JD Journal » associate salaries

Lockstep Returns to Linklaters

joshua — Wed, 31 Mar 2010 16:57:51 +0000

UK-based firm Linklaters, which last year lowered associate pay raises, announced it is returning to full lockstep compensation for its associates and that performance-related bonuses will also be issued to its top performers.

According to LegalWeek, newly-qualified associates at the firm will earn the equivalent of $93,428 in base salary. Salaries will then move up the ladder on an annual basis to $103,291 and $110,886.

Linklaters UK human resources director, Caroline Rawes, explained the move to LegalWeek: “We look carefully at our salaries on an annual basis and take into account what the market is doing and we thought it would be appropriate to reward, both in pay and bonus, the contribution that our associates have made to the firm over the last 12 months.”

Last year, Linklaters reduced the percentage-raise of associates to between 2% and 4%.

Linklaters has 26 offices in 19 countries and is one of the five members of the “Magic Circle” of prominent UK law firms.

Freshfields Unfreezes Associate Lockstep; Unveils 2010 Rates

sara — Fri, 26 Feb 2010 17:25:54 +0000

Freshfields Bruckhaus Deringer is the first top U.K. law firm to announce associate salary rates for 2010, with the firm lifting the freeze on associate lockstep put in place last year. The firm told staff yesterday that the freeze would be lifted at the start of the new financial year. Beginning in May associates will move through the pay scale as normal but the pay levels themselves will not be increased. The new qualified rate (reduced last year), will remain at 59,000 pounds ($80,000), while a one year qualified attorney will make 66,000 pounds ($89,500), a lawyer with two years experience will make 73,000 pounds ($99,000) and a three year qualified lawyer will make 86,000 pounds ($116,600).

The firm said in a statement, “We have decided that there will not be a salary freeze for the coming financial year. While the outlook globally is still uncertain, our people have worked very hard to help our clients and the firm through the challenges of the last year or so, and we are grateful for the contribution everyone has made.”

London based Freshfields Bruckhaus Deringer is a general practice firm with 2,700 attorneys and 27 offices globally.

Sidley Austin Salary Thaw and Double Raise

joshua — Fri, 12 Feb 2010 21:01:20 +0000

After issuing another round of paychecks at 2008 salary levels, Sidley Austin today announced its 2010 compensation plan. Salaries have been thawed and associates will be getting a double bump in salary, putting them back to where they would have been if they had never been frozen in the first place. Unlike some of the firms Sidley considers peers, however, associates will not be getting a “make whole” bonus. Kirkland & Ellis along with Latham & Watkins paid their associates a bonus equal to the amount the salary thaw cost them last year.

Still, there’s plenty to be happy about with today’s announcement. It puts Sidley back among those leading the market for salaries and may put pressure on firms that thawed salaries but didn’t move evenyone up two levels, or firms that cut salaries before thawing them.

Winston & Strawn Keeps Salaries Frozen

joshua — Fri, 12 Feb 2010 19:00:58 +0000

Winston & Strawn froze salaries last year and now it appears that the freeze is still on. Associates received emails today regarding their compensation and across the board, they are still the same as they were two years ago. Third year associates are still making $160k.

This might seem like a way to increase business at the firm – pay associates less so the firm can advertise lower rates for its clients, but that isn’t the case. Hourly rates for the associates’ time have gone up.

Meanwhile, fellow Chicago denizen Sidley Austin has continued to pay its associates at 2008 levels as well, while they evaluate the market. Is it any surprise that the National Law Journal says the market for Chicago laterals is picking up?

UPDATE: Sidley has just announced a salary thaw and raise. Read about it here.

Raises (sort of) and Bonuses at Pillsbury

joshua — Thu, 04 Feb 2010 16:01:35 +0000

Let’s start with the easy part. Associates in the New York office of Pillsbury are having their salaries restored to the level they would have been at had they never been frozen in the first place, so long as they met their billable hour target of 1,755 hours. Associates that missed their target are still getting a raise, but are only being bumped up one level.

Outside of New York, associates are also getting raises but based on a new compensation model that has base pay set lower. For example, first year associates in California will have a base pay of $145k instead of New York’s $160k. This isn’t terribly uncommon and we’re still on familiar ground here. Associates in DC, Virgina and California (but not Sacramento) who hit their billable hour target for the year will get an extra bonus bringing them up to the New York base pay level. Seems reasonable. All other US associates are stuck with their lower salaries.

Salaries for Asia have not yet been set and the firm says it’s working on it.

Things get a bit more complicated for bonuses. Once again, New York associates have a clear bonus plan that matches the Cravath scale. Outside of New York, associate bonuses are tiered based on some combination of billable hours and merit, and will either be less than the Cravath scale (for the somewhat meritorious) or at the Cravath scale (if you’ve been very very good this year).

Mayer Brown Raises Salaries Back to Pre-Recession Levels

joshua — Tue, 02 Feb 2010 22:22:34 +0000

The salary marketis starting to crystallize now. Mayer Brown today joined other top tier firms in restoring associate salaries back to pre-recession levels. That means everyone is being bumped up two levels, putting all Mayer Brown associates where they would have been had salaries never been frozen in the first place. There are still some minor differences between the firms – for example, no word yet on whether Mayer Brown will issue an extra bonus to make up for the lost salary in 2009, but these differences affect past compensation and not the state of the salary market going forward.

The question is, will the market respond? Several firms that have thawed salaries have only moved their associates up one level. Will this put pressure on them to reconsider that decision? And how will it affect the salary market for those firms that have adopted or are intending to adopt a merit based compensation plan? It’s too soon to say, but when it happens, you will read about it here.

Mayer Brown is one of the largest global law firms both by number of lawyers and revenue. The firm has over 1,800 lawyers in key business centers across the Americas, Asia and Europe.

Revenue and Profits Down at Goodwin Procter

joshua — Fri, 29 Jan 2010 21:18:42 +0000

Goodwin Procter’s gross revenues fell 4% in 2009 to $658 million and per partner profits dropped 3% to $1.27 million. Although discouraging, in a year marked by layoffs, deferrals and salary cuts it could have been much worse. The good news is that the firm is not taking it out on its associates, at least the ones that haven’t been laid off. The firm is paying bonuses and although associate salaries have not been restored to where they would be without a freeze, they have been thawed and bumped up one level, without a base salary cut.

Managing partner Regina Pisa expects revenues to stay flat in 2010 with increased work in real estate and real estate capital as the recovery heats up.

Goodwin Procter LLP employs 900 attorneys in Boston, Los Angeles, New York City, Silicon Valley, San Diego, San Francisco, and Washington DC.

Hughes Hubbard Increased Revenues and Profits for 2009

joshua — Fri, 29 Jan 2010 21:04:52 +0000

2009 was a bad year for the economy and the legal sector took its share of licks, but there are success stories as well. Hughes Hubbard & Reed had a 10% increase in gross revenues in 2009, from $251.8 million to $277 million. Profits per partner jumped by 9.7%, from $1.34 to $1.47 million. Associates also did well, earning above market bonuses and getting salaries restored to pre thaw levels.

The strong earnings were led by work done for Lehman Brothers during its liquidation and and strong year for its product liability practice.

Hughes Hubbard & Reed LLP, an international law firm based in New York, is ranked number one in New York and number two nationally on The American Lawyer’s A-List of the “top firms among the nation’s legal elite.” AmLaw also ranked the firm #4 in “Top Growth Firms” among the nation’s 200 largest firms over the last 10 years.

Vinson & Elkins Issues Bonuses and Raises

joshua — Fri, 29 Jan 2010 19:46:38 +0000

Vinson & Elkins associates are having their salaries thawed out and returned to where they would have been without the salary freeze. This puts V&E at the top of the muddled salary market.

UPDATE: We’ve received tips saying that only New York associates are getting the salary boost. If you have any hard information on the state of V&E associate salaries outside of New York, send us a tip here.

The firm is also handing out Cravath scale bonuses. What is missing is any kind of “make whole” bonus, to restore the money associates missed out on by having their salaries frozen to begin with.

Vinson & Elkins LLP is an international law firm with more than 770 lawyers across 14 offices worldwide, including 19 lawyers in Abu Dhabi and Dubai. The firm was founded in Houston, Texas, in 1917 by James Elkins and WIlliam Vinson.

Morning Roundup

joshua — Tue, 26 Jan 2010 12:00:01 +0000

Good morning! Today is Tuesday, January 26, and here’s your morning roundup…

A Pepper Hamilton Partner is the lead investor in a deal to purchase the Texas Rangers…

Wilmer Hale’s numbers are out and per partner profits are up seven percent (guess they don’t mind that story leaking to blawgs) …

Wilson Sonsini is thawing salaries and paying bonuses…

And so is Hughes Hubbard…

NBC has triumphed over Conan when it comes to the IP rights of various characters from his show…

Chadbourne & Parke has a new IP partner…

It wouldn’t be a new year without a list of predictions, and seeing as how it’s almost the end of January, we thought we’d better find one…

Crowell & Moring snags one for its international arbitration practice…

Cozen O’Connor adds one in anti trust…

MLA gets a big contract from the government of Bermuda…

Our condolences go out to friends and family of Baker Hostetler partner John Mings…

Westlaw and Lexis/Nexis are redesigning their interfaces in reaction to competition from free search engines like google…

Drinker Biddle picks up one in New York…

A former McGuireWoods partner and former aide to NC Governor Mike Easley is facing corruption charges…

Hughes Hubbard Thaws Salaries, Issues Bonuses

joshua — Mon, 25 Jan 2010 17:44:08 +0000

Hughes Hubbard is thawing out salaries and junior associates are getting a double bump, placing them where they would have been had there been no salary freeze. Senior associates are splitting the difference, with the class of 2004 and beyond getting bumped up but not quite as far. Of course, this further muddies the water of the “market rate” situation.

In addition to salary raises, Hughes Hubbard associates are getting their 2009 bonuses. Those that made their billing target of 1950 hours will get a bonus on the Cravath scale. However, there are above market bonuses being paid out to associates that hit 2100, 2300 or 2500 hours last year.

Cooley Godward Salary Thaw, and is there a Market Rate Anymore?

joshua — Fri, 22 Jan 2010 22:09:33 +0000

Cooley Godward has lifted last year’s salary freeze, sort of. First years will continue to make $160k, which puts them ahead of firms that have cut first year salaries, second years move up to $165k and third years jump up to $170k. This isn’t a true up, but Cooley third years are once again earning more than the class below them.

Two years ago, biglaw salaries were pretty much the same across the board, so salary wasn’t typically a factor in choosing where to work. Now things are a bit messier. Among the firms sticking with lockstep compensation, some have cut salaries, some have cut salaries outside of major markets, some have frozen salaries, some have thawed salaries, and some have thawed salaries with a “true up”. And as difficult as that can be to sort out, the situation gets far more complicated when looking at the firms that have moved to merit based compensation plans. Most, but not all, have adopted a three tier system, and most of those have two levels within each tier. Some have cut base pay with the promise of potential greater earnings, some have not. Some are holding back a percentage of pay to be released upon hitting certain milestones.

All of this means that there is no longer a “market rate” for associate compensation. That may not matter much this year, since new graduates aren’t likely to be quite as picky about where they work so long as they have a job, but as the economy improves, these variances in salary are going to be one of the factors attorneys evaluate in choosing a firm. Will we see a return to a standardized salary across the board, and if so, which plan will win out?

Merit Based Pay at Drinker Biddle

joshua — Tue, 19 Jan 2010 19:35:24 +0000

Drinker Biddle is moving to a merit based pay system, becoming the latest in a string of major law firms to abandon lockstep compensation. Under the new plan associates in their second year and beyond are broken down into four tiers. Each tier has a baseline salary but the firm is quick to emphasize that final salaries will recognize the individual contributions an associate makes to the firm’s success and could rise well above the minimum salaries. There are also two separate scales for major markets such as New York, and offices in other locations.

Associates in New York, Chicago, Washington DC and California will have base salaries of $145k, $165k, $185k, and $250k depending on tier, with the top tier reserved for those expected to make partner within two years. Outside the major markets, salaries range from $130k to $185k. Abovethelaw.com is reporting that this represents a salary cut for 53% of Drinker Biddle’s associates, but that’s based only on minimum salaries for each tier and may not be reflective of final salaries.

This system applies to associates in their second year and beyond. Drinker Biddle is continuing its new first year program, as reported here. First year associates will undergo extensive training while drawing salaries of $105k, and clients will be charged a reduced rate for any work done by this group.

Drinker Biddle & Reath LLP was founded in Philadelphia in 1849. The firm has more than 650 attorneys in 12 offices in the US. Its largest offices are in Philadelphia; Chicago; Florham Park, New Jersey; and Washington, DC.

Dickstein Shapiro Abandoning Lockstep

joshua — Thu, 14 Jan 2010 18:53:04 +0000

The lockstep march away from lockstep compensation continues unabated as 2010 gets into full swing. The latest firm to join the thundering herd is Dickstein Shapiro, which will initiate a three tiered merit based system as of January 22. Regulars readers of our page are no doubt familiar with the basic concept – associates are broken down into three tiers based on various subjective and objective criteria. Dickstein Shapiro associates are, in yet another market conforming convention, broken down into A and B levels within their tiers to determine base pay.

Entry level A associates will be making $145k per year and Entry B associates will earn $160k. What’s the difference between level A and level B associates? According to a statement made to abovethelaw, it’s “…based on their achievement in a number of core competencies, including productivity, problem solving, legal research, writing, communication, fact development, negotiation skills, supervisory responsibilities, and adherence to the firm’s core values…”.

Maybe it’s just me, but if I had known that I could earn $145k per year working as a lawyer in a major law firm without being productive, competent at problem solving, legal research, writing, communication, fact development and negotiating, I would have chosen a different career. That sounds like easy money. As for supervisory responsibilities, how much supervising are entry level associates expected to do?

It’s easy to pick on Dickstein Shapiro for basing salary differences on the skills required to be a lawyer, but the truth is it’s not all that different from a variety of firms moving toward merit based compensation plans.

Dickstein Shapiro LLP, founded in 1953, is a multi-service law firm with more than 400 attorneys in Washington, DC, New York, and Los Angeles.

Salary Cuts at Kaye Scholer

joshua — Wed, 13 Jan 2010 18:45:14 +0000

Kaye Scholer is cutting first year associate salaries to $145k, but unlike many other firms they aren’t doing it under the guise of abandoning lockstep compensation. Additionally, any associate that hits their billable hour target by December will be getting a bonus that should bring them back to or above $160k. In the meantime, associates that hit 1800 hours last year will be getting their lockstep raises, and Kaye Scholer has announced bonuses ranging from $20k to $40k for 2009.

In order to qualify for the 2009 bonus, associates must have billed 2200 hours (for $20k) and 2400 hours (for $40k), but the interesting kicker is that all classes are receiving the same bonus, providing they hit the targeted number of hours. For junior associates that made the goal, this is an above market bonus, although it’s a bit light for senior associates in the 2200 hour category.

Kaye Scholer was founded in 1917 by Benjamin Kaye and Jacob Scholer. The firm has more than 500 attorneys in eight offices located in New York, Chicago, Frankfurt, London, Los Angeles, Shanghai, Washington DC, and West Palm Beach.

Salary Cut at Pillsbury Winthrop

joshua — Thu, 07 Jan 2010 16:54:37 +0000

Pillsbury’s first year associates outside of New York are receiving a salary cut, down to $145k. Any first year that bills in excess of 1950 hours will receive an additional $15k bonus. First years in the New York office will continue to receive $160k.

Salaries for 2010 have not yet been set and for the moment all associates are being paid at 2009 levels. When compensation levels are set, any raises will be made retroactive to January 1. In addition, 2009 bonuses will be paid at the end of this month.

Pillsbury Winthrop Shaw Pittman is an international law firm with offices located throughout the US and globally, including key financial centers New York, London, Tokyo and Shanghai.

Morning Roundup

joshua — Wed, 06 Jan 2010 12:15:12 +0000

Good morning! Today is Wednesday, January 6, and here’s a look back at yesterday’s news.

A federal judge has upheld most of a new law regulating tobacco companies and advertising…

Raymond Mullady has moved from Orrick to Blank Rome…

Blank Rome in turn has lost four IP lawyers to Sterne Kessler…

Dechert announced its bonuses and 2010 compensation….

and there’s new leadership in Skadden’s Chicago office…

Weil Gotshal Bonuses

joshua — Wed, 23 Dec 2009 19:33:43 +0000

Weil Gotshal is paying most of its associates on the Sullivan & Cromwell scale – $7500 for the first years up to $33k for the most senior – but some of the senior associates who are on Santa’s nice list will be getting a bit more. At the top of the scale, bonuses for about 25% of the most senior associates will hit the $50k mark. Weil is also bumping everyone up a notch for 2010 salaries.

Weil, Gotshal & Manges is an international law firm headquartered in New York City. It is one of the largest and most highly regarded law firms in the world, with approximately 1,300 lawyers and gross annual revenue in excess of $1.7 billion.

Salary Thaw at Akin Gump

joshua — Mon, 21 Dec 2009 21:57:20 +0000

Akin Gump has lifted its salary freeze and is planning to pay out bonuses, according to a memo sent out by firm chairman, Bruce McLean. Of course, that’s based on Akin Gump’s compensation system which isn’t strictly a base salary. To earn market level salaries, associates must meet quarterly billed hour quotas. That said, even the base salary isn’t bad, compared to some of the salary cuts we’ve been seeing lately.

If anyone has information on the Akin Gump bonuses, we’re anxious to hear it. You can send us an anonymous tip here.

Akin Gump Strauss Hauer & Feld LLP was founded in Dallas in 1945 by Robert Strauss and Richard Gump. The firm now numbers more than 900 attorneys and advisers in the United States, Europe, Asia and the Middle East.

Holland & Knight is the Next to Abandon Lockstep

joshua — Fri, 18 Dec 2009 21:46:28 +0000

I think it’s time for some new terminology. Lockstep compensation referred in the past to associates moving up in pay scale in “lockstep” with their contemporaries. All associates from the same class got the same raise, year after year. But it also holds another connotation – that all biglaw firms move together in lockstep when it comes to associate compensation, in order to not be left behind in what used to be fierce competition for the top graduates each year. Well the firms are still in “lockstep”, but now they’re marching together away from class based yearly pay raises and into merit based systems.

Holland & Knightis the latest firm to join the lockstep march away from lockstep compensation. The firm is moving toward a merit based system but unlike the three tiered system being floated by many of its competitors, H&K will go to an individualized system that they believe is more fair to the attorneys. In a bizarre twist (and a cutting edge use of the English language) H&K characterized the systems being adopted by others as being uncertain, providing little stability for associates, and said “… we’re moving to a system with a lot of quantitative and subjective factors.” Setting aside for the moment that a system using subjective factors to determine salaries is not likely to be universally accepted as fair, certain or stable, there’s also the interesting contradiction between quantitative and subjective factors. Does anyone else think this sounds like being “a little bit pregnant”?

H&K, again like nearly all its contemporaries, is using this time to cut first year salaries. In addition to the overall salary cut that happened in July, first year associates are taking another ding, dropping down to $130k.

Holland & Knight is a law firm with more than 1,150 lawyers in 23 US offices. Foreign offices include Beijing, China, and Mexico City, Mexico, with representative offices in Caracas, Venezuela, and Tel Aviv, Israel.

Stroock Pays Bonuses, Lifts Salary Freeze

joshua — Thu, 17 Dec 2009 22:37:36 +0000

Stroock is handing out bonuses this year, and like so many before them, they’re paying on the Cravath schedule. That is, any associate that hit their billable hours target of 1900 will get a Cravath size bonus and the firm says that those that “made extraordinary contributions to the firm” will get a bit more. As a reminder, the Cravath scale ranges from $5k for first year associates up to $30k for seniors.

The more significant news from Stroock is the lifting of the salary freeze. All classes will advance next year and receive a pay bump accordingly.

Stroock & Stroock & Lavan LLP is based in New York City, with approximately 350 lawyers in three offices, including Miami and Los Angeles. It was founded in 1876.

Seyfarth Shaw Abandons Lockstep

joshua — Thu, 17 Dec 2009 18:54:12 +0000

Like many firms before it, Seyfarth Shaw is abandoning lockstep starting in 2011. Details haven’t been released, not even to the associates who must now spend next year trying to hit performance goals that have not been announced in order to receive salaries that have not yet been determined but that’s just part of the charm of working for biglaw. 2010 salaries will be based on 2009 performance and although exceptional associates can expect a 5% salary increase next year, those that merely met expectations will be rewarded with a 5% pay cut. Exceeding expectations without being exceptional is good enough to get you a salary freeze, so a second year associate that is exceeding expectations can expect to be paid the same as a wet behind the ears first year and a second year associate meeting expectations will be paid less than colleagues that haven’t had the pleasure of prepping their first document. Seyfarth Shaw’s web page says that they pay “competitive salaries”. Who knew that meant competing with each other to avoid being paid less than a first year…

I’m not sure which is more insulting – getting a 2010 pay cut for meeting 2009 expectations, or being told that at the end of 2009.

UPDATE: A tipster reminded me that Seyfarth Shaw has already cut the salaries of the incoming first year associates by five to ten percent, so meeting expectations isn’t going to drop your salary below that of a first year associate after all. Well, isn’t that a relief.

Sonnenschein Abandons Lockstep and Cuts Staff

joshua — Tue, 15 Dec 2009 22:30:57 +0000

There are two unconnected stories coming out of Sonnenschein today.

The first is that the firm has made staff cuts 14 days before Christmas. The firm has confirmed the staff layoffs to abovethelaw.com but no details were provided on the number of staff cut. No associates were cut.

The firm also laid out the outlines of its new compensation plan being implemented in early 2010. I say outlines, because important details like base compensation seem to have been overlooked. Like many other firms, Sonnenschein is moving to a three tiered merit based system. The firm says that bonuses based on merit will make up a larger part of associate salaries. Although everyone certainly appreciates a large bonus, it does make financial planning a bit more difficult – particularly when nobody yet knows what the baseline pay will be.

Sonnenschein Nath & Rosenthal is an international law firm headquartered in Chicago with 13 offices and 800 attorneys around the world.

WilmerHale Ditches Lockstep

joshua — Tue, 15 Dec 2009 20:12:44 +0000

WilmerHale is abandoning lockstep compensation and adopting a merit based three tiered system that should look familiar to anyone that’s read these pages over the past few months. The new compensation plan, cleverly titled “career advancement program” or “CAP” will take effect in 2012. But not to worry, WilmerHale has found another time honored method of holding labor costs down in the mean time. Next years salaries look remarkably like this years – yes, the firm is instituting a salary freeze for everyone but second year associates, who will receive a $5k bump in compensation.

Wilmer Cutler Pickering Hale & Dorr LLP has twelve offices across the US, Europe and Asia. It was created in 2004 through the merger of the Boston’s Hale & Dorr and the Washington’s Wilmer Cutler & Pickering, and employs more than 1,100 attorneys worldwide. As of 2008, it was the 23rd largest law firm in the world in terms of revenue.

More Bonuses

joshua — Thu, 10 Dec 2009 17:43:22 +0000

Two more firms have announced bonus schedules. Fried Frank’s bonuses for New York associates look and feel a lot like the Sullivan & Cromwell bonuses, which were of course a very slight modification to the Cravat scale most firms have been using. Boies Schiller & Flexner, however, is paying bonuses well above the market rate.

Fried Frank’s New York associates will receive bonuses up to $35,000. These bonuses are based on a number of discretionary factors. The $35k is the same cap that Sullivan & Cromwell and the firms that have followed it are using, but firms on the Sullivan scale base bonuses strictly on seniority. No word yet on what associates outside the big apple can expect.

Ahhh but the bonuses at Boies… Let’s just say that the top bonus for second year associates at Boies is $70k. That should give some idea of the difference in scale between Boise bonuses and the market rate. Boies is using a formula based on revenue generated for the firm and base salary. Bonuses are equal to 30% of the revenue generated, minus base salary. Bill more hours, make more money. Bring in more clients, make more money. As if that’s not enough, Boies is also paying above market rate base salaries, with first years starting at $174k. Oh, and did we mention – first year associates who started after September of this year are getting a $5k bonus.

McDermott Will & Emery Issue More Deferrals

joshua — Wed, 09 Dec 2009 01:28:12 +0000

McDermott Will & Emery associates were supposed to start work in January, but many are now being deferred again. Details are still sketchy, and it appears that no firm dates have been given yet. Associates will be brought in when their respective practice groups need them. In the meantime, they will draw a $5000 per month stipend.

Is it just me, or is it a bit harsh to issue these deferrals so late in the game? Presumably the affected associates, should they have been lucky enough to secure gainful employment while waiting to start work, have already informed their employers that they would be leaving in January. It’s certainly not inconceivable that many of them made holiday plans based on the presumption that they would be drawing a much larger salary come January.

This must be how it feels to wake up Christmas morning and find a lump of coal in your stocking.

DLA Piper Abandons Lockstep

joshua — Tue, 08 Dec 2009 21:40:19 +0000

DLA Piperhas joined the lockstep march away from lockstep compensation. In a memo today, the firm outlined its new associate compensation package. In broad terms, it looks familiar. The overall structure resembles the plan published recently by Orrick, a three tier system with levels within the tiers. Unlike Orrick’s plan, however, DLA Piper associates will have 15% of their pay withheld each year and will have to earn it back by achieving what amounts to a certain grade on their performance review. True, the grades are numerical, not alphabetical, but the descriptions are reminiscent of grade descriptions commonly found in law school. What’s more, DLA Piper outlined the percentage of associates they expect to make each grade, leading AboveTheLaw to refer to it as a grading curve. You can also see a copy of the memo at ATL. It’s not clear that it is a curve, however, since there’s no indication that the expected percentage of associates at each grade level is fixed.

Orrick Moves Away From Lockstep

joshua — Thu, 03 Dec 2009 22:50:06 +0000

Orrick presented its new compensation plan to its associates today, and there was much rejoicing. Unlike many firms that cut base salaries with discretionary bonuses, Orrick kept the $160k starting salary for first year associates. After that associates will be arranged in three tiers, associates, managing associates and senior associates. The three tier system is something we’ve seen from several firms that have abandoned lockstep this year, but Orrick also has multiple pay scales within each tier. At the high end, senior associates will pull down a base salary of $250k, plus bonuses. In addition, Orrick says it will pay bonuses at market rate plus an additional discretionary amount of 5-15%, depending on tier. This is a very competitive structure and should make Orrick a strong competitor for recruitment. The salary changes will begin in 2010 but the firm says it will pay bonuses for 2009 based on this structure.

Chadbourne & Parke Restoring Salaries

joshua — Mon, 30 Nov 2009 20:29:57 +0000

In April, Chadbourne & Parke cut associate salaries and promised that some or all of the money would be returned based on each associates contribution to the firm. Now it appears that all of the money cut from salaries will be restored in a lump sum payment in early 2010. On the one hand, this appears to be good news for a legal industry that has been struggling along with the rest of the economy. Chadbourne had a ready made excuse to keep some of the money but isn’t doing it. On the other hand, half of Chadbourne’s class of 2009 is still deferred indefinitely.

New York’s Chadbourne & Parke LLP, founded in 1902 by Thomas L. Chadbourne, employs 400 lawyers and tax advisers in 13 offices in nine countries. Chadbourne is best known for its global practice in project finance and energy, international insurance and reinsurance practice, multi-jurisdictional litigation in courts from Rhode Island to Russia, and corporate transactions.

Sutherland Ditches Lockstep

joshua — Mon, 23 Nov 2009 22:29:05 +0000

Atlanta based Sutherland is joining the rush to abandon lockstep compensation and is moving to a merit based system similar to the one other top firms have adopted or are planning to adopt. Associates will be classified as junior, mid-level and senior, with the levels roughly corresponding to their time in the firm. Unlike lockstep compensation increases, however, it’s possible for an associate to move forward at a faster or slower pace than his or her classmates, based on demonstrating proficiency at certain core skills. Sutherland says this change is designed to meet the wishes of their clients, many of whom are unwilling to continue to pay billing rates based solely on the length of time an associate has been with the firm.

Additionally, Sutherland is cutting the pay for new associates in its Atlanta office, but associates in its other offices will continue to earn $160k. Atlanta associates will now start at $135k.

Haynes & Boone Cut First Year Salaries

joshua — Mon, 23 Nov 2009 19:40:58 +0000

First year associates at Haynes & Boone will be starting after Thanksgiving, but at a reduced rate. The firm emailed its incoming associates and informed them that the salary for first years has been cut to $145k. The firm says that it has not decided on a pay structure for 2010 yet so this may be a temporary cut, but that seems unlikely in today’s market. The rush to $160k was fueled by competition for the best students coming out of law school and was coupled with other perks and benefits, lavish events and other promotions designed to win the hearts and minds of the next generation of lawyers. With law school enrollment on the rise and the number of biglaw jobs on the decline, the tables have turned a bit and firms don’t need to persuade recent graduates to come work for them. A job offer is enough.

Clients are also pushing for lower hourly rates, particularly from first year lawyers who are essentially getting on the job training at the clients expense. In today’s economy, firms are increasingly catering to the wishes of their clients in order to get the business and so more and more firms are offering cut rates for first year hours, or moving to alternative fee structures. None of this adds up to returning salaries to 160k next year for Haynes & Boone first year associates.

That doesn’t mean it won’t happen, and if it does happen I will happily eat my words.

Hard Times at Seyfarth Shaw

joshua — Fri, 20 Nov 2009 20:14:47 +0000

Seyfarth Shaw has told half of its deferred associates that they will not be starting in January as planned. Instead, they are being redeferred to October 2010, and will receive a stipend of $2000 dollars per month starting in January. If that wasn’t enough bad news, Seyfarth is also cutting the salaries of first year associates by five to ten percent. One can only hope that the deferral stipends aren’t subject to those cuts.

Yes, it’s nice to get paid $2000 a month to do nothing, and yes, it’s possible in some parts of the country to live on that kind of money, but in general biglaw doesn’t have offices there. Keep in mind that we’re talking about lawyers that graduated in June, got a job, and are now having to wait almost a year and a half to start working – assuming that things improve enough to start at all. With more firms pushing start dates back to October of next year, are there going to be jobs available for the 2010 grads?

Reed Smith Asks Non Equity Partners for a Tithing

joshua — Mon, 16 Nov 2009 18:37:38 +0000

Render unto Caesar what is Caesar’s, or so the expression goes. Now Reed Smith is asking much the same of its non equity partners. Non equity partners are being asked to contribute as much as 15% of their base salary to the company or risk losing partnership status. Gregory Jordan, the firm’s chairman, had this to say about the plan. ““It’s about not just saying you’re a partner, but actually being one. It means something. It revolves around risk-sharing in the business.” Jordan defended the move, saying that it isn’t a means to get a quick cash infusion into the company, and going on to say that Reed Smith is having “a very strong year”.

A very strong year? That doesn’t square up with the history.

In March, Reed Smith laid off 100, 26 lawyers and 74 staff.

In May, Reed Smith cut all US associate salaries by 10%.

In August, Reed Smith cancelled on campus interviews at Fordham law at the last minute, prompting the school to ban Reed Smith from on campus recruitment for five years.

Last week, Reed Smith cut the salaries of incoming associates by 20% and lowered their billing rates for work done by new associates. This came two weeks after announcing a plan to move away from lock step.

If this is a very strong year, I would hate to see what things look like in a bad year.

Morning Roundup

joshua — Wed, 11 Nov 2009 18:13:49 +0000

Today is Wednesday, November 11. At 11 am on November 11, 1918, all fighting stopped in World War 1 and Woodrow Wilson proclaimed the day Armistice Day. It wasn’t until Veterans started to return from World War 2 that the day became a day to celebrate all of our vets.

Here’s a look back at yesterday’s news…

Scott Rothstein was spotted and filmed having lunch and sounding upbeat…

Covington & Burling are freezing associate salaries…

Katten split its deferrals into three groups, with group number three losing their jobs…

Reed Smith cut associate salaries….

and the DC Sniper was executed by lethal injection last night….

In memoriam for Veterans Day:

Michael Cahill

Eduardo Caraveo

Justin DeCrow

John Gaffaney

Frederick Greene

Jason Hunt

Amy Krueger

Thomas Nemelka

Michael Pearson

Russell Seager

Francheska Velez

Juanita Warman

Kham Xiong

Salary Freeze at Covington & Burling

joshua — Tue, 10 Nov 2009 21:43:30 +0000

Stick this one in the “It could be worse…” file.

At an all associates meeting today, Covington & Burling announced a freeze on associate salaries for all offices other than New York. Although Covington’s associates are probably not thrilled with the news, things could be worse. If Covington can reign in costs without having to lower salaries or cut jobs, it puts them a step ahead of most firms.

Back in April, Covington & Burling’s Diversity Update included a statement that they had not frozen salaries. It took longer than a month, but now we can finally link back to it.