Law Practice Management

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

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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

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