Lawyers

Law Firms Feeling Effects of Raising Salary Rates
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

law firm salary effect

Summary: Law firms are reporting the repercussions of raising first year associate salaries up to $180K with a hit to their profit growth.

In July, Big Law went through a big transition that hadn’t happened since 2007. First year associates got the big salary hike they had been craving, which was an 11 percent increase at the first law firm to announce the new salary rate, Cravath Swaine & Moore.

  
What
Where


Law firms across the country of all sizes announced similar changes to their salary rates in an attempt to remain competitive with Cravath. With increases across the field, profits have been minimal at many law firms.

The third quarter report by Citi Private Bank for 2016 showed slow profit growths. Senior Vice President and client adviser at the Citi Law Firm group, David Altuna said, “This is the first quarter we have an opportunity to see that.” The salary hike in July has caused expenses to grow faster across the industry, eating into any profits. The top law firms have been able to handle the increase better but all law firms felt the strain of higher lawyer compensations. Altuna said, “It is quite clear that the AmLaw 50 is outperforming. They’re reporting the highest revenue growth.”

Profits have increased during the last quarter but not as much as a year ago. Overall, law firms experienced growth supported by rate growth and modest increases for demand and collections of money. Altuna explained, “We’re seeing momentum slow. I can point to two numbers: One is demand, which is measured by the total billable hours. It was up 1.8 percent at the end of the first quarter and now it’s only up 0.3 percent.”

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




Another factor that affected profits this quarter was the presidential election. With a new president would come new regulations so many of the firms dealing with clients in regulatory work were required to slowdown and wait-and-see what happened, especially on top of the Brexit vote.

The report is based on 188 law firms, 79 of which are AmLaw 100, 52 are AmLaw 200, and 57 additional firms.



Do you think some law firms jumped to giving the salary increase without checking their budgets? Tell us your thoughts in the comments below.

To learn more about the first year salary increase, read these articles:

Photo: paydayloans.co.uk



 

RELEVANT JOBS

Licensed Virginia Attorney

USA-DC-Washington

Small real estate law firm seeks to fill a full-time position for a Virginia licensed attorney with ...

Apply now

Licensed Virginia Attorney

USA-VA-Charlottesville

Small real estate law firm seeks to fill a full-time position for a Virginia licensed attorney with ...

Apply now

Licensed Virginia Attorney

USA-VA-Norfolk

Small real estate law firm seeks to fill a full-time position for a Virginia licensed attorney with ...

Apply now

Associate Attorney

USA-CA-San Clemente

We are a client-focused growing south Orange County California solo-practitioner law firm with a pra...

Apply now

BCG FEATURED JOB

Locations:

Keyword:



Search Now

Public Finance Associate Attorney

USA-WA-Seattle

Seattle office of a BCG Attorney Search Top Ranked Law Firm seeks a public finance associate attorne...

Apply Now

Complex Civil Litigation Associate Attorney

USA-NY-New York City

New York City office of boutique firm seeks associate attorney with 4-6 years of complex civil litig...

Apply Now

Mid-Senior level Corporate Capital Markets/Securities Associate Attorney

USA-IL-Chicago

Chicago office of a BCG Attorney Search Top Ranked Law Firm seeks mid-senior level corporate capital...

Apply Now

Most Popular

SEARCH IN ARCHIVE

To Top