How much will you earn?

Big Law associates got bigger paychecks last year, but other salaries remained flat. What can new lawyers expect to make in their first year?

It’s not every day somebody gets a $20,000-a-year raise, no matter how gifted they are at their job or how well they play office politics. However, many first-year Big Law associates got that sweet boost last year. 

The powerhouse New York law firm Cravath, Swaine & Moore was first to make the leap. Its associates had been grumbling about stagnant compensation in the face of rising living costs and the deep debt many had incurred from attending the nation’s top law schools.

So first-year associate pay went up from $160,000 to $180,000. Senior associates also saw raises, based on their years of experience.

The salary increase was a long time coming. It was the first in the nation by Big Law since 2007, and it led to an onslaught of similar announcements by the largest law firms in New York, Washington, D.C., and Los Angeles.

That made big news, partly because the figure was so high and partly because it had been so long. But while law students cheered, few will earn $180,000 upon graduation.

The big pay hike hasn’t exactly trickled down.

Salary levels for recent graduates

While the biggest and most prestigious law firms set the pace for salaries, other law firms are not always quick to follow. At law firms with fewer than 50 lawyers, the median salary for first-year associates was $90,000, half of what their Big Law counterparts in major markets are making. Even at firms with more than 700 lawyers, the median starting salary fell short of Cravath’s figure, coming in at $155,000.

“It’s not what I expected to see,” said James Leipold, executive director of the National Association for Law Placement (NALP). “After all the publicity surrounding the move to $180,000, I fully expected to see the national median starting salary for law firms move upward, but what the data reveal is that for the most part, only the largest firms in the largest legal markets made the move, and while many offices are paying $180,000 to start, many are not. The result is upward movement in some law-firm size bands while the national median has remained unchanged.”

It took several years for the previous pay hike in 2007 to become the industry standard, and some believe it could be a few years for the influence of Cravath’s new salary to take hold. Still, the legal market has changed significantly in the past decade.

As more law firms grow through mergers and acquisitions, the largest firms are not as similar to one another as they used to be. There are firms with more than 700 lawyers that are made up of small regional offices, many of which do not pay starting salaries of $180,000.

Data from a 2017 salary report by Robert Half Legal, which surveys law firms and corporate counsel offices, revealed slight increases for first-year associate salaries in both small to large law firms. In small firms, those with one to 10 lawyers, first-year salaries ranged from $56,500 to $82,000, an increase of 2.8 percent from 2016. Midsize law firms with 35 to 75 lawyers saw a 3.5 percent increase, with salaries reaching up to $134,250.

First-year associates at large firms with more than 75 lawyers saw the biggest jump in salaries. In 2017, associates at large firms were paid between $126,500 and $168,250, a 6.2 percent increase from the previous year.

First-year associates in 2017 benefited from less competition in the legal job market, said Jamy Sullivan, executive director of Robert Half Legal. First-year associates are in high demand, and the majority of law firms surveyed by Robert Half reported that they were having a tough time finding new legal talent. The biggest jumps in salary were in practice areas that demand a higher salary, such as commercial law, compliance, health care and litigation, Sullivan said.

“While some large law firms raised first-year associate salaries to $180,000 in June 2016, generating a buzz throughout the industry, newly minted attorneys who are actually earning these salaries tend to be the exception,” Sullivan said. “These mega firms are extending generous starting salaries to top candidates who graduated from a leading law school in the top percent of their class and possess in-demand skills — technological proficiency, business acumen and strong interpersonal abilities — among other sought-after attributes.”

Most associate salaries are proportional to the level of responsibility the associate is given, Sullivan said. Law grads who enter the legal workforce with several years of work experience, excellent academic credentials and practical experience attract higher salaries. This is especially true in law firms that break away from the traditional associate track. In the past, all associates at a firm made the same salary based on years of service, but more law firms are moving away from that and toward differentiated roles. 

“It doesn’t really make sense that everyone makes the same money anymore,” Leipold told the law firm review website Chambers Associate.  “There needs to be some diversification. Law firms are becoming more like corporations, with more career paths and more differentiated roles, and I think that will continue.”

Salaries for graduates entering business, public interest, judicial and government employment are distinct from those working in law firms, and thus less likely to be affected by the Cravath pay scale. This is especially true for graduates entering the public sector and judicial clerkships, where starting salaries rarely, if ever, exceed six figures.

“Jobs in government and jobs as judicial clerks are likely to be steady, as they have been for many years, despite economic booms and busts,” Leipold said.

According to 2015 NALP data, public interest employers, such as public defenders and nonprofits, paid a median salary of $47,000, with salaries ranging from $31,000 to $70,000.

Judicial clerk salaries were low and tight in range. More than 40 percent of reported salaries fell between $45,000 and $55,000. Salaries varied, however, depending on the type of court. Clerks in federal courts, for instance, reported the highest salaries, with 60 percent earning $60,000 or more. At the state level, clerks reported salaries between $45,000 and $55,000. On the local level, 50 percent of clerks reported salaries of less than $45,000.

In 2015, government salaries in the 25th and 75th percentiles were $45,000 and $63,538, respectively.  Salaries tend to be the highest for graduates working for the federal government. Surprisingly, local government employees reported higher salaries than those working for state governments.

Jobs in the business sector, both J.D.-advantage and bar-passage-required, provide slightly higher starting salaries. The most common reported salaries for law graduates employed in business were between $60,000 to $70,000, according to NALP data.

J.D.-advantage jobs, or those not requiring a law license, reported salaries of $55,000 and $85,000 for the 25th and 75th percentiles. For jobs requiring bar passage, salaries were slightly higher, at $58,240 and $90,000 for the 25th and 75th percentiles. 

However, identifying a salary trend in business is difficult, since 90 percent of business salaries are between $36,000 and $140,000.  The wide variety of legal jobs in the business sector accounts for the broad diversity in reported salaries. The highest earners were in fields such as consulting, compliance, management, tax and in-house counsel.

Surprisingly, only 26 percent of business jobs surveyed required a law license, but those that did tended to pay more. For example, corporate counsel positions for lawyers with zero to three years of experience paid between $87,000 and $166,750 in 2017, according to Robert Half.

“Jobs in business are likely to continue to be important sources of jobs for new graduates, and we would expect to see continued growth in the J.D.-advantage job sector as private-practice opportunities continue to diminish and the businesses that compete with law firms continue to grow in size and importance,” Leipold said.

For more insight on the legal job market, read the rest of this article in the digital version of Fall 2017 National Jurist.

Categories: