 7, 2009 2:20 PM CST

I am B. McLeod.  I am an authority on everything because I refer to myself in the third person.

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8.

B. McLeod
May 7, 2009 10:49 PM CST

The poster at # 7 is actually not B. McLeod, but perhaps wants to be me so very, very badly that he or she has apparently been swept away by delusion, and has begun posting in my name.  I do understand, but I regret that # 7 can never actually be me.  There can be only one.

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