Salary increase question

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citylawyer1010
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Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 12:58 pm

Hi all,

I have been at my firm for almost one year now (came on as a first year associate). This firm has approx 80 attys and has a decent reputation. When I started, I accepted their salary offer of 70k. Now after a year, I would like to request an increase. Market statistics show that 2nd year associates in my market at a midsized firm make approx 90-110k. Should I request 90k? I feel like it may seem unreasonably greedy considering how bad the market is but would like your thoughts. Thanks

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A. Nony Mouse
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Re: Salary increase question

Postby A. Nony Mouse » Sun Jul 14, 2013 1:11 pm

I think asking for a nearly 30% raise after your first year is a bit much, even if the market rate for 2nd year associates is higher than what you're making. My impression is that biglaw firms paying market rate ($160K) bump 2nd yr associate salaries by $10K (though the numbers I've found on that are a couple of years old). Outside of law, the average annual raise is 3%.

But as a negotiating tactic, I have no idea.

fluffythepenguin
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Re: Salary increase question

Postby fluffythepenguin » Sun Jul 14, 2013 1:13 pm

I have no idea what raise you can ask for, but thought this article might be of interest to you.

http://online.wsj.com/article/SB1000142 ... 91660.html

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 1:23 pm

fluffythepenguin wrote:I have no idea what raise you can ask for, but thought this article might be of interest to you.

http://online.wsj.com/article/SB1000142 ... 91660.html


Pretty cool. Thanks.

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 1:36 pm

I guess there is no standard for this?

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A. Nony Mouse
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Re: Salary increase question

Postby A. Nony Mouse » Sun Jul 14, 2013 1:38 pm

My impression is that unless you're talking lockstep biglaw market rate, there isn't a lot of standardization. But that's just a gut impression.

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 1:41 pm

I'm underpaid compared to the average class of 2012 lawyer based on the stats. So maybe that's something.

anonymous2012
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Re: Salary increase question

Postby anonymous2012 » Sun Jul 14, 2013 1:43 pm

Consider your billables and collectables. If you have started billing at a higher rate then a corresponding salary increase may be warranted. Also consider any bonus money you receive.

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 1:49 pm

I bill 250 an hour. I think I prob work for 25 an hour.

Sup Kid
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Re: Salary increase question

Postby Sup Kid » Sun Jul 14, 2013 2:00 pm

citylawyer1010 wrote:I bill 250 an hour. I think I prob work for 25 an hour.

If you're only making $25/hour and getting paid $70,000 (not including any benefits), that means you're working 2800 hours/year... I think you need to recheck your math.

As for your original question, I think its worth having a discussion with a second or third year associate you're close to before asking for anything. In a firm of 80 attorneys, I'd bet that they have some sort of standard raise for each year you work, and its best to see what that is before throwing out a figure. That said, even if they have a standard raise, you can ask for slightly more, if that's what the market is doing and if you are billing (and the firm is realizing) a lot of hours.

Hutz_and_Goodman
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Re: Salary increase question

Postby Hutz_and_Goodman » Sun Jul 14, 2013 2:01 pm

citylawyer1010 wrote:I bill 250 an hour. I think I prob work for 25 an hour.


This is a pretty big disparity, but keep in mind that for the firm the comparison is not what you bill vs. what you take home but instead what you bill vs. what they would have to pay someone else to bill what you bill. A raise of 3% would be like $2,000 a year. I think if it was me I would approach them with 85k as the figure, assuming that I could probably get them to give me 80k (which is a raise of ~15%).

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A. Nony Mouse
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Re: Salary increase question

Postby A. Nony Mouse » Sun Jul 14, 2013 2:04 pm

Hutz_and_Goodman wrote:This is a pretty big disparity, but keep in mind that for the firm the comparison is not what you bill vs. what you take home but instead what you bill vs. what they would have to pay someone else to bill what you bill. A raise of 3% would be like $2,000 a year. I think if it was me I would approach them with 85k as the figure, assuming that I could probably get them to give me 80k (which is a raise of ~15%).

Yeah, I wasn't suggesting the OP ask for 3% - like I said, that's outside of law; the biglaw lockstep increase is a little over 6% - just providing some context.

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 2:07 pm

This is my first real job so I don't really have experience.

c3pO4
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Re: Salary increase question

Postby c3pO4 » Sun Jul 14, 2013 2:26 pm

negotiating your first raise can be tough. the way to think about it is not really to focus on the "market" around you or what people normally make. that is relevant but only if your employer actually believes you could go and get hired at another firm that pays more. given the current legal market, you probalby have 0 credibility on that question and if you could get a job at a firm that pays 20K more, you wouldn't be at your current firm.

What you should focus on in your negotiation is what VALUE you bring to the firm. That is, like people said based on what you are billing and what the firm is collecting, is it still PROFITABLE for the firm to give you X raise. What is the sweet spot that both maximizes your compensation as well as the firm's PROFIT. There is a sweet spot that works for both your and the firm's interests, and a good negotiator will find that sweet spot. Remember they can charge mroe for your hours in year 2 than in year 1, plus giving you a reasonable raise will make sure you are a happy and productive employee. Your value is not determined by what other lawyers in your market make. It's determined by what you bring in to your firm vs what you cost them to pay you (or to replace you). You are in a tough spot too because given the fact that there are probably hundreds if not thousands of qualified unemployed grads who could take your place, you are easily replaceable. How much training did you get in the 1st year? Enough to make it not worthwhile for your employer to find someone else willing to work for less? Are you 5% more profitable to the firm in year 2 than in year 1? in that case, a 5% raise is your CEILING, and since the firm wants to get more profit in year 2 than year 1, imagine you would probably reasonably deserve a 2.5% raise. If you are 10% more profitable in year 2, you have a good argument for a 4-5% raise. Think about these questions because that is what your employer is considering and weighing in deciding by how much they are willing to raise your salary.

Based on your situation, I think targeting a 5% raise is a good aggressive strategy. Also keep in mind you are creating a precedent for raises for future years in this current negotiation, so fi you settle for a small ~2% raise, you make it very unlikely that you will be able to get a bigger raise in the future. If you want to end up at 5%, you should probably begin the negotiations above that, around 10%.

The thing about law school and lawyers is that as a group, we are terrible at business. This is unfortunate since law is... a business. Good luck!

It seems to me you need to change your entire mindset. Fair/greed/etc. has nOTHING to do with it. A salary negotiation is a determination of value by two parties with both divergent and convergent interests. If you can a) figure out your value and what compensation is appropriate and b) credibly present that case to your employer and get them on board, you give yourself the best shot.
Last edited by c3pO4 on Sun Jul 14, 2013 2:34 pm, edited 5 times in total.

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guano
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Re: Salary increase question

Postby guano » Sun Jul 14, 2013 2:28 pm

citylawyer1010 wrote:I'm underpaid compared to the average class of 2012 lawyer based on the stats. So maybe that's something.

It means you're at a firm that pays below average salaries. You certainly shouldn't expect a market average salary increase

Deal with it

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 2:47 pm

c3pO4 wrote:negotiating your first raise can be tough. the way to think about it is not really to focus on the "market" around you or what people normally make. that is relevant but only if your employer actually believes you could go and get hired at another firm that pays more. given the current legal market, you probalby have 0 credibility on that question and if you could get a job at a firm that pays 20K more, you wouldn't be at your current firm.

What you should focus on in your negotiation is what VALUE you bring to the firm. That is, like people said based on what you are billing and what the firm is collecting, is it still PROFITABLE for the firm to give you X raise. What is the sweet spot that both maximizes your compensation as well as the firm's PROFIT. There is a sweet spot that works for both your and the firm's interests, and a good negotiator will find that sweet spot. Remember they can charge mroe for your hours in year 2 than in year 1, plus giving you a reasonable raise will make sure you are a happy and productive employee. Your value is not determined by what other lawyers in your market make. It's determined by what you bring in to your firm vs what you cost them to pay you (or to replace you). You are in a tough spot too because given the fact that there are probably hundreds if not thousands of qualified unemployed grads who could take your place, you are easily replaceable. How much training did you get in the 1st year? Enough to make it not worthwhile for your employer to find someone else willing to work for less? Are you 5% more profitable to the firm in year 2 than in year 1? in that case, a 5% raise is your CEILING, and since the firm wants to get more profit in year 2 than year 1, imagine you would probably reasonably deserve a 2.5% raise. If you are 10% more profitable in year 2, you have a good argument for a 4-5% raise. Think about these questions because that is what your employer is considering and weighing in deciding by how much they are willing to raise your salary.

Based on your situation, I think targeting a 5% raise is a good aggressive strategy. Also keep in mind you are creating a precedent for raises for future years in this current negotiation, so fi you settle for a small ~2% raise, you make it very unlikely that you will be able to get a bigger raise in the future. If you want to end up at 5%, you should probably begin the negotiations above that, around 10%.

The thing about law school and lawyers is that as a group, we are terrible at business. This is unfortunate since law is... a business. Good luck!

It seems to me you need to change your entire mindset. Fair/greed/etc. has nOTHING to do with it. A salary negotiation is a determination of value by two parties with both divergent and convergent interests. If you can a) figure out your value and what compensation is appropriate and b) credibly present that case to your employer and get them on board, you give yourself the best shot.


Wow, thanks for this. Don't most employees get a 2% increase each year? Col, etc? I guess I'm lucky just having a job.

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A. Nony Mouse
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Re: Salary increase question

Postby A. Nony Mouse » Sun Jul 14, 2013 2:54 pm

citylawyer1010 wrote:Wow, thanks for this. Don't most employees get a 2% increase each year? Col, etc? I guess I'm lucky just having a job.

In this economy, raises aren't routine.

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Jsa725
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Re: Salary increase question

Postby Jsa725 » Sun Jul 14, 2013 3:06 pm

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Last edited by Jsa725 on Sun Oct 26, 2014 3:09 pm, edited 1 time in total.

mrsmartypants
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Re: Salary increase question

Postby mrsmartypants » Sun Jul 14, 2013 3:58 pm

Wait, you got unbanned after that little anon-sockpuppet incident?

bdubs
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Re: Salary increase question

Postby bdubs » Sun Jul 14, 2013 4:33 pm

FYI - I'm pretty sure biglaw bumps come more than 12 months after most people start. I think most of them come right around the new year, so about 14-15 months into the job. I'm also relatively sure that billing rates change from first year to second year at the new year as well.

Sounds like you started pretty early so you might not be considered a second year until your firm revises its bill rates again which might not be for another few months.

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 4:34 pm

Jsa725 wrote:IMO; find out whether the firm automatically increases salaries on a per-year basis by asking other associates (Y2, Y3, etc...). You can do it rather causally, perhaps while eating lunch, and not person-specific by asking, "hey bob, do you know if the firm gives annual raises?" a simple yes or no answer would suffice; however, it would be rude to ask "how much" if the answer is yes. You may be able to get more info (like if bob had to ask or if the raise was just given to him) if the conversation steers itself that way.

Also, if the firm automatically bumps you from $70k to $80k, you will feel like a jackass by asking for a 5-10% raise w/o first finding out the firms policy.

Edit: you also have a year of exp. under your belt and if the market is truly $90-110 for Y2 associates I'd also polish my résumé and quietly start searching to see if any other firms are hiring. You may get no bites, but you may also find out what other firms are looking for in potential laterals which is good info to know.



I used stats offered by Robert half legal salaries 2013. They provide general market stats and then ask you to multiple that by a variable with corresponds with a city's col

Also, aren't I worthless with 1 year of experience. How much do I need?

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BVest
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Re: Salary increase question

Postby BVest » Sun Jul 14, 2013 4:42 pm

anonymous2012 wrote:Consider your billables and collectables. If you have started billing at a higher rate then a corresponding salary increase may be warranted. Also consider any bonus money you receive.

citylawyer1010 wrote:I bill 250 an hour. I think I prob work for 25 an hour.


I think what anon2012 meant was that if you came on at 70k and were being billed at 250/hr, then look at what you're billed at now. So if you're now billing at 300/hr, that's a 20% increase, thus a corresponding 20% increase may be warranted (or at least something you can justify asking for).

If they're not billing you any more than before, look for something else to hang your hat on. For example, have your billable hours increased from your first quarter to your most recent quarter? If so, by what percentage. If more than 14% (which would be 10k), then try for a corresponding raise.

The other thing you have going for you now is known product, but this is much less quantifiable. When they first took you on at 70k, unless it was an at-will offer, they were also assuming the risk that you can lawyer worth a damn, and they priced that risk into your salary (driving it down). Now that you have proven yourself, they're assuming less risk by retaining you going forward, thus they should be willing to pay more. As far as how to work that into negotiations, it's an aside about how your reviews have all been strong and since they know the quality of your work they can see that you are worth the higher salary. (Of course this assumes that you've performed well.)

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Jsa725
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Re: Salary increase question

Postby Jsa725 » Sun Jul 14, 2013 4:52 pm

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Last edited by Jsa725 on Sun Oct 26, 2014 3:09 pm, edited 1 time in total.

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guano
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Re: Salary increase question

Postby guano » Sun Jul 14, 2013 5:01 pm

citylawyer1010 wrote:I bill 250 an hour. I think I prob work for 25 an hour.

Keep in mind that this doesn't mean their profit on your work is $225/hour

To begin with, those $70k in wages cost more than $70k, because of various taxes and fees
Then there's whatever support staff is available to you, and various costs such as rent, electricity, cleaning services, etc.

And that's not even taking into consideration that $ billed =/= money received.

citylawyer1010
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Re: Salary increase question

Postby citylawyer1010 » Sun Jul 14, 2013 6:25 pm

Thanks guys. Don't get me wrong i feel super fortunate to have a decent paying job as a tier 2 grad.




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