BY KATHERINE BROWN
On January 22, the New York law firm of Simpson Thacher & Bartlett raised the annual base pay of first-year associates to $160,000 before bonus, triggering similar announcements from other large firms across Manhattan.
A report issued by the National Association for Law Placement in August of 2005 called entry-level salaries at large law firms across the country “remarkably stable.” But in the Big Apple, that stability has all but vanished.
Last February, a round of increases bumped starting salaries in the city to $145,000 from $125,000, where they had previously languished for five years. That raise was first announced by Sullivan & Cromwell, and other firms quickly followed.
The Harvard Law School campus has been abuzz with the news, with students anxious to hear which firms have jumped on the bandwagon, and which are holding back. The raises affect summer associate salaries.
“How do I find out whether or not my firm has matched?” asked 2L Rachel Sherman, who will be working this summer at the New York offices of Weil Gotshal & Manges. “No one’s contacted me yet.”
Some students have received letters or e-mails from their future employers, but others take to the internet, visiting popular sites like law.com or autoadmit.com, where law students from around the country post the latest on raises.
Paul Weiss was the first to match Simpson Thacher’s increase to $160,000, announcing the news Tuesday afternoon. Other firms that have raised base pay to $160,000 include Davis Polk, Paul Hastings, Akin Gump, and Skadden.
Simpson Thacher’s decision comes in the wake of a pay hike at many California firms, from $135,000 to $145,000. Living expenses are higher in New York than in other regions of the country, and the associate pay there generally leads the market. New York also has the reputation as the market requiring associates to work the longest hours.
“I think it’s reasonable,” Sherman said. “The salaries have to keep up with the astronomical housing and living costs.”
Those watching for the latest salary news online had other explanations for the round of raises. “Almost a year ago, Sullivan & Cromwell raised starting salaries by $20K from $125K to $145K,” said a commenter on Above the Law, a legal gossip site. “Yesterday, Simpson announced a further $15K increase in starting salaries to $160K. Why have salaries gone up by nearly 30% in a year? To staunch the flow of midlevels to the investment banks, hedge funds, PE [private equity] shops, in-house counsel and myriad other jobs that promise either higher pay, a better quality of life, or in rare cases, both.”
A poster on autoadmit.com agreed, saying, “Honestly, in New York at least they cannot squeeze any more hours out of people. It’s a lot more likely that they are doing this to retain more mid-levels and seniors and therefore increase their effective billing rates.”
“Simpson had an absolutely ridiculous year in private equity/ M+A[mergers and acquisitions],” explained another poster. “Their numbers will likely be so high that they would have been embarrassed not to raise salaries. Throw in that Simpson was late to act on the bonuses this year (by late, I mean not 1st, 2nd or 3rd) and that they’ve taken a huge recruiting hit because of the fact that associates are literally clocked in and out of the office, and the move makes perfect sense.”
Many expressed skepticism about the motives behind the raises. “Obviously a $20K increase was not enough to slow the attrition rate,” said a commenter at Above the Law. “Now firms are hoping that another $15K might get people to stick around? What about asking the tougher questions such as why turnover is so high in New York law firms? Or why associates secretly, or not so secretly, begin planning their own exit strategies from day one on the job? Or what senior associates and partners could do to keep their juniors from jumping ship?”
Echoing the sentiment, an autoadmit poster said, “I think if they lowered the pressure and allowed the people to have some life, maybe they could retain more mid levels.”
No one at HLS seems to be complaining about the round of raises, although some said that the jump from $125,000 to $160,000 in the span of the year was surprising, if not unreasonable.
“I’ve gotten a $35,000 raise since my firm hired me, and I’ll gladly take it,” said 3L John Tsu. “But it’s a tad bit crazy.”
Although “biglaw” firms have increased compensation, the median salary for first-year associates at firms nationwide is still around $100,000. This may come as a surprise to many Harvard Law students, who often confine their job searches to the only biggest and most prestigious firms, all of which pay top dollar.
Pay for public interest work does not nearly approach the earnings of private sector attorneys. NALP’s 2005 Associate Salary Survey indicates that the median salary for a fifth-year associate ranges from $82,000 to $155,000, which is two to three times what an attorney with similar experience makes at a public service organization.
To some, the difference in pay is not a deterrent to pursuing a career in the public sector. Many students opt out of on-campus interviews, or participate in OCI only to interview with small, private public interest firms or government employers.
“I spent part of last summer at a civil rights firm in North Carolina, and after graduation I’m headed to Georgia to do public interest work,” said 3L Sarah Bolling, who will rely on a Skadden Fellowship for her funding. “The recent pay increase at big law firms is ridiculous. I didn’t interview with any big law firms, and I don’t regret it.”
An even greater number of HLS students admit that public interest might be more personally fulfilling, but that a firm salary is attractive after years as a student on a shoestring budget. On what will they spend the extra cash?
“I really want an iPhone,” said 2L Trevor Austin. “They are totally sweet.”
Andrea Saenz contributed to the reporting of this article.