Law Practice Management

Some BigLaw Leaders Still Ponder: How Low Can Associate Salaries Go?

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Once upon a time, BigLaw firms generally followed a similar lockstep salary structure and, only a year ago, the top starting pay for first-year associates was $160,000 or even more—especially when generous bonuses were tallied. Annual pay raises were virtually automatic.

Now, after the financial crisis of the past year and the pay cuts and salary freezes imposed by a number of well-known firms, it isn’t clear what the new norm is, the Recorder reports.

Some firms, such as Morrison & Foerster, are still sticking with their $160,000 starting pay—but have frozen salaries for more senior associates. Others, such as Sheppard Mullin, have cut first-year compensation to $145,000 from $160,000, the legal publication reports. Billable hours requirements won’t be changed, but the billable hourly rate clients are charged for legal work by first-years will be cut about $15, says partner Robert Williams. He oversees firmwide recruiting.

Meanwhile, as many firms significantly reduce their hiring of new law school graduates, associates can be considered fortunate simply to have jobs. And, as corporate clients push for greater value for their legal dollar, another trend is to abandon lockstep associate compensation entirely, in favor of new merit-based pay models.

Lisa Smith of the Hildebrandt legal consulting firm says about a third of large law firms are now considering a merit-based compensation structure for associates. And, she predicts, the days when major law firms routinely adopted the same starting salary for first-year associates are now behind us.

“You’ll see far more variation going forward, so the starting salary becomes far less important and it becomes about how fast you can advance,” she tells the Recorder.

Related earlier coverage: “Pay Cuts Accelerate at Law Firms Across the Country” “BigLaw Pay Freeze is Part of Changing Business Model” (2007): “More Calif. Firms to Pay Associates $160,000”

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