The Grads Aren’t the Only Ones Who Win With Elite Biglaw Firm’s Raise in Salaries
October 4, 2022
The hottest big law firm in the city just made its biggest move yet, and it could shake up the market as we know it. In a bold move, the top law firm announced this week that they would be making raises available to all of their associates, even those who are still first-years in the program. It’s their most ambitious move since they decided to start hiring interns straight out of undergrad, so we chatted with industry insiders to get more insight into how this will impact both new associates and everyone else in the legal community.
Firms are raising associate salaries
Since two of Wall Street Journal’s Best Law to Work for are elite firms, the raise will likely trickle down from them. This is a huge win for law graduates who are just starting their careers or who have been there for a while. The last significant pay increase for attorneys took place back in 2009 with Latham & Watkins raising salaries by 30%. If firms across the board follow this lead and start raising salaries, then it will only be good news for law graduates.
While graduates will certainly rejoice at a raise, there may be additional implications for new attorneys. I follow Latham & Watkins’ lead and increase associate salaries, it may lead to a domino effect that would have to justify paying graduates more by either raising their profits or making cuts elsewhere—such as fewer perks and benefits for employees
or lowering bonuses for partners. The competition amongst law is intense, so don’t expect them to go without some sort of motivation behind these salary increases.
Why they are doing this
This is a great step forward for all employees, not just those with fewer years under their belts. The company recognizes that associates’ salaries will now be on par with their peers at other elite firms, which they hope will make it easier to recruit top talent. There are also other benefits to this change. For example, lawyers who have been at a firm for less than seven years can now earn as much as six figures annually.
Moreover, making salaries more competitive also helps top firms get higher-quality candidates who wouldn’t have thought to take a job at that firm previously. When salaries are less competitive, lawyers generally have greater freedom to choose where they want to work. Consequently,
firms with lower salaries can find it harder to recruit top talent. It’s not that attorneys won’t ever work for less money; there are some top talent who prefer non-monetary benefits (e.g., work-life balance), location, or other factors and will accept below-average compensation for those perks. However, most attorneys want pay comparable to what their peers earn at comparable and will take jobs accordingly.
What associates should do now
If you’re an associate at one of the country’s most elite and prestigious law f don’t worry! You just got a big raise. In what may be a national trend, Cravath Swaine & Moore LLP has announced that it will be raising salaries for all of its associates to $190,000 annually, starting next year. The firm went on to say that salary increases would vary according to experience, but would not dip below $190K.
This is great news for current Cravath associates and recent grads alike. It should also provide some relief for firms looking to hire top-tier legal talent that might be skittish about potentially skyrocketing salaries on-par with Cravath’s new compensation model in competing markets.
If you’re a new grad or an associate at Cravath, don’t worry if your salary doesn’t rise to $190,000 right away. You should still be happy knowing that it can happen at any point within your 10 years at Cravath. Some associates might even see a raise before 2018 rolls around.
As an associate in one of America’s top, you know that these salaries will be competitive compared with other firms around town; nevertheless, all associates should continue to work hard and show off their best stuff. So what are you waiting for? You’ve just been handed a huge raise…Go get ‘em!
What law firms should do next
In light of their recent decision to raise salaries for all their associates, many law firms are following suit. To be clear, this is not an argument that big law should match our salaries; that would be unsustainable. Rather, there is a need to offer more equity among partners and increase investments in lawyer development to offset what they’ve increased by spending more on wages.
It’s time we started thinking long-term because if it starts now it will only be easier to manage later down the road when these new associates are expected to make partners with equity.
browsing Law Scribd for more updates.