The nation’s largest law firms have increased their starting salaries for the first time in almost 10 years, increasing starting salaries for first-year associates from $160,000 to $180,000.
New York-based Cravath Swaine & Moore was the first to announce the move in early June. More than 100 law firms quickly matched the midyear pay raise, which took effect in July.
It’s not the first time the nation’s largest law firms have acted in unison. During the tech bubble of 2000, salaries were pushed to $125,000. In 2006, during the mortgage bubble, firms bumped it up to $160,000, where it has remained until now.
Associates at all levels will see their salaries increase, with the Class of 2008 earning $315,000. Most large law firms pay a set salary based on seniority.
But it’s too early to tell whether the salary increases will trickle down to smaller firms.
“I don’t have a crystal ball and can’t predict what the market will do,” said James Leipold, executive director of the National Association for Law Placement, an organization that tracks law firm salaries and employment statistics. “We will conduct our next associate salary survey in January 2017, and by then we will be able to measure the impact of the salary increases across different law firm sizes.”
According to NALP’s 2015 Associate Salary Survey, $160,000 continued to be the benchmark for first-year associates at firms with 700 or more attorneys. However, fewer firms were paying it. In 2009, nearly two-thirds did. In 2015, just 39 percent offered it.
Charles Volkert, executive director of Robert Half Legal, said he’s yet to witness any kind of across-the-board reaction to the recent jump in compensation.
“It’s only been a few weeks out, and we’re not seeing any shift,” he said.
Only a select number of law firms can pull this off, Volkert noted. They need to be among the biggest and best.
“In New York, you have mammoth cases,” he said. “Yes, they happen elsewhere, but not as often.”
The average pay for a first-year associate at a law firm of 75 or more lawyers is $151,000, according to a 2016 salary survey by Robert Half Legal.
By comparison, the average pay at a small law firm — one with 10 or fewer attorneys — is less than half that, at $71,750.
During the past 15 years, the difference between large law firm salaries and small firm salaries has widened. Still, the salary increases are good news.
The Great Recession had dampened salaries, and then, even as profits returned, firms were reluctant to increase salaries, as corporate clients were demanding discounts and refusing to pay high rates for junior associates.
But partner profits are up, with Cravath partners earning $3.56 million a year, according to The American Lawyer. The compensation disparity was stirring dissatisfaction among associates.
