And thanks to one firm, the new lawyers can expect higher pay than in the past. The going rate at large firms in New York has reached $145,000 — apart from starting and year-end bonuses — while the base salary in cities other than New York is approximately $10,000 lower, according to an annual study released Aug. 1 by the National Association for Law Placement.
The recent round of pay increases began last year, when Quinn Emanuel Urquhart Oliver & Hedges, a litigation firm based in California with offices in New York, decided to increase the base pay for first-year associates to $135,000, which at the time exceeded even the $125,000 starting salary common at many New York firms. A partner, A. William Urquhart, said his firm “hoped bigger firms wouldn’t follow so we could separate ourselves, but they did.”
A few months later, Sullivan & Cromwell, a large law firm with headquarters in New York, raised the base salary for new lawyers by $20,000, to $145,000.
In this age of instant communication, it did not take long for word of the raise to spread. Associates heard of the increases via BlackBerry and text messaging as well as from legal publications and Web sites like vault.com and greedyassociates.com. And the associates were not shy about sharing their knowledge with the partners of their firms.
Mr. Urquhart said: “Typically I will find out what is happening with salaries within hours, either through my daughter, who is a third-year associate at a New York firm, or through recruitment coordinators. The news travels like lightning.”
Salary discussions in most professions are confidential, but candor is the rule at law firms.
“It’s a funny phenomenon that it’s all very public,’’ said Steven J. Steinman, a partner at Fried, Frank, Harris, Shriver & Jacobson. “It’s an unusual facet of practicing law that if you’re an associate your salary is very well known. I don’t know of any other industry where you can find out with specificity what people make.”
Jamie Gordon, who is near the end of her first year as an associate at Proskauer Rose, said there was a “buzz about the raise,” at Proskauer when Sullivan increased its base rate. Soon enough, Proskauer raised its own rate for associates. “And people were happy,” Ms. Gordon said.
As a result of the increase at Sullivan & Cromwell, Quinn Emanuel, and most large New York firms, quickly raised its starting pay again to match the new standard.
Most firms followed suit because they compete for the same law students, and also need to stanch attrition of their current associates. Hiring has become particularly competitive because of expanding practices in corporate law, litigation and bankruptcy.
William V. Fogg, one of the partners responsible for recruiting and hiring at Cravath, Swaine & Moore, said that “law firms are getting bigger at a faster rate than law schools,” creating a growing demand for lawyers and commensurate salary increases.
Despite the sharing of information, one area remains murky. Year-end bonuses — as well as those sometimes given before associates arrive — may vary by thousands of dollars and the public information is frequently “less transparent,” said Gail S. Berney, the head of professional development at Proskauer Rose.
Some firms, like Cravath, Swaine, give associates the same bonus based on class year. Others may have a range to reflect longer hours worked by some associates. A few lawyers speculated that the bonus this year could be slightly less than last year’s so that total compensation remains the same.
In addition, while some firms, like Weil, Gotshal & Manges and Quinn Emanuel, pay associates in all their office the same salary, others offer a premium based on the cost of living. Those starting at Fried, Frank’s Washington office earn $10,000 less than their New York counterparts; the associates at Proskauer’s offices are paid based on the “local going rate,” Ms. Berney said.
The inevitable issue for clients as well as the firms is whether higher salaries are reflected in increased hourly rates. But Michael J. Gillespie, a partner at Debevoise & Plimpton, another law firm based in New York, said: “There’s not really a connection between salary levels and hourly rates. We set salaries at whatever is necessary to attract and retain the best associates. We set hourly rates by client demand and market conditions based on firms operating at our level in the market.”
And Mary Korby, a partner in the Dallas office of Weil, Gotshal, said her firm had not “raised our first-year rates in response to the salary increase.’’
“It’s basically coming out of the partners’ pockets,” she said.
Another concern is whether firms will reduce the time their associates are allowed to spend on professional development during the first year and increase their billable hours to compensate for the higher starting salaries. Ms. Berney of Proskauer and Ms. Korby said that was not the case at their firms. Ms. Korby even said the increases had an opposite effect.
“When the pay started escalating so rapidly in ways that are shocking to those who have been in the compensation area, we decided we had to put additional time and money into training,’’ she said. “Our clients are looking at those coming through the door being paid, well, startling amounts. And they expect them to be the best they can be.”