Why is 1st yr associate pay even across the board?

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Bronte
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Re: Why is 1st yr associate pay even across the board?

Postby Bronte » Tue Jul 09, 2013 10:34 am

jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.

RodneyRuxin
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Re: Why is 1st yr associate pay even across the board?

Postby RodneyRuxin » Tue Jul 09, 2013 10:39 am

Disappointed in the number of serious answers to this thread

NYstate
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Re: Why is 1st yr associate pay even across the board?

Postby NYstate » Tue Jul 09, 2013 10:47 am

Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


It is easier to fire people than pay everyone less.

Biglaw has cut salaries by cutting bonuses. There used to be substantial spring bonuses.

Somewhere I read an article that salaries are decreasing nationwide. I think it was an NALP report.

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sinfiery
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Re: Why is 1st yr associate pay even across the board?

Postby sinfiery » Tue Jul 09, 2013 11:47 am

Yeah...if the 1st year salary went to 125k, there is zero chance I take on 150k+ debt.

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rinkrat19
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Re: Why is 1st yr associate pay even across the board?

Postby rinkrat19 » Tue Jul 09, 2013 11:56 am

jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.

If a firm did that, it'd probably be taken as a sign that they were in financial trouble. An image of stability and profitability is key to getting clients, keeping clients, and keeping partners/rainmakers from jumping ship for a firm that isn't the subject of rumors about financial problems. Rumors can snowball into actual trouble.

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Georgia Avenue
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Re: Why is 1st yr associate pay even across the board?

Postby Georgia Avenue » Tue Jul 09, 2013 12:03 pm

Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


That firm would be immediately killed in recruiting and would wind up having to take nothing but people who didn't have any other options just to fill a summer class

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jtabustos
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Re: Why is 1st yr associate pay even across the board?

Postby jtabustos » Tue Jul 09, 2013 12:19 pm

sinfiery wrote:Yeah...if the 1st year salary went to 125k, there is zero chance I take on 150k+ debt.


True that. For some it may make them think twice.

But people are already taking on $150K debt now though for not so great odds and salaries. :?

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jtabustos
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Re: Why is 1st yr associate pay even across the board?

Postby jtabustos » Tue Jul 09, 2013 12:20 pm

Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


What about on the client side? Why would they pay the lawyers?

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Bronte
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Re: Why is 1st yr associate pay even across the board?

Postby Bronte » Tue Jul 09, 2013 12:26 pm

jtabustos wrote:
Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


What about on the client side? Why would they pay the lawyers?


I don't understand your question.

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jtabustos
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Re: Why is 1st yr associate pay even across the board?

Postby jtabustos » Tue Jul 09, 2013 12:27 pm

I meant to ask why do clidents agree to pay so much if given the supply-demand skew. Sorry about that.

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jtabustos
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Re: Why is 1st yr associate pay even across the board?

Postby jtabustos » Tue Jul 09, 2013 12:29 pm

NYstate wrote:
Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


It is easier to fire people than pay everyone less.

Biglaw has cut salaries by cutting bonuses. There used to be substantial spring bonuses.

Somewhere I read an article that salaries are decreasing nationwide. I think it was an NALP report.



Are the bonus scales known beforehand and written into your "contract" or do they change constantly?

NYstate
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Re: Why is 1st yr associate pay even across the board?

Postby NYstate » Tue Jul 09, 2013 12:30 pm

Georgia Avenue wrote:
Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


That firm would be immediately killed in recruiting and would wind up having to take nothing but people who didn't have any other options just to fill a summer class


Plenty of talented people would work for $125,000 as a first year. Don't overemphasize the inability of a firm to cut salary and get good people. Obviously Weil who just fired 60 associates is not that concerned with the impact in recruiting.

Many top people only get one offer. It isn't as if everyone at T14 schools are picking and choosing among a dozen offers or even five offers.

NYstate
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Re: Why is 1st yr associate pay even across the board?

Postby NYstate » Tue Jul 09, 2013 12:32 pm

jtabustos wrote:
NYstate wrote:
Bronte wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.


It's an image thing. No firm wants to break rank and make headlines for cutting salaries. It signals financial distress. Plus, talent would flee in droves unless other firms instantly followed suit.


It is easier to fire people than pay everyone less.

Biglaw has cut salaries by cutting bonuses. There used to be substantial spring bonuses.

Somewhere I read an article that salaries are decreasing nationwide. I think it was an NALP report.



Are the bonus scales known beforehand and written into your "contract" or do they change constantly?


Change. Firms announce bonuses at year end and it used to be spring. ATL has articles on this. Usually firms will follow the market leader.

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Re: Why is 1st yr associate pay even across the board?

Postby NYstate » Tue Jul 09, 2013 12:33 pm

jtabustos wrote:I meant to ask why do clidents agree to pay so much if given the supply-demand skew. Sorry about that.

Clients are fighting paying bills since ITE.

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Bronte
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Re: Why is 1st yr associate pay even across the board?

Postby Bronte » Tue Jul 09, 2013 12:34 pm

jtabustos wrote:I meant to ask why do clidents agree to pay so much if given the supply-demand skew. Sorry about that.


Clients willingness to pay has decreased as a result of the crisis. But firms have responded by laying off associates and cutting bonuses rather than cutting base salary.

NYstate wrote:Plenty of talented people would work for $125,000 as a first year. Don't overemphasize the inability of a firm to cut salary and get good people. Obviously Weil who just fired 60 associates is not that concerned with the impact in recruiting.

Many top people only get one offer. It isn't as if everyone at T14 schools are picking and choosing among a dozen offers or even five offers.


Ok, but firms have not cut base salaries. There must be some reason why not. The reason is presumably that they figure layoffs and bonus reductions are less damaging to their reputation than a base salary reduction.

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Monochromatic Oeuvre
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Re: Why is 1st yr associate pay even across the board?

Postby Monochromatic Oeuvre » Tue Jul 09, 2013 1:07 pm

I mean, every year associate pay doesn't increase, it's effectively a cut as long as inflation stays positive. $160k today buys about 10% less than it did in 2007, which is the last time base pay was raised.

Here's a helpful chart for comparison since January 2007, when STB raised the base pay. I chose CLS because I think we have the highest COA for the year ($82k--did anyone else top that?).

Associate pay increase, 2007-13: 0%
CLS tuition increase, 2007-13: 35.6%

So, yeah. Side note: Was it really only 2004 that Berkeley had a resident tuition of $21.5k? Where the hell is all this money going? Ridiculous prof salaries can't possibly account for such a massive increase.

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sinfiery
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Re: Why is 1st yr associate pay even across the board?

Postby sinfiery » Tue Jul 09, 2013 1:56 pm

Yeah, the money at the margins is exactly the money that goes towards paying off student loans. Losing 25k a year towards loans will make many, many people rethink going to law school.


HYS would literally be a bad investment because no merit scholarships.

If they seriously are not worried about who goes to law school, whatever I guess.

NYstate
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Re: Why is 1st yr associate pay even across the board?

Postby NYstate » Tue Jul 09, 2013 2:08 pm

sinfiery wrote:Yeah, the money at the margins is exactly the money that goes towards paying off student loans. Losing 25k a year towards loans will make many, many people rethink going to law school.


HYS would literally be a bad investment because no merit scholarships.

If they seriously are not worried about who goes to law school, whatever I guess.


I'm just guessing here but firms probably believe that the constantly increasing cost of law school (or how students finance it) isn't their problem.

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guano
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Re: Why is 1st yr associate pay even across the board?

Postby guano » Tue Jul 09, 2013 2:36 pm

jtabustos wrote:I meant to ask why do clidents agree to pay so much if given the supply-demand skew. Sorry about that.

Because half of what a client is buying is pedigree. If a hedge fund says their lawyers are Skaden, they have more credibility than if they say the lawyer is John bumblefuck.
If you go to a regulator and your attorney is Locke Lord, you'll be taken more seriously than if your lawyer is bumlord.
And if a deal goes sour because someone fucked up due diligence, you can get better recompense from DPW than from John W.

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jtabustos
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Re: Why is 1st yr associate pay even across the board?

Postby jtabustos » Tue Jul 09, 2013 2:41 pm

sinfiery wrote:Yeah, the money at the margins is exactly the money that goes towards paying off student loans. Losing 25k a year towards loans will make many, many people rethink going to law school.


HYS would literally be a bad investment because no merit scholarships.

If they seriously are not worried about who goes to law school, whatever I guess.


Do HYS have any aid at all? Didn't know about the no merit scholarships. Isn't cost of attendance $225K at HYS?

I guess it's still the same thing though, no? If the biglaw firms cut your bonuses or they lay you off/fire you sooner, in order to adjust to market conditions, then a law student will still be unable to pay back their loans as easily.

I get what people are saying above, however, in that it's just more tricky the way they do it. Sneaky sneaky. They may not lower your base salary, but if they mess with you in other ways where it turns out the same (financially), then that's just as bad?

I just started a thread on biglaw's layoffs/overcapcity from a piece at Above The Law today over in the general Law FAQ section: viewtopic.php?f=5&t=212691

Kind of some scary news coming out of biglaw in the wake of Weil.

Do people think this is the start of a new storm of layoffs?

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TrialLawyer16
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Re: Why is 1st yr associate pay even across the board?

Postby TrialLawyer16 » Tue Jul 09, 2013 3:48 pm

rinkrat19 wrote:
jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates? I'm sure a person with $200K debt would be just as happy/desparate for a job at $125,000 as he/she would at $160,000.

If a firm did that, it'd probably be taken as a sign that they were in financial trouble. An image of stability and profitability is key to getting clients, keeping clients, and keeping partners/rainmakers from jumping ship for a firm that isn't the subject of rumors about financial problems. Rumors can snowball into actual trouble.
Sooooo true +1000
If you need any evidence of that just check the stock market

A wise man once told me, "Protect your reputation like you protect your d*ck"

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Georgia Avenue
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Re: Why is 1st yr associate pay even across the board?

Postby Georgia Avenue » Tue Jul 09, 2013 4:07 pm

NYstate wrote:Plenty of talented people would work for $125,000 as a first year. Don't overemphasize the inability of a firm to cut salary and get good people. Obviously Weil who just fired 60 associates is not that concerned with the impact in recruiting.

Many top people only get one offer. It isn't as if everyone at T14 schools are picking and choosing among a dozen offers or even five offers.


These are completely different things. Weil's recruiting won't be hurt because nobody thinks they're going to be the one who gets fired (see every law student thinking they'll be top 10%, get tons of offers at OCI, etc etc etc), and they might be willing to roll the dice for a few years. Being paid $35,000 less than market is very immediate and tangible, and will probably scare off anyone with more than one offer, or lead to people not even bidding them in the first place.

NYstate
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Re: Why is 1st yr associate pay even across the board?

Postby NYstate » Tue Jul 09, 2013 4:11 pm

Georgia Avenue wrote:
NYstate wrote:Plenty of talented people would work for $125,000 as a first year. Don't overemphasize the inability of a firm to cut salary and get good people. Obviously Weil who just fired 60 associates is not that concerned with the impact in recruiting.

Many top people only get one offer. It isn't as if everyone at T14 schools are picking and choosing among a dozen offers or even five offers.


These are completely different things. Weil's recruiting won't be hurt because nobody thinks they're going to be the one who gets fired (see every law student thinking they'll be top 10%, get tons of offers at OCI, etc etc etc), and they might be willing to roll the dice for a few years. Being paid $35,000 less than market is very immediate and tangible, and will probably scare off anyone with more than one offer, or lead to people not even bidding them in the first place.


I see your point. Firing people is different than just paying people less. I assume that if one firm dropped starting salaries at least some others would join in. I still think a top firm could get plenty of good associates even if it paid less than similar firms. The supply is greater than the demand. We may never find out as, outside of bonuses, firms haven't cut salary.

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laotze
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Re: Why is 1st yr associate pay even across the board?

Postby laotze » Tue Jul 09, 2013 4:21 pm

jtabustos wrote:Anyone know why biglaw associate salaries aren't actually lower? lol.

I was thinking that given supply-demand being so skewed these days (and so many lawyers desparate for any kind of work), why wouldn't a biglaw firm take advantage and pay them lower rates?


Game of chicken and no one wants to be the first to blink/careen off the road.

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Tom Joad
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Re: Why is 1st yr associate pay even across the board?

Postby Tom Joad » Tue Jul 09, 2013 6:38 pm

Antitrust bros, would it be illegal if all firms agreed to drop associate salaries to $80,000 max? It would seem to be a good move for the partners and really pretty fair to associates.




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