NYC to 200k Forum

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

[Anonymous User]

Cravath can either say PPP was down last year (after several years of great growth), partners are leaving for other firms, and circle the wagons at 190. Or they can say our profits are among the highest in the country, we're still a leader, and go to 200 or 210. Either is reasonable. Waiting for others to move, however, is not what a leader does.

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

What if firms just don’t match?

[Anonymous User]

If firms really expect one of them to go to 200k, why not be the first to do it? You're going there anyway, you get the credit with associates and applicants, and you might be able to bifurcate the salary market. For firms with $3 or $4 million in PPP, why wait?

I was just going to post this same thought.

I've also never understood why it would be such a "disaster" to match Milbank today and then have to match a subsequent raise later. Would that cause more of a reputational hit than the absolute silence we're witnessing?

They don't expect it, but they understand there is a possibility of $200k. If you know anything about big law, you would understand partners at law firms HATE to appear like they can't read the landscape and appear reactionary. Which is what it looks like if you raise to match more than once. This is not a difficult concept to understand. Most firms don't want to raise to $200k, but CSM partners meet Monday typically and they are one of a few firms that could push us to $200k.

Nothing says reactionary and can't read the market more than waiting a week (or longer) to match Milbank, Irell, and Proskauer. Firms matched within a day or two last time. If going to 200k is a drop in the bucket for your $4 million PPP partnership (it is), and you think the market is going there anyway, why wait?

I think the whole "have to wait until Cravath partners meet on Monday" nonsense is not credible. Cravath's partners can meet whenever they want.

This

There's only 3 possibilities for CSM here:

(1) the partners haven't met to discuss yet;
(2) they have discussed and plan to announce a raise at a future point;
(3) they have discussed and plan to announce a match at a future point;

Pick one and tell me why that makes more sense.

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

It would help cement the market at 190k. It would also lead to a lot of associate grumbles that the raise doesn't even match cost of living and tuition increases while profits far outpace those.

[minnbills]

The benefit of a match now is that it would help cement the market at only $190k.

Nah that would just give Cravath all the more of a bump when they one-up everyone.

Also, ~10k per associate is real money. If you've got 300 associates at your firm, that's $3 million. That could easily end up being $50k out of a partner's pocket.

[Anonymous User]

If firms really expect one of them to go to 200k, why not be the first to do it? You're going there anyway, you get the credit with associates and applicants, and you might be able to bifurcate the salary market. For firms with $3 or $4 million in PPP, why wait?

I was just going to post this same thought.

I've also never understood why it would be such a "disaster" to match Milbank today and then have to match a subsequent raise later. Would that cause more of a reputational hit than the absolute silence we're witnessing?

They don't expect it, but they understand there is a possibility of $200k. If you know anything about big law, you would understand partners at law firms HATE to appear like they can't read the landscape and appear reactionary. Which is what it looks like if you raise to match more than once. This is not a difficult concept to understand. Most firms don't want to raise to $200k, but CSM partners meet Monday typically and they are one of a few firms that could push us to $200k.

Nothing says reactionary and can't read the market more than waiting a week (or longer) to match Milbank, Irell, and Proskauer. Firms matched within a day or two last time. If going to 200k is a drop in the bucket for your $4 million PPP partnership (it is), and you think the market is going there anyway, why wait?

I think the whole "have to wait until Cravath partners meet on Monday" nonsense is not credible. Cravath's partners can meet whenever they want.

This

There's only 3 possibilities for CSM here:

(1) the partners haven't met to discuss yet;
(2) they have discussed and plan to announce a raise at a future point;
(3) they have discussed and plan to announce a match at a future point;

Pick one and tell me why that makes more sense.

(4) Cravath and DPW don’t raise because they’re the only 2 V10s to post PPP declines

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

The more cemented the market is at 190, the more of an incentive there is for a firm like Cravath to make a play for 200.

Cravath doesn't want to move the whole market, in an ideal world, Cravath wants as few firms to follow its move to 200 as possible. So paradoxically, the higher the perception of a cemented market, the higher the chance any individual firm might one up it.

[Single-Malt-Liquor]

If firms really expect one of them to go to 200k, why not be the first to do it? You're going there anyway, you get the credit with associates and applicants, and you might be able to bifurcate the salary market. For firms with $3 or $4 million in PPP, why wait?

I was just going to post this same thought.

I've also never understood why it would be such a "disaster" to match Milbank today and then have to match a subsequent raise later. Would that cause more of a reputational hit than the absolute silence we're witnessing?

They don't expect it, but they understand there is a possibility of $200k. If you know anything about big law, you would understand partners at law firms HATE to appear like they can't read the landscape and appear reactionary. Which is what it looks like if you raise to match more than once. This is not a difficult concept to understand. Most firms don't want to raise to $200k, but CSM partners meet Monday typically and they are one of a few firms that could push us to $200k.

Nothing says reactionary and can't read the market more than waiting a week (or longer) to match Milbank, Irell, and Proskauer. Firms matched within a day or two last time. If going to 200k is a drop in the bucket for your $4 million PPP partnership (it is), and you think the market is going there anyway, why wait?

I think the whole "have to wait until Cravath partners meet on Monday" nonsense is not credible. Cravath's partners can meet whenever they want.

This

There's only 3 possibilities for CSM here:

(1) the partners haven't met to discuss yet;
(2) they have discussed and plan to announce a raise at a future point;
(3) they have discussed and plan to announce a match at a future point;

Pick one and tell me why that makes more sense.

Option 1. This is probably way more important for us than it is for them.

Also, anyone giving notice at their job this week is obligated to say that the final straw was them not matching within 24 hours.

[Anonymous User]

I think the whole "have to wait until Cravath partners meet on Monday" nonsense is not credible. Cravath's partners can meet whenever they want.

Cravath partners also don't care enough about this to put effort into reacting a few days early

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

What if firms just don’t match?

I don't see that as very likely. It doesn't matter yet because the Milbank raises don't take effect until 7/1 and the STB bonuses aren't payable 6/28, but if firms haven't in a couple weeks and people at DPW actually start making less money than their classmates across the street at STB, which was perceived by everyone during the time I was at DPW as basically the same firm, it will become an issue. Also, 1Ls are putting together OCI bids right now. If this isn't fixed when bids are due, I can't imagine it wouldn't have an impact on firms' hiring yield.

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

Nah that would just give Cravath all the more of a bump when they one-up everyone.

Also, ~10k per associate is real money. If you've got 300 associates at your firm, that's $3 million. That could easily end up being $50k out of a partner's pocket.

The partners wont lose jack shit. A $5 increase to each lawyer's hourly rate would equal 10K assuming 2K billable hours. Clients would never notice that. Even if you assume only 1850 billable hours, that's $5.40. No client is leaving a firm over that, and no partner is going to take a pay cut because of it.

[Anonymous User]

The benefit of a match now is that it would help cement the market at only $190k.

The more cemented the market is at 190, the more of an incentive there is for a firm like Cravath to make a play for 200.

Cravath doesn't want to move the whole market, in an ideal world, Cravath wants as few firms to follow its move to 200 as possible. So paradoxically, the higher the perception of a cemented market, the higher the chance any individual firm might one up it.

We can't all work for the prestigious MilBANK

I think most law firms realize they are so cheap with their associate comp that nothing they raise to will stop their peer firms from matching

[Anonymous User]

Cravath can either say PPP was down last year (after several years of great growth), partners are leaving for other firms, and circle the wagons at 190. Or they can say our profits are among the highest in the country, we're still a leader, and go to 200 or 210. Either is reasonable. Waiting for others to move, however, is not what a leader does.

Being the 6th or 7th firm to go to 190 is by definition not leading. Cravath has been responsible for only 1 of the 3 most recent salary raises (Simpson to 160, Cravath to 180, Milbank to 190). On the year-end bonus front, I am pretty sure DPW are responsible for the most recent raises, after they re-raised Simpson a few years ago (might be getting my wires crossed here). Kirkland routinely outshines them in total comp, not to mention Wachtell. People don't even really say "Cravath Scale" in common parlance anymore; I hear "Market-paying" or "NY Market" more often to describe 180k-paying firms. I don't think Cravath can be fairly called the definitive market-leader in comp anymore, and this just cements it.

[Anonymous User]

Cravath can either say PPP was down last year (after several years of great growth), partners are leaving for other firms, and circle the wagons at 190. Or they can say our profits are among the highest in the country, we're still a leader, and go to 200 or 210. Either is reasonable. Waiting for others to move, however, is not what a leader does.

Being the 6th or 7th firm to go to 190 is by definition not leading. Cravath has been responsible for only 1 of the 3 most recent salary raises (Simpson to 160, Cravath to 180, Milbank to 190). On the year-end bonus front, I am pretty sure DPW are responsible for the most recent raises, after they re-raised Simpson a few years ago (might be getting my wires crossed here). Kirkland routinely outshines them in total comp, not to mention Wachtell. People don't even really say "Cravath Scale" in common parlance anymore; I hear "Market-paying" or "NY Market" more often to describe 180k-paying firms. I don't think Cravath can be fairly called the definitive market-leader in comp anymore, and this just cements it.

CravaTTTh*

[Anonymous User]

doh already covered

[minnbills]

The partners wont lose jack shit. A $5 increase to each lawyer's hourly rate would equal 10K assuming 2K billable hours. Clients would never notice that. Even if you assume only 1850 billable hours, that's $5.40. No client is leaving a firm over that, and no partner is going to take a pay cut because of it.

Most firms that moved to 180 are experiencing some financial distress - don't discount how much clients hate paying law firms (see the BOA letter from the last salary war and see also the fact that more and more legal work is being done in-house).

[Anonymous User]

Cravath can either say PPP was down last year (after several years of great growth), partners are leaving for other firms, and circle the wagons at 190. Or they can say our profits are among the highest in the country, we're still a leader, and go to 200 or 210. Either is reasonable. Waiting for others to move, however, is not what a leader does.

Being the 6th or 7th firm to go to 190 is by definition not leading. Cravath has been responsible for only 1 of the 3 most recent salary raises (Simpson to 160, Cravath to 180, Milbank to 190). On the year-end bonus front, I am pretty sure DPW are responsible for the most recent raises, after they re-raised Simpson a few years ago (might be getting my wires crossed here). Kirkland routinely outshines them in total comp, not to mention Wachtell. People don't even really say "Cravath Scale" in common parlance anymore; I hear "Market-paying" or "NY Market" more often to describe 180k-paying firms. I don't think Cravath can be fairly called the definitive market-leader in comp anymore, and this just cements it.

CravaTTTh*

Let's all just mail them letters addressed to "CravaTTTh." 10K letters should get us to 200.

[Anonymous User]

I think we're missing a very important variable here. Every time a firm raises they have to justify it to their clients (sometimes explicitly assuring them rates will stay the same or telling them that it's going to cause a rate increase). Even if clients don't get explicit communications about this it's going to be on their mind. You don't want your clients asking twice in one month about how you pay your associates.

Clients can go find cheaper, low quality legal work elsewhere

[Anonymous User]

I think we're missing a very important variable here. Every time a firm raises they have to justify it to their clients (sometimes explicitly assuring them rates will stay the same or telling them that it's going to cause a rate increase). Even if clients don't get explicit communications about this it's going to be on their mind. You don't want your clients asking twice in one month about how you pay your associates.

How so? Clients pay the attorneys' hourly rates. If the rates stay the same, what the client pays stay the same. It doesn't impact the client if 24% of the $575/hour you're paying for that associate goes to the associate instead of 20% of $575. You're still paying $575/hour for that associate.

[Anonymous User]

And another day goes by without a salary increase.
Dear big law firms,

[Anonymous User]

I think we're missing a very important variable here. Every time a firm raises they have to justify it to their clients (sometimes explicitly assuring them rates will stay the same or telling them that it's going to cause a rate increase). Even if clients don't get explicit communications about this it's going to be on their mind. You don't want your clients asking twice in one month about how you pay your associates.

How so? Clients pay the attorneys' hourly rates. If the rates stay the same, what the client pays stay the same. It doesn't impact the client if 24% of the $575/hour you're paying for that associate goes to the associate instead of 20% of $575. You're still paying $575/hour for that associate.

It makes them wonder why they weren't paying $550 in the first place, plus they know that before too long it'll be $600.

[Anonymous User]

Clients can go find cheaper, low quality legal work elsewhere

Not if they want Columbia / Yale lawyers who are always at their desk during roll call.

[Anonymous User]

Profits per partner keep going up, billing rates keep going up, hours worked are the same or higher.

[Anonymous User]

The partners wont lose jack shit. A $5 increase to each lawyer's hourly rate would equal 10K assuming 2K billable hours. Clients would never notice that. Even if you assume only 1850 billable hours, that's $5.40. No client is leaving a firm over that, and no partner is going to take a pay cut because of it.

Most firms that moved to 180 are experiencing some financial distress - don't discount how much clients hate paying law firms (see the BOA letter from the last salary war and see also the fact that more and more legal work is being done in-house).

Many firms are also seeing increased revenue. Let's also remember that legal services are purchased just like any other commodity/service - inflation increases the cost of commodities/services, and this is really just a COL/inflation adjustment. I suspect law firms will do two things to decrease costs: (1) fire/reduce salaries of people who don't meet their hours and (2) use contract attorneys/AI for corporate diligence (something litigation practices have been doing for doc review for many years), which will dramatically decrease legal costs and the need for junior associates (i.e., the people clients hate paying for).