Trying to understand the trajectory of BigLaw salaries
Am I the last one to hear that the gargantuan national law firms have raised first-year salaries yet again?
I heard or read somewhere that Irell & Manella started the trend by bumping first-year salaries for the current class to $135,000 per year. (I was vaguely aware that until then the national BigLaw starting salary had been around $125,000.) Not only did a bunch of BigLaw firms follow suit, but some twelve or so New York firms decided to raise the ante by pushing salaries even further, to $145,000.
This weekend, prompted by an op-ed in the Wall Street Journal, a few respected voices in the legal blogosphere weighed in on the change. The op-ed suggested that law firms are just adding associates to increase their "leverage" (i.e. net profit from associates that partners get to take home), and that having hired more associates the firms simply assign more associates to work on projects than is necessary. Larry Ribstein's post here seems to play around with that idea a little bit to see if it was tenable, and Ribstein suggests that law firms over-recommend legal services when something else would suffice.
Bruce MacEwen gives Prof. Ribstein's observation a nod, but proceeds to conclude that the WSJ op-ed's theory is still absurd; young associates (unlike their more senior counterparts) just don't make much if any money for firms, and clients won't tolerate firms that churn projects. MacEwen suggests that the high salaries of the premium NYC firms reduce turnover, provide an incentive to work harder, and draw out the highest quality workers. He also suggests some cultural angles to the story. Steve Bainbridge doesn't believe the economic interpretation suggested by the WSJ op-ed, either.
It's all a little through-the-looking-glass from my perspective. Those New York kids would sneer at my salary now and guffaw at what I made in my first year of law practice. But I sure wouldn't trade places with them. I guess the good news is that there are places in law for each of us to do good work. I'm with Gerry Riskin on this:
I said then and I will say it again that salaries alone do not buy you motivation, commitment, drive and the desired peak performance. They buy you compliance with extremely high billable hour targets. I believe the long term winners have to be competitive in their salaries but also must learn how to enhance the satisfaction of both lawyers and the clients they serve.
Supplement: Arnie Herz's two cents on this point are worth a lot more than two cents.
