Law Practice
NY 1st-Year Pay Plan: $250K, But No Jobs
Posted Oct 1, 2007 1:41 PM CST
By Martha Neil
Observers are waiting to see what the next salary move will be in New York City, where law firms that tried to surge ahead on first-year pay are now neck-and-neck with competitors from other major cities.
Simpson Thacher & Bartlett's move earlier this year to raise starting pay to $160,000 momentarily seemed like a big upward bound. "But while Simpson’s bump momentarily opened up a $25,000 gap between top-end New York firms and their Washington counterparts, the pack soon matched the move. Eight months later, starting salaries for first-years at most of the 200 largest firms nationwide remain bunched at $160,000," reports New York Lawyer (sub. req.), in a reprint of a Legal Times article.
Now the question isn't so much whether some New York City firms will up the ante again, but when. Another round of raises is inevitable, many observers believe, "probably ignited by a New York corporate firm looking to up the bidding war for talent," the article reports.
Earlier this year, the National Law Journal suggested "whispers" of a $190,000 starting salary in NYC—which, of course, has not yet become the new standard even as October begins.
For the moment, at least, the only big salary move was suggested in jest by the unnamed head of a Washington firm, according to the Legal Times article. “The firm will announce tomorrow we’re going to $250,000—but we’re just not going to hire anyone," he says.
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Comments
Joe Barf
Oct 5, 2007 6:23 AM CST
I just threw up in my mouth.
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Jesse Hoffman
Oct 5, 2007 7:41 AM CST
Well if your a new associate you should probably go wash your mouth out with money.
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Alvin D. Chipmunkski
Oct 5, 2007 7:47 AM CST
Salaries are a bit out of whack. More importantly, there’s a lot of utterly unqualified mediocre law graduates from unknown schools coming to NY and other big cities expecting these big salaries even though they’re limited to the cream of the crop from top schools. When will these dolts realize that only a small percentage of people get the big bucks, and most other lawyers have to scramble if they EVER expect to make close to six figures per year. Most mediocre law grads in NYC are lucky to get any job, even temp work, at $30 per hour. That’s not the same thing as $160K plus perks.
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Eric Trajtenberg
Oct 5, 2007 8:17 AM CST
As a recent graduate who did well at a second tier school, I can tell you that NO law schoold graduate is worth 160k per year, no matter how many hours they bill. What about the people actually paying for these raises? Do clients care when they read about these enormous salaries? Corporate clients should be up in arms about these inflated salaries and scrutinizing every bill. No first year associate, writing meaningless 10-page memos, should be billed out at the inflated rates which clients are being charged.
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Dose of Reality
Oct 5, 2007 8:24 AM CST
There are a lot of mediocre law graduates coming out of top schools. There’s only so long even mediocre top school grads can look good on “paper” before they’re found out.
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JD & Special Sauce
Oct 5, 2007 8:32 AM CST
Well this is what happens when too many law schools are accredited…we need to pay closer attention to the underlying relationship between the increase in accreditation and the growing temporary and contract attorney staffing industry—and the outsourcing of legal work to foreign countries—that enables these types of salaries. The practice of law is becoming a bit like Wal-Mart.
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Really?
Oct 5, 2007 8:57 AM CST
Eric—As a recent graduate, I’d suggest that you probably have no clue whether a law school graduate is worth $160K a year. From an economic perspective, if a first year bills 2000 hours at $275/hr, he or she more than covers his/her own salary, benefits and overhead. Moreover, there’s value in attracting top talent that may be able to expand a firm’s practice over time. It sounds like the work you’re doing may be useless and should incense your firm’s clients, but I assure you this isn’t the case with all young associates at all firms.
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David Seville
Oct 5, 2007 9:00 AM CST
There are a lot of fine partners at excellent law firms that are not among the 200 largest firms nationwide who actually know what they are doing - and can only dream of a 5th year associate’s pay. Something is painfully wrong with this picture. I should add that articles, and phenomena, like this make it virtually impossible for firms like ours to attract the kind of talent that our clients deserve.
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Eric
Oct 5, 2007 9:18 AM CST
To Really?: I never said that I worked for a firm, nor that I bill at a higer rate. I clerked for a year, then hung a shingle with my friend, doing whatever I can to help clients in a variety of matters. I understand that a young associate’s billables will cover their costs, but the ultimate consumer (ie, the client) is still footing the bill for associate’s hours. No matter how you slice it, there is a HUGE learning curve when you enter the practice of law, and associate’s salaries should be reflective of this curve. If young associates want to work for firm’s with great names and reputations, then they should have a year or two with a salary which reflects the learning curve. Also, “top academics” does not equal “top talent.” I think that point is pretty much irrefutable.
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Really?
Oct 5, 2007 9:40 AM CST
Eric—If you don’t work for a law firm then I’d suggest you have even less an idea of what you’re talking about. There is a big learning curve, but that doesn’t mean that associates can’t add value from day one. Certainly a first year associate has different capabilities and plays a different role than a senior partner, and that’s why there’s a big disparity in billing rates and an even bigger disparity in salaries. That is, learning curve costs are already built into firms’ salary structures. You may think that rates/salaries are too high, in which case hanging out a shingle is a reasonable option. But particulalry for complex cases/transactions, I don’t think it’s unreasonable for clients to want a team of attorneys with deep experience and the sort of support a large firm can provide, even if it costs more. Moreover, the differences in costs you’re talking about are typically miniscule in comparison to the size of cases/deals people are working on. And of course top academics doesn’t equal top talent—that’s why law firms have extensive interview and summer associate programs.
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Clarence Darrow
Oct 5, 2007 10:15 AM CST
Eric is correct. I’m a 6th year associate at an AmLaw 100 firm and my salary would boggle most people minds. I make more than many of my clients who are named executive officers in US public companies. $160,000 for a first year is ridiculous. You have an English undergrad and 3 years of law school and you come out of school knowing what? Nothing but academic rhetoric. My clients have real problems and issues that need real solutions that a first, second or third year has nary the ability to understand, much yet resolve. The NY firm bidding war is ridiculous and out of hand. It will ultimately kill all but the strongest firms. Every time first year salaries go up, mine goes up to. I received a mid-year adjustment of $25,000 and in January I will go up another $25,000, but ultimately, we are pricing ourselves right out of business. I am firmly against any further raise in first year salaries, even if it means nothing more on the table for me. And Really?, I do agree top academics does not equate to top talent. Some of our worst lawyers and business developers are Harvard and Yale grads with NYU and Georgetown LLM’s. Some of our most talented, most respected and most prolific lawyers are from 2nd tier schools. Perception is very rarely reality.
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cheers
Oct 5, 2007 10:23 AM CST
Clarence said it best.
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Pathalogic Lawyer
Oct 5, 2007 10:42 AM CST
When I graduated from law school (last century), starting salaries at top NYC firms were around $90k and minimum billables were around 1600-1800 hours. Salaries are now $160k and billables are 2000 - 2300. Absent chemical assistance, I presume there is a physical limit to the number of hours an attorney can work so presumably, there must be some limit in inflation-adjusted associate salaries.
However, economists define “price” as the amount the market is willing to pay so, although arguably tautological, if firms are all willing to pay $160k or $190k, they are not “overpaying”. If you want to argue about “important” $h!t, lets discuss A-Rod’s compensation. <g>
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Really?
Oct 5, 2007 10:44 AM CST
Clarence and Eric—Way to go, you’ve defeated a complete strawman argument that academics are the best indicator of future success as a lawyer. I don’t know if anyone has made or ever would make this argument (I certainly didn’t here), but way to go in beating it back anyway. Top notch. Let me know when you decide to take on the 1+1=3 lobby.
Per my earlier post, no one is arguing that second years have the expertise to solve anyone’s complicated legal problems. However, from a client perspective, if I have a $2 billion class action or a $1 billion M&A deal then, I would want the most capable people working on it at all levels of my legal team, and if recruiting the most capable people means higher salaries, then so be it. (Again, to keep you from going into a tizzy, I mean “capable” based on actual ability, not alma mater.) The extra couple hundred grand in legal fees this may cost is going to be negligible in light of the potential win/loss or profit from a case or deal. From a firm perspective, most partners at most big firms who are capable of handling really tough problems still rise up through the associate ranks, even in an age with some lateral senior movement. Thus, firms have every incentive to get the best people they can in the door at the junior level in hopes that some will develop into elite technical and/or rain-making talents.
I do agree that current salary/rate trends may lead to greater differentiation between true top tier firms that can charge premium rates and the peloton, but I don’t think that fact offers much incentive for top tier firms to ease off the pedal.
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Sour Grapes
Oct 5, 2007 11:00 AM CST
Jealousy is an ugly thing.
Fortunately, the laws of supply and demand do not consider individuals’ sour grapes in the slightest.
It’s economics. Are the firms making money? Huge. Are the clients happy with results? More often than not. So sit on the sidelines and stew if it makes you feel better.
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bludevil007
Oct 5, 2007 11:37 AM CST
The people on here who call first year salaries “inflated” should step into a first year lawyer’s shoes. The hours are atrocious, the demands are high, and social life can be borderline nonexistent - top that off with the fact that you just spent three extra years of your life in law school, which you most likely paid for yourself, while your banker friends have been pulling in $200k for years and will have their B-school tuition paid for them.
The people at the financial institutions corporate lawyers provide services to leave at 6pm every day - whereas a lawyer’s work day has just begun. If anything, first years (and lawyers in general) are UNDERPAID.
Also, I agree with sour grapes - lawyer’s salaries are driven by market forces just like everything else. Law firms have to strike a delicate balance between charging acceptable billing rates for clients and attracting the best candidates
As to the alma mater = caliber of lawyer argument - there is actually some truth to it. To be honest, unless you are top 5 in your law school class at a second tier school, chances are the Ivey kid is better than you. Judging from just a few years of legal practice (which i realize is not much), I’d take a NYU/Columbia kid any day over a Fordham kid any day, and that’s just the facts.
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OldPartner
Oct 5, 2007 1:33 PM CST
When I started practicing patent law 30 years ago after an 11-year engineering career, I had to scuffle for an associate’s job at a mid-grade firm. Even the, I was making more money than I had made as a chief engineer with 21 subordinates and responsibility for lifesaving medical devices. Now, I am paying $160K to bright young people who simply have no idea of how to do anything. We are in a vicious cycle, where our coin-operated Congress keeps making legal jawflap more important than real productive activity, and salaries reflect that trend. Perhaps the last American to do anything useful can turn out the lights.
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The Canadian View
Oct 5, 2007 2:21 PM CST
In Canada the first year lawyers are not even allowed to call themselves lawyers - they are articling students and have to be hired and trained by a senior lawyer before they are admitted to the bar. It is hard to find an articling job - only the top half get one. Which means our bottom half never get admitted - guess what that does to the number of lawyers and especially the number of incompetent lawyers in Canada? We have half as many.
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What's a Canada?
Oct 5, 2007 3:44 PM CST
Just another scheme to reduce supply, same difference. It’s kind of shocking how bad the math and business skills of lawyers are to not understand that.
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Fred Stare
Oct 6, 2007 7:01 AM CST
I was a great attorney. People person, comforting, amazing wrtier, gave good phone, all that jazz. South Carolina—1st year associate, working for a horribly idiotic PI attorney. Borderline psychotic, definite asspaste. I did everything from advertising for the firm to travel planning, computer tech support, entertaining his personal visitors, to overlooking trust account “issues.” His version of mentoring was “Figure it out,” which turned out to somewhat be a double-edged sword as I was macro-managed (he didn’t have time to actually practice law) instead of micromanaged. I brought in quite a bit of clean money, and after two years I was “making” 40k per year. I’ve since left the firm and am considering a complete career change despite 100k+ in student loan debt.
Any non-attorney reading this thread should really think a third time about taking the steps to enter the profession.
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The View from the Top
Oct 7, 2007 1:34 AM CST
Hey “What’s a Canada?” - when the economy goes into recession and you get laid off as an associate, and you feel humiliated and depressed having wasted the best years of your life, I predict that you will wish there were fewer lawyers like you all chasing the same ambulance. Enjoy!
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Graham Martin
Oct 7, 2007 8:29 AM CST
It’s amazing to me how many of the people in this list of comments sound so blasted angry. What happened to discussion? What happened to the validity of other peoples’ points of view? No need to shout down others for expressing their own experiences.
To “Really?”: I don’t know that however much crass and confrontational language you use, that you will ever succeed in “winning” a discussion with someone who is just recounting their life experiences. How will you change what they have experienced?
Personally, having just graduated from law school, passed the bar, and now looking for work, it is interesting to read this discussion, but I don’t really find it all that relevant. How many people actually get these big firm jobs if they haven’t already gotten through the door via OCI in their second year of school? To me, this discussion misses the whole other question of what these high salaries do to ability of non-big-firm attorneys to practice. Maybe I am just doomsaying, but it seems to me that eventually the associate salary explosion will price those firms right out of business, with clients realizing they can get the same work done for half the cost at smaller firms. And given the fact that I don’t want to do due diligence for 3 years, I am very excited about working for a smaller firm, even though it means less money.
I am sure there will be doubters accusing me of being jealous and sour about not being in the pocket of a big firm, but I’m realistic and know that whatever I can do at this early point in my career is not worth six figures per year. Not that I wouldn’t mind having someone throw massive amounts of money at me—I just don’t think I can justifiably ask for it at this point.
This is the part where people call me stupid and idealistic, and then tell me that the world is all about clawing your way to the top and making as much money as you can, regardless of what you have to do, because that is all that really matters. Thanks for the contributions, anger-mongers.
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Graham's Mom
Oct 7, 2007 1:07 PM CST
Graham has a point. I think there are great reasons to go to a smaller firm. There are also reasons to go a big firm.
There’s no reason to begrudge the big firm associates their salary - more power to them. Similarly, there’s no need to look down your nose at somebody at a smaller firm. More often than not, they are getting better experience and can enjoy their weekends.
There’s room for everybody, and no need for petty jealousy. And contrary to what our Canadian friend says, we’re not getting laid off and chasing an ambulance. The people I know are basically getting the chance to do the kind of work they want, give or take a few.
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Joe Six-Pack
Oct 7, 2007 7:02 PM CST
Graham, sorry you didn’t do well your first year and missed out on the bigLaw opportunity, but apparently your friends did too. No big firm$$$ have new associates performing due diligence, it’s not cost affective. They use contract associates (re: 2nd tier grads) at $30 an hour, and then charge clients $150 and hour.
Enjoy small law (re: state municipal court houses) jobs such as Acts of Replevin to help farmer john receive compensation for his sick sow. I mean, who wants to work on multi-billion dollar lawsuits in federal court, that’s just not idealistic.
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Bill
Oct 8, 2007 1:09 PM CST
Re: Joe Six-Pack.
I can’t respect anyone who doesn’t know the meaning of ‘re’ but posts such arrogant posturing.
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gatsby
Oct 9, 2007 9:32 AM CST
Joe Six-Pack: It’s cost-effective, not cost-affective. Perhaps a spelling refresher course could remedy this.
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the great
Oct 9, 2007 11:43 PM CST
Apparently, Joe didn’t do so hot his first year, either…if he doesn’t know that due dilligence and doc review go on all the time at big firms…and at a whole lot more than $150 hour. “Contract associates?” Not at a reputable firm.
Obnoxious poser.
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