Top Law Schools

Great, then expect the total cost of attendance at law schools to rise from $90,000 per year to $110,000 per year.

I recently talked to a law school friend whose dad is an STB partner and he's told her the firm leadership is expecting a pay raise by January 2019.

We pray.

FWIW, I know that at least one Cravath partner shared that at the time the firm chose to raise salaries so that associates could afford to live closer to the office and be available at all times.

Wild Card wrote:Great, then expect the total cost of attendance at law schools to rise from $90,000 per year to $110,000 per year.

This doesn't matter to those of us with law school in the rear view mirror.

2013 wrote:I understand this separation theory comment, but did Cravath ever consider any non-v10 firm competition? Very few people would have turned down Cravath, etc. to go to Nixon Peabody or something.

The only firms Cravath is concerned about all are capable of paying first year associates 200+ if they so choose to.

Also, to the person above who mentioned the dearth of senior associates, how does raising first year salary help with that? The only way to fix that problem is to give massive bonuses to senior associates (50% like these boutiques are doing).

Agree first year salaries aren't very telling - someone needs to create a total comp score based on associate salaries + bonus at all levels (Cravath = 1.00, K&E would end up at like 1.05 because of bonuses, firms that level off after first year would get .90 or something).

On the competition point, I agree that nobody is seriously considering Nixon Peabody (is that a real firm?) out of the gate, but I know a LOT of v10 midlevels that are constantly considering a lateral move to somewhere more palatable. Usually it's a NYC -> secondary move, so I think it's important for the NYC firms to outpay Texas, or else that becomes way too easy of a decision for associates capable of getting jobs in other markets.

yep if I were Crabath I wouldn’t ever raise first year salaries again

Literally any top 25 grad can do those jobs

MillllerTime wrote: I know a LOT of v10 midlevels that are constantly considering a lateral move to somewhere more palatable. Usually it's a NYC -> secondary move, so I think it's important for the NYC firms to outpay Texas, or else that becomes way too easy of a decision for associates capable of getting jobs in other markets.

Isn't most of this type of thinking dealt with on the front end of hiring? I mean in the sense that firms are somewhat leery of hiring grads without ties to the market. Non-NY markets are appealing because of their cost of living, but it seems like the number of associates (esp. mid-levels) who would consider a NY -> TX move without having a previous tie to TX is pretty small. I do still think that NYC should pay more than TX because COL is so much higher and work demands are generally understood (though not always accurate) to be higher.

I would think that another salary increase in such a short time period seems unlikely. Partners don't want to give up extra profit, and I do think there is something to be said for firms quietly cutting other benefits/bonuses (e.g. STB reducing the firm health insurance contribution) weighing against another salary increase.

Prove me wrong.

jd20132013 wrote:yep if I were Crabath I wouldn’t ever raise first year salaries again

Literally any top 25 grad can do those jobs

It's not so simple. Eventually, Cravath would be well below market and would only attract candidates who had no other options. While most of the individual tasks a junior associate does are quite simple, actually being successful at organizing, anticipating, and understanding the background for those tasks so you can move beyond junior levels is considerably more difficult. You might get away for a while with hordes of low-paid bottom feeders, but eventually you need a pipeline for the mid and senior associate workhorses that are vital to actually getting work done for the rainmakers. You won't attract good laterals either if you aren't paying market.

Besides, associate salaries aren't nearly as big of a deal to firms like Cravath with monster profits per partner. Where they really squeeze is lower tier firms where many partners may only make around $300k. For those partners, paying a know-nothing first year associates $200k including bonus has to rankle.

Talk of raises is interesting. Not sure it will come from Cravath. The partnership departures there suggest we are truly in uncharted waters with the current market.

Anonymous User wrote:
Isn't most of this type of thinking dealt with on the front end of hiring? I mean in the sense that firms are somewhat leery of hiring grads without ties to the market. Non-NY markets are appealing because of their cost of living, but it seems like the number of associates (esp. mid-levels) who would consider a NY -> TX move without having a previous tie to TX is pretty small. I do still think that NYC should pay more than TX because COL is so much higher and work demands are generally understood (though not always accurate) to be higher.

I would think that another salary increase in such a short time period seems unlikely. Partners don't want to give up extra profit, and I do think there is something to be said for firms quietly cutting other benefits/bonuses (e.g. STB reducing the firm health insurance contribution) weighing against another salary increase.

Prove me wrong.

Maybe TX was too specific, but most NYC associates have ties to some other market or would otherwise rather live in a secondary market if the pay were the same. The main point is the bolded sentence that we agree on - if NYC isn't paying more, it starts to attract a smaller and smaller portion of the top students (which I think is already happening to some extent). I'm not that optimistic about a raise actually happening either, but I do think elite NYC firms have an opportunity to set themselves apart while only taking a 2-3% hit to PPP.

There's a completely different conversation to be had about whether associates should want their firm to follow. For the firm over $3MM PPP I think it's an easy yes, but otherwise I think I would personally prefer the extra job security and benefits that aren't under siege.

There are a ton of major markets that pay the same as NYC already. People still want to start in NYC because "prestige", exit options, it's the easiest market to get a job, and it's NYC - people want to experience living there. None of that is going to change even if other markets continue to keep pace with NYC cravath scale.

I don't get why Kirkland isn't moving to $200K. It's gotten so many top partners recently from cravath etc, it's revenue was #1 this year, and overall the firm is doing great. If the move to $200k, other firms will follow

Anonymous User wrote:I don't get why Kirkland isn't moving to $200K. It's gotten so many top partners recently from cravath etc, it's revenue was #1 this year, and overall the firm is doing great. If the move to $200k, other firms will follow

you realize the people approving the salary increase means they make less money, right?

Johann wrote:

Anonymous User wrote:I don't get why Kirkland isn't moving to $200K. It's gotten so many top partners recently from cravath etc, it's revenue was #1 this year, and overall the firm is doing great. If the move to $200k, other firms will follow

you realize the people approving the salary increase means they make less money, right?

In addition, Kirkland attracts plenty of laterals already with well above market signing bonuses.

Above market year-end and sign-on bonuses get harder if you raise base comp.

Anonymous User wrote:I don't get why Kirkland isn't moving to $200K. It's gotten so many top partners recently from cravath etc, it's revenue was #1 this year, and overall the firm is doing great. If the move to $200k, other firms will follow

I don't think K&E will be the first mover on salaries even though they can definitely afford it. In the bonus presentation K&E gives to associates every year, they emphasize trying to raise the percentage of comp tied to bonus as they feel it makes people more entrepreneurial/provides alignment.

They also emphasize that they always pay "top of market." If a firm likes to be able to say it pays more than other firms, it makes sense for them not to raise salaries because the top firms will match and those are the firms K&E sees as competitors. I'm sure they're are aware that other firms won't match their individualized bonuses (which conveniently are never written down in a single memo that can be leaked to ATL and promptly matched), but would match an across-the-board salary increase.

Anonymous User wrote:

Anonymous User wrote:I don't get why Kirkland isn't moving to $200K. It's gotten so many top partners recently from cravath etc, it's revenue was #1 this year, and overall the firm is doing great. If the move to $200k, other firms will follow

I don't think K&E will be the first mover on salaries even though they can definitely afford it. In the bonus presentation K&E gives to associates every year, they emphasize trying to raise the percentage of comp tied to bonus as they feel it makes people more entrepreneurial/provides alignment.

They also emphasize that they always pay "top of market." If a firm likes to be able to say it pays more than other firms, it makes sense for them not to raise salaries because the top firms will match and those are the firms K&E sees as competitors. I'm sure they're are aware that other firms won't match their individualized bonuses (which conveniently are never written down in a single memo that can be leaked to ATL and promptly matched), but would match an across-the-board salary increase.

Yeah, no universe where KE is the first mover. It would almost certainly be a lockstep firms. If KE does it, they'd probably have to lower their bonus payouts, meaning that there's less that differentiate them.

Food for thought. Praying one of these guys makes a move on the heels of the new AmLaw 100.

https://abovethelaw.com/2018/04/am-law- ... d-revenue/

AmLaw numbers looked great. It was early June 2016 right?

Anonymous User wrote:AmLaw numbers looked great. It was early June 2016 right?

June 6, 2016, to be exact. With this year's revenue and profit numbers at the "super rich" firms, it's absurd to think partners can actually justify, even to themselves, that they can't share a tiny slice crumb of the pie.

In trying to advocate for raises think it would be more effective to focus on cost of living increases than to focus on firms' profits. Associates in CA, IL and NYC should ask open-ended questions about what firms are doing to mitigate the impact of the tax law on associates. I'm in NYC and my marginal rate went up at the same time I lost the ability to deduct ~$20k per year in SALT so it has been a real hit.

No matter how the question is framed, firms will inevitably say that they are committed to meeting market rates. They aren't interested in giving up profits without pressure from the first moving firm. So I do think any move comes from a firm viewing it as enough of a power play to make it worthwhile, not any concern for associate well-being.

Have any current biglaw associates heard if their firms are planning a response to the effects of the tax law. Poster above is correct that loss of SALT deductions will be a hit on associates. Just wondering if the cravath/davis polk/simpson/kirkland etc have communicated anything to associates?

Anonymous User wrote:Have any current biglaw associates heard if their firms are planning a response to the effects of the tax law. Poster above is correct that loss of SALT deductions will be a hit on associates. Just wondering if the cravath/davis polk/simpson/kirkland etc have communicated anything to associates?

Not sure this will garner much sympathy. My understanding is that the new tax law is pretty bad for law firm partners and service providers in general.

MillllerTime wrote:

Anonymous User wrote:Have any current biglaw associates heard if their firms are planning a response to the effects of the tax law. Poster above is correct that loss of SALT deductions will be a hit on associates. Just wondering if the cravath/davis polk/simpson/kirkland etc have communicated anything to associates?

Not sure this will garner much sympathy. My understanding is that the new tax law is pretty bad for law firm partners and service providers in general.

It's not bad by any stretch of the imagination. It's just not as generous to law firms as it is to some other passthrough businesses. Law firm partners and associates still get a 2 point cut in their top marginal rate, from 39% to 37%.