Marketing Raises: What You Need to Know

A 100-lawyer firm in one of the nation’s largest markets announced Raises that it was going to finally be distributing raises to its associates, but only if they reached certain billable hour goals.

Some are calling this new initiative brilliant, while others say it’s a recipe for disaster that could result in disgruntled associates and unhappy clients. What do you think? Are associate raises at your firm handed out based on billable hours? If so, what requirements do you have to meet to earn them?

Avoid the Treadmill

We may be living in an era of automation, but some experts believe that salary growth is still possible. David Talmage, a Principal at Keller Graduate School of Management said:

I don’t think we’re on a treadmill from a long-term perspective. He believes there will be more opportunities for those willing to innovate.

Advancements in technology might streamline work processes, but it’s also possible that automation and AI might leave people with more time for creative pursuits. Some say a skills gap has developed which means some workers are opting out because the changing environment just doesn’t fit them. And many seem okay with this – for now.

Why Lawyers in Partnership Track Care About Marketing Raises

You may have read the news recently about how elite law firms are finally handing out market raises. The only catch is that you need to be billing over 1,300 hours per year to qualify.

For those who are not yet in the partnership track at their firm and aren’t even close to qualifying for a marketing raise, all this news might feel a little irrelevant, but there’s some good news for you too!

The Am Law 100 has also taken note of how much work associates do and how integral they are in generating revenue, so they’re now announcing when lawyers will receive Raises partner-track funding if they keep on hitting the billable hour requirements each year. This way, they don’t have just one group competing with one another.

When You Might Get a Raise

In 2018, the salary difference between firms ranked 90th and 100th on the Am Law 100 was just under $2,000. Yet in 2016, it was nearly $10,000. How come?

New labor regulations were enacted in 2018 that required employers of a certain size to offer a one-time market adjustment payment (MAP) if they didn’t give their Raises employees a raise.

With associate attorneys billing an average of over $600 per hour and exceeding the amount needed for MAPs with clients who paid them what they were worth, many companies decided it would be easier to pay up than shell out compensatory time off.

How to Get a Raise

If you’re already at the top of your firm, or you aren’t expecting a raise from your employer anytime soon, fear not. There are a few ways to get around this barrier and make some extra cash on the side. One is by boosting your billable hours (which will hopefully be recognized by your boss!).

If you don’t feel like putting in more hours Raises of work than what’s required of you, one other way would be to increase the amount of business that goes through your pipeline. A great way to do this is by starting an additional project that relates to what you specialize in at work.

Recent Trends in Partner Compensation

For lawyers, the range in partner compensation is also influenced by factors such as geography and firm size. A large proportion of salaries at Am Law 100 firms with more than 450 attorneys were either $1,200,000 or $2,400,000 per year in 2016. This compares with a median salary of $974,350 for firms employing 11-250 attorneys and a median salary of $770,000 for firms employing 251-450 attorneys.

In contrast to the Am Law 100’s approach that exclusively ties senior partner compensation to profitability performance, most other law firms Raise primarily use fixed compensation scales without linking payments directly to performance (with some exceptions). Fixed compensation scales usually start at a relatively low level and gradually increase with years of service.

New Normal Comp For Partners?

In a refreshing departure from past norms, top firms such as Kirkland & Ellis and Paul Weiss have now instituted market-rate comp structures for their associates.

The new salary structure is already in place at New York firm Shearman & Sterling, where associates are billed out on a 1.6 multiplier that reflects the cost of an associate’s work relative to an equity partner’s work, according to Law360. We felt that this was the right time for us to revisit our compensation system because it has been years since we did so, said George Cerise Jr., chairman of the firm. But let’s be clear here:

these salary increases don’t make up for what has been lost in unpaid Raises hours and penalties throughout the past two decades.

So, Do I Still Want That Promotion?

It’s not always worth it to get that promotion if you have questions about whether your raise will pay off. It takes some time for a new associate, who starts at a market salary, or the average salary for their firm and location, order to make as much money as someone who is promoted before them.

If you’re still looking for confirmation of this trend in law firms – consult your list of Am Law 100 Firm Hiring Dossiers. It’s estimated that those of the top twenty firms are spending 5% less on associate salaries than they were last year.

The New Bottom Line (and Why It Doesn’t Exist)

It was sad when law firms decided to start paying only those associates who billed over 1,600 hours and got 200 billable hours in bonuses, but at least the cut-off line for a nice chunk of market raise money existed. Now that PWC hand out raises as long as you just hit the base Raises the level of 960 billable hours, there’s no bottom for how much it takes to get rewarded with some cash.

The go-to advice has been, to bill what you can, but there’s never been more incentive for people to put in their 40 (or 50) hour work weeks and stay below the 960 mark. And this isn’t just limited to law firms — all employees are feeling pressured by employer expectations while benefits continue to dwindle.

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