Biglaw Salaries going up?

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wildhaggis
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Re: Biglaw Salaries going up?

Postby wildhaggis » Fri Apr 24, 2015 1:42 pm

Big Shrimpin wrote:
Hutz_and_Goodman wrote:I find it really hard to believe that NYC big law will hit the 10 year mark without any raise in 1st year comp. The number of law grads is way down and the percentage of law grads who want to and can do the work needed is (conservatively) less than 20% of grads.


what's the source of pressure to raise base comp?

firms don't give AF cuz they're still gonna get top talent

and at a time when firms are racing to increase PPP, decrease costs and retain clients who don't want to pay for training juniors, there's just absolutely no reason to raise base comps for juniors

fck, before that happens I could see some sort of TTT "apprenticeship" where firms have a tranche of juniors that get paid like 80K to battle each other for a small % chance at a midlevel-esque position that starts at like 200K or something


Ask and you shall receive

http://abovethelaw.com/2013/10/more-jobs-with-better-training-but-at-lower-pay-welcome-to-the-future-of-biglaw/

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Cobretti
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Re: Biglaw Salaries going up?

Postby Cobretti » Fri Apr 24, 2015 1:45 pm

Big Shrimpin wrote:id be elated if i end up being wrong

im not wrong that often, tho

re last comment - we already have top-tier/boutiques with alt models above "market" and things haven't changed much, other than w&c responding to bigger bonuses

this is a business brah, it's a race to the bottom on junior associate comp when all the focus is on PPP

we're not special snowflakes entitled to top dollar...hell, lots of firms write-off juniors hours

also, r u all 0Ls/in LS?

2L here, relying more on my MBA/econ background ITT than anecdotes though.

You're absolutely right that its a business and that drives every decision, but if that's the case then why did bonuses get raised nearly across the board this year? Clearly firms felt pressure to pay out more, even though it directly raised expenses and decreased PPP.

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FSK
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Re: Biglaw Salaries going up?

Postby FSK » Fri Apr 24, 2015 1:46 pm

Cobretti wrote:
Big Shrimpin wrote:id be elated if i end up being wrong

im not wrong that often, tho

re last comment - we already have top-tier/boutiques with alt models above "market" and things haven't changed much, other than w&c responding to bigger bonuses

this is a business brah, it's a race to the bottom on junior associate comp when all the focus is on PPP

we're not special snowflakes entitled to top dollar...hell, lots of firms write-off juniors hours

also, r u all 0Ls/in LS?

2L here, relying more on my MBA/econ background ITT than anecdotes though.

You're absolutely right that its a business and that drives every decision, but if that's the case then why did bonuses get raised nearly across the board this year? Clearly firms felt pressure to pay out more, even though it directly raised expenses and decreased PPP.


They fired their future midlevels in 2008. NOw, they need midlevlels. They increased bonuses favoring midlevels & seniors the most. Not suprising at all.

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Cobretti
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Re: Biglaw Salaries going up?

Postby Cobretti » Fri Apr 24, 2015 1:50 pm

Desert Fox wrote:
Hutz_and_Goodman wrote:Flawschool kid: the # of JD grads has decreased and the % who have "elite" LSAT scores has decreased. So you have fewer bodies + fewer top performers.


I'm not entirely sure that decrease has been consistent among the elite LSAT scores. T14 median LSATs aren't down that much.

over the last few years the drop has been the largest for top scores: http://www.theatlantic.com/business/archive/2012/04/the-wrong-people-have-stopped-applying-to-law-school/255685/

BUT it looks like this year the trend reversed for the first time since applicants began dropping, so maybe supply is already reacting: http://www.slate.com/blogs/moneybox/2014/08/21/law_school_applications_more_students_with_high_lsats_are_applying.html

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Big Shrimpin
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Re: Biglaw Salaries going up?

Postby Big Shrimpin » Fri Apr 24, 2015 1:51 pm

huge M&A year and with all-time high PPP couldn't pay shit without looking absurd

but flexibility in bonus payouts allows firms to keep PPP higher on a downturn when they can pay shitbonuses without being locked into salary payouts

im no mba, so I defer to u on biz, but ive been in biglaw for a while and if history is an indicator of the future, esp if we had another downturn, i just don't see how u raise fixed cost like salary when u an keep it variable with bonuses (not even sure if that's right terminology but whatev)

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Cobretti
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Re: Biglaw Salaries going up?

Postby Cobretti » Fri Apr 24, 2015 1:51 pm

flawschoolkid wrote:
Cobretti wrote:
Big Shrimpin wrote:id be elated if i end up being wrong

im not wrong that often, tho

re last comment - we already have top-tier/boutiques with alt models above "market" and things haven't changed much, other than w&c responding to bigger bonuses

this is a business brah, it's a race to the bottom on junior associate comp when all the focus is on PPP

we're not special snowflakes entitled to top dollar...hell, lots of firms write-off juniors hours

also, r u all 0Ls/in LS?

2L here, relying more on my MBA/econ background ITT than anecdotes though.

You're absolutely right that its a business and that drives every decision, but if that's the case then why did bonuses get raised nearly across the board this year? Clearly firms felt pressure to pay out more, even though it directly raised expenses and decreased PPP.


They fired their future midlevels in 2008. NOw, they need midlevlels. They increased bonuses favoring midlevels & seniors the most. Not suprising at all.

so the raise for juniors was to be nice?

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Cobretti
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Re: Biglaw Salaries going up?

Postby Cobretti » Fri Apr 24, 2015 1:53 pm

Big Shrimpin wrote:huge M&A year and with all-time high PPP couldn't pay shit without looking absurd

but flexibility in bonus payouts allows firms to keep PPP higher on a downturn when they can pay shitbonuses without being locked into salary payouts

im no mba, so I defer to u on biz, but ive been in biglaw for a while and if history is an indicator of the future, esp if we had another downturn, i just don't see how u raise fixed cost like salary when u an keep it variable with bonuses (not even sure if that's right terminology but whatev)

You could be totally right that they might switch to more bonuses instead, but I'm not that worried about that. My point is that there is clear indicators of strong pressure to increase total comp, if that happens via larger bonuses going forward (on average) then so be it.

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Big Shrimpin
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Re: Biglaw Salaries going up?

Postby Big Shrimpin » Fri Apr 24, 2015 1:56 pm

Cobretti wrote:
Big Shrimpin wrote:huge M&A year and with all-time high PPP couldn't pay shit without looking absurd

but flexibility in bonus payouts allows firms to keep PPP higher on a downturn when they can pay shitbonuses without being locked into salary payouts

im no mba, so I defer to u on biz, but ive been in biglaw for a while and if history is an indicator of the future, esp if we had another downturn, i just don't see how u raise fixed cost like salary when u an keep it variable with bonuses (not even sure if that's right terminology but whatev)

You could be totally right that they might switch to more bonuses instead, but I'm not that worried about that. My point is that there is clear indicators of strong pressure to increase total comp, if that happens via larger bonuses going forward (on average) then so be it.


yeah I just see that as the mechanism, esp since firms can advertise above-market bonuses to attract talent and then stiff you if u don't hit hours targets

we shuld honestly just unionize ;-)

Mal Reynolds
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Re: Biglaw Salaries going up?

Postby Mal Reynolds » Fri Apr 24, 2015 2:00 pm

I've only seen two explanations for upward pressure on wages:

1) that big law might be losing associates to other industries, e.g. finance, business etc.

and 2) that there are less students around in the schools firms recruit from so firms will have to pay more to attract from a smaller crop.

1 seems to be the stronger argument but that would likely only apply to 2/3/4 year associates. I don't think there's been that big of a drop in students for 2 to really have any effect.

And shrimpin is right there's no reason to think that base salaries will go up as opposed to bonuses. It's the perfect escape hatch.

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sublime
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Re: Biglaw Salaries going up?

Postby sublime » Fri Apr 24, 2015 2:02 pm

..

Mal Reynolds
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Re: Biglaw Salaries going up?

Postby Mal Reynolds » Fri Apr 24, 2015 2:04 pm

That's an interesting thought. But NYC firms have survived with paying the same market rate for a long time now. I don't see why now all of a sudden the they aren't able to get a bunch of suckers to work in NYC.

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Desert Fox
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Re: Biglaw Salaries going up?

Postby Desert Fox » Fri Apr 24, 2015 2:05 pm

Mal Reynolds wrote:I've only seen two explanations for upward pressure on wages:

1) that big law might be losing associates to other industries, e.g. finance, business etc.

and 2) that there are less students around in the schools firms recruit from so firms will have to pay more to attract from a smaller crop.

1 seems to be the stronger argument but that would likely only apply to 2/3/4 year associates. I don't think there's been that big of a drop in students for 2 to really have any effect.

And shrimpin is right there's no reason to think that base salaries will go up as opposed to bonuses. It's the perfect escape hatch.


Why wouldn't losing associates to other types of legal employment matter? Government is hiring somewhat regularly again. Corporations are bringing people in house. Student loan laws now make it easy to go do PI work.

Mal Reynolds
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Re: Biglaw Salaries going up?

Postby Mal Reynolds » Fri Apr 24, 2015 2:09 pm

Seems like firms budget for attrition in their current base salaries though. Firms were paying 160k for a few years before the crash and that seemed fine to keep associates long enough back then.

toothbrush
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Re: Biglaw Salaries going up?

Postby toothbrush » Fri Apr 24, 2015 2:11 pm

what was the economic climate or main impetus behind the 2007 increase?

Mal Reynolds
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Re: Biglaw Salaries going up?

Postby Mal Reynolds » Fri Apr 24, 2015 2:19 pm

Mal Reynolds wrote:Seems like firms budget for attrition in their current base salaries though. Firms were paying 160k for a few years before the crash and that seemed fine to keep associates long enough back then.


Also, wouldn't firms just hire more people and reach deeper into classes if they were worried about keeping enough associates?

kcdc1
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Re: Biglaw Salaries going up?

Postby kcdc1 » Fri Apr 24, 2015 2:22 pm

Big Shrimpin wrote:yeah I just see that as the mechanism, esp since firms can advertise above-market bonuses to attract talent and then stiff you if u don't hit hours targets

The trouble with using that model indefinitely is that early-career attorneys have huge debt and are accordingly risk averse. So a firm that offers similar total compensation but with a higher base salary will have a competitive advantage in recruiting at no extra cost. Where firms have lower risk aversion than employees, an efficient pay package will focus predominantly on guaranteed compensation.

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Desert Fox
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Re: Biglaw Salaries going up?

Postby Desert Fox » Fri Apr 24, 2015 2:24 pm

Mal Reynolds wrote:Seems like firms budget for attrition in their current base salaries though. Firms were paying 160k for a few years before the crash and that seemed fine to keep associates long enough back then.


There has been 8 years of inflation eatting away at that.

I think one big problem firms will face is that they stopped factoring in attrition during the recession and the years after. They spent many years under-hiring. That is why bonuses went up.

Also since doc review work dried up, they aren't hiring as many Juniors. In the boom times, you'd have juniors do 3 years of doc review who then left. Since there isn't doc review (at least enough to keep people busy for year), the litigation organization chart is looks like a house instead of a pyramid. In some practice it is like a silo.

So far they get away with that because lit has shit exit options. People just stay. If that changes, they'll have to pony up.

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JohannDeMann
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Re: Biglaw Salaries going up?

Postby JohannDeMann » Fri Apr 24, 2015 2:37 pm

Just to summarize for everyone following along not participating:

The actual lawyers agree no big raise is coming. Maybe 170k for first years.
The law students who will put their money where their mouth is believe a pay raise is def in order but only 170k is in the cards for 5 or major NYC firms and only NYC.
The law students making bulldog talk with a puppydog ass think 175k+ is in the cards for lots of firms in NYC and other primary markets.

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cookiejar1
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Re: Biglaw Salaries going up?

Postby cookiejar1 » Fri Apr 24, 2015 2:48 pm

I don't care about facts or analysis. NYC to 190K. Please.

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sublime
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Re: Biglaw Salaries going up?

Postby sublime » Fri Apr 24, 2015 2:48 pm

..

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sublime
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Re: Biglaw Salaries going up?

Postby sublime » Fri Apr 24, 2015 2:49 pm

..

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Desert Fox
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Re: Biglaw Salaries going up?

Postby Desert Fox » Fri Apr 24, 2015 2:50 pm

Is it fraud if we come up with an elaborate hoax to trick ATL into thinking a firm went to 190!

Mal Reynolds
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Re: Biglaw Salaries going up?

Postby Mal Reynolds » Fri Apr 24, 2015 2:54 pm

sublime wrote:Shit, I have already signed up (hopefully) for 160. 170/175 sounds great to me. Free money essentially.


And Mal, I don't think it is necessarily likely that anything raises based on that, but it seems like a theory, especially for the 10 or 20 NYC firms that really pride themseves on being prestigious and getting the best.

Especially when some of those firms right now are at 3-4+ Mil PPP.


But they already get tons of students to work there. People love eating the prestige for breakfast.

TTTooKewl
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Re: Biglaw Salaries going up?

Postby TTTooKewl » Fri Apr 24, 2015 3:16 pm

Mal Reynolds wrote:
sublime wrote:Shit, I have already signed up (hopefully) for 160. 170/175 sounds great to me. Free money essentially.


And Mal, I don't think it is necessarily likely that anything raises based on that, but it seems like a theory, especially for the 10 or 20 NYC firms that really pride themseves on being prestigious and getting the best.

Especially when some of those firms right now are at 3-4+ Mil PPP.


But they already get tons of students to work there. People love eating the prestige for breakfast.


Easy to choose more prestige over less prestige when the two firms pay the same.

Mal Reynolds
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Re: Biglaw Salaries going up?

Postby Mal Reynolds » Fri Apr 24, 2015 3:18 pm

Yeah but it would never be the case that lower vault firms raise salaries and the higher ups don't match.




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