New York-based Simpson, Thacher & Bartlett announced January 22 that it was raising first-year associates' salaries to $160,000. Before the memo even hit associate inboxes, a contingency of top New York firms followed suit, including Paul, Weiss, Rifkind, Wharton & Garrison; Sullivan & Cromwell; and Cadwalader, Wickersham & Taft. Skadden, Arps, Slate, Meagher & Flom said it would also increase salaries to $160,000 for all offices, meaning associates in markets such as Houston and Chicago would be paid significantly more than their peers. Other firms such as Fish & Richardson and Weil, Gotschal & Manges also raised starting salaries across the board to $160,000. To date, over two dozen firms have stepped up to the plate and raised rates to $160,000 for new associates in their New York offices.
With New York firms leading the charge, DC and West Coast firms have had their hands forced—either hike pay or risk losing prestige and the ability to attract top talent. The market standard in Washington for first-years has been $135,000, up from $125,000 in 2005, with some firms such as Skadden and Jones Day topping out salaries at $140,000, with bonuses reaching $15,000. With Skadden's move to raise salaries in its DC office to $160,000 to match its New York rates, salary hikes in the District are as likely as political spats on the Hill. DC-based Hogan & Hartson announced that it will raise associate salaries in its New York office to $160,000 but has not yet confirmed whether the increase will be extended to its Washington office.
However, DC associates of firms based outside the District, such as Wilkie Farr & Gallagher, DLA Piper, and Fried, Frank, Harris, Shriver & Jacobson, have already received pay increases to match their New York counterparts. Not to be outdone by massive, international legal powerhouses, McKee Nelson boosted starting salaries to $160,000 for associates in its two offices in New York and DC.
California firms are watching the pay hikes closely. Quinn, Emmanuel, Urquhart, Oliver & Hedges is one of the few California firms that had raised associate salaries to $145,000 to match New York rates. So far, it has not announced plans to raise rates again to reflect the most recent salary increases. Simpson, Thacher & Bartlett's salary increase, however, applied to all its offices, including its Palo Alto and Los Angeles locations. Most major California-based firms, though, have held rates at $135,000.
With the current salary increases steaming up and firms in hot pursuit of salary leaders, industry insiders say that profitable California-based firms will almost certainly match the pay hikes, at least in their New York offices. Regional West Coast firms will have to make tough decisions as they weigh the benefits of boosting pay against their bottom lines. Firms that decide against raising salaries risk becoming merely regional players as they slip away from being able to compete at the national level.
Outside of California, New York, and DC, salary increases have been slow to come. In Chicago, Sidley Austin, Jenner & Block, and Mayer, Brown, Rowe & Maw have nudged up rates for their incoming associates to $145,000. Atlanta associates at firms that gave across-the-board raises now make an astounding $160,000, while most of their counterparts make the standard $115,000 for first-year associates. Some firms, such as Troutman Sanders and Paul, Hastings, Janofsky & Walker, have announced $10,000 pay hikes for Atlanta associates, with more firms expected to follow.
The pay wars have just begun. Check back frequently for the latest news, as we bring you ringside updates on the battle for pay dirt!
Most law firms that have announced first-year salary increases to $160,000 will raise junior and mid-level salaries as follows:
Class / 2007 Base Salary
2006 $160,000
2005 $170,000
2004 $185,000
2003 $210,000
2002 $230,000
2001 $250,000
2000 $265,000
1999 $280,000
Increases for associates in the class of 1998 and senior will be determined on an individual basis.
