NY GOES TO 180k! IT HAPPENED!!!! (CovingTTTon does a 180! Holder wept.) Forum

[Johann]

eh, you're right. i edited mine, though it probably too late.

to shift things back in the right direction: how long til the money train hits DC, and what are the odds that they retroactively boost all our SA salaries?

DC salaries will likely be tied to NY (or very closely follow) - people want dat DC preftige but they'd go to NY in a heartbeat if the money was better.

Retroactive SA pay isn't a thing but your enhanced first year salaries (plus bonuses!) will make you feel better

ehh, DC isn't really a market follower anymore.

Its 2015 Associate Salary Survey says the median pay for first-year associates at large firms in Washington remains $160,000. But that is the case at about 60 percent of D.C. firms this year. In 2009, about 90 percent of firms with more than 700 lawyers reported first-year salaries of $160,000.

http://www.bizjournals.com/washington/b ... aries.html

It's like Chicago - obviously the big dogs would move but outside the truly top of the top, doubtful.

I think the "big dogs" covers most of the big law market though. All of the big DC-centric biglaw shops and the V-whatevers with smaller DC offices. I guess it's little more than my gut, but people in like the Dallas outpost would seem to get if you don't match what their fellow NY associates are getting right away, but DC?

No. These are only 700+ firms, so it's all big dogs in the way yo uare thinking. V30 firms and below would not be moving unless they have some particularly strong tie to DC, that's my point. Dallas would not be moving either; you're correct there.

Please show math as to why V30 is cut off?

Better yet show me a non v30 that could afford to go to 190K first year salaries. You prolly need about $2M PPP to make that move. Only New York and Skadden, Simpson dpw Kirkland etc can afford that.

[Johann]

Yeah I'm sure because the firms they use in another article as examples were 700+ firms. I'm on a phone but I'll link later.

[smaug]

they all could afford it but you know they're not going to do it

[lavarman84]

I think the stability of those places depends on the market. Maybe it's because I'm from MN (and the MN market is collapsing/has always been kinda brutal) but from what I hear those places aren't really that desirable there... maybe that changes in other markets.

Put another way, I know top students from the schools that typically are the source for associates at midlaw firms try hard not to end up at those firms and end up in Chicago or NY instead. Are they just dumb?

Dumb? No. I don't know the Minnesota market well enough but chasing prestige might be a factor. I know that I almost did. And I felt pretty stupid for it.

[lavarman84]

Honestly, though, have we learned anything new so far? People at T14s have been known to avoid NYC whenever they can, but this is limited by regional/satellite firms requiring (1) connections and/or (2) grades, and having vastly smaller classes. People from HLS or other schools who meet the grades and/or connections have been lured outside for a while now (whether to TX or CA, and especially DC). NY can sit on its lawrels so long as the average law student who is not a standout applicant faces NYC or strikeout.

This isn't quite true. People at Columbia/NYU/Penn/Cornell want NYC, it's not solely because they don't want to strike out or that NYC firms are the most prevalent at OCI. A ton of top people go to NYC, and honestly, unless you've tasted all the different major cities or are from there - there just aren't that many reasons not to choose NYC. Those firms are still the most prestigious, and a ton of people don't want to go back to whatever TTT small city/region they're from.

I'd say there are quite a few. The biggest being money when you account for cost of living. But there are so many reasons why New York isn't a good fit for me, personally. I'm sure plenty of others have reasons why.

[Londonbear]

This is a bizarrely over sensitive response. GULC sucks and 70% of their graduates would be lucky to get NYC biglaw. That said, NYC is crazy expensive and that's a shame.

right but like half of us commenting in here go to GULC and we're not just gonna admit that our school sucks without spinning it hard. cmon now

Back-up is here, thank god.
//
Everyone knows most GULC grads self-select out of big law because of public interest, guys. This is why our stats look so dismal. If people actually tried we'd easily have 65% big law + clerkships

I still think the key is to find a shop that matches salaries across all offices, and then hunker down in a satellite with enough people for security, and enjoy the NYC rates.

Barring someone wanting to work in NYC because they like the city itself, I agree this is a pretty good option. Especially if said shop has a big NYC office which is not its head office, and will match salaries without exporting the toxic work culture along with it.

For PI numbers: http://www.top-law-schools.com/forums/v ... 1&t=262810
A lot do self-select for PI.

And the bolded is just plain wrong.

[TheoO]

they all could afford it but you know they're not going to do it

Hell will be raised if the partner has to forgo modest adjustments to his yacht because you wanted to pay off that debt a little quicker.

[BigZuck]

Craven Anon Cravath Coward 1: "Yo, a partner asked if we should get paid more!"
Craven Cravath Coward 2: "Yeah, I can confirm that that meeting happened."
TLS NY to 190 Thread: "So you guys told him we need more money, right? Right!?!"

(Crickets chirp)

LOL

GOOD JOB GUYS

[TLSModBot]

they all could afford it but you know they're not going to do it

Dispute this a little. Many firms could "afford" to do it in that they wouldn't go bankrupt. BUT they'd have to cut PPP, and not from junior partners who have small draws anyway or major rainmakers; it'd come from mid-range partner who also tend to have the most mobile books of business. So if someone moves and no one matches, they are looking at a partner defection death spiral.

Some firms could just do it without serious repercussions (Cravath, DPW, Simpson) which is why they're the firms we look to for the 190K movement.

[TLSModBot]

Let's do a thought experiment of a totally hypothetical not-at-all-real firm. Let's call it "Smadwalader, Swickersham, & Smaft."

Smadwalader has 348 attorneys, of which 237 are associates. Of the 111 partners, only 55 are equity partners. Of those, only about half (let's say 27) are mid-level partners who would realistically experience a change in partner draws (the rest are either major rainmakers or junior equity partners with laughably small draws anyway). Smadwalader has a 2015 reported PPP of $2.6M (many, many firms have a much lower PPP).

237 associates * $30K raise per attorney = $7.11 Million in increased expenses, every year, forever.

$2.6M * 27 equity partners = $70.2 Million in partner draws before associate raises.

That's 10% of the current draw being reduced. Post-raise:

$70.2 Million - $7.11 Million = $63.09 Million / 27 Partners = $2.34 Million new PPP.

Convince a bunch of partners with mobile books of business (some of which lateraled in themselves precisely because of better pay opportunities) that they need to accept a permanent $250K yearly drop in income. Yeah, that'll go well.

[Desert Fox]

Woa woa woa. 30k per first year. Midlevels will get an extra 60k or more when we go to 190k.

[Desert Fox]

Why are you assuming rainmakers and junior partners don't pay their share of associate costs.

There is no way cadwaladet has a 15:1 attorney employee to equity partner ratio.

Use a firm that doesn't have income partners (plenty don't).

[mvp99]

Woa woa woa. 30k per first year. Midlevels will get an extra 60k or more when we go to 190k.

lol sooo what 320k comp all in?

Let's do a thought experiment of a totally hypothetical not-at-all-real firm. Let's call it "Smadwalader, Swickersham, & Smaft."

Smadwalader has 348 attorneys, of which 237 are associates. Of the 111 partners, only 55 are equity partners. Of those, only about half (let's say 27) are mid-level partners who would realistically experience a change in partner draws (the rest are either major rainmakers or junior equity partners with laughably small draws anyway). Smadwalader has a 2015 reported PPP of $2.6M (many, many firms have a much lower PPP).

237 associates * $30K raise per attorney = $7.11 Million in increased expenses, every year, forever.

$2.6M * 27 equity partners = $70.2 Million in partner draws before associate raises.

That's 10% of the current draw being reduced. Post-raise:

$70.2 Million - $7.11 Million = $63.09 Million / 27 Partners = $2.34 Million new PPP.

Convince a bunch of partners with mobile books of business (some of which lateraled in themselves precisely because of better pay opportunities) that they need to accept a permanent $250K yearly drop in income. Yeah, that'll go well.

wouldnt they cite increased costs to increase billing rates like they have over forever?

[smaug]

also if they were to do this wouldn't every firm just increase billing rates across the board

"we're sorry, we had to do this to retain the best talent"

[TLSModBot]

Why are you assuming rainmakers and junior partners don't pay their share of associate costs.

There is no way cadwaladet has a 15:1 attorney employee to equity partner ratio.

Use a firm that doesn't have income partners (plenty don't).

A. I'm not assuming. Edwin Reeser, a legal industry consultant, does some good writing on law firm mergers and how infrastructure costs are distributed along the partner "tiers"/whatever you call the different power-dynamic levels. I'll try to dig up an article or two when I'm not knee deep toddlers.

B. Yes, NALP et. al. reports the entirely fictional firm of Smadwalader has 348 attorneys, of which 111 are partners, of which 55 are equity partners.

But fine, let's do another totally hypothetical example:

Smaul Smastings has 873 attorneys - 604 are associates, 197 are equity partners, and only 72 are income partners. Let's assume 150 partners will equally share the costs of the associate raise (lol).

604 * 30K = $18.12 Million in additional costs, per year, every year, forever.

Divided into 150 partners, and it's only $120K per partner. (if we're being realistic, it's divided significantly into 100 partners, but let's give the benefit of the doubt as say 120 - that would be $150K per partner). Not terrible, but it drops the firm 5 or 6 spots down the PPP rankings. If you think that won't cost the firm at least a couple partners (and accordingly, the revenue that goes with them), then you're kidding yourself (especially considering 7 of those - and I can't stress this enough - entirely fictional partners lateraled into the firm just last year).

[TLSModBot]

also if they were to do this wouldn't every firm just increase billing rates across the board

"we're sorry, we had to do this to retain the best talent"

You're right! They would. However, as billing rates go up, realization rates go down (clients discounts, disputed bills, etc). Law firms are net losing money as billing rates rise.

That's what has been happening across the board - check out this Peer Monitor report for better details.

[smaug]

also if they were to do this wouldn't every firm just increase billing rates across the board

"we're sorry, we had to do this to retain the best talent"

You're right! They would. However, as billing rates go up, realization rates go down (clients discounts, disputed bills, etc). Law firms are net losing money as billing rates rise.

That's what has been happening across the board - check out this Peer Monitor report for better details.

that happened because they started using those outside firms and billing check software

they're already using those now, though. would that still happen moving forward? (i'll read the report now, sorry, just reacting first)

[TLSModBot]

also if they were to do this wouldn't every firm just increase billing rates across the board

"we're sorry, we had to do this to retain the best talent"

You're right! They would. However, as billing rates go up, realization rates go down (clients discounts, disputed bills, etc). Law firms are net losing money as billing rates rise.

That's what has been happening across the board - check out this Peer Monitor report for better details.

that happened because they started using those outside firms and billing check software

they're already using those now, though. would that still happen moving forward? (i'll read the report now, sorry, just reacting first)

Page 6 I think is particularly useful of the report.

Gimme a sec to pull from a Bruce MacEwen book (i.e. the AdamSmithEsq guy), I think he had a good quote on this.

eta: From "Growth is Dead" - direct managing partner quote: "Raising rates? No problem; piece of cake. But we raise rates 5% and realization drops 6%." Write-offs, discounts, billing disputes, whatever the reason is, collections as a percentage have been dropping - we were looking around 90% before the recession, now we're somewhere in the mid to low 80's.

[SLS_AMG]

Honestly, though, have we learned anything new so far? People at T14s have been known to avoid NYC whenever they can, but this is limited by regional/satellite firms requiring (1) connections and/or (2) grades, and having vastly smaller classes. People from HLS or other schools who meet the grades and/or connections have been lured outside for a while now (whether to TX or CA, and especially DC). NY can sit on its lawrels so long as the average law student who is not a standout applicant faces NYC or strikeout.

And this is without even taking into account the whole "I want to do my 20s in NYC" or the group of people who have the view that they need to begin their careers in NYC before lateraling elsewhere for some reason or another (this is, btw, something I commonly heard OCS tell people at my school, whether right or wrong, I have no clue yet).

What are you even saying? Sure, some people decide to target specific markets and others simply don't want to live in NYC or practice NYC big law. Others absolutely want to live/work in NYC, even if they could have worked elsewhere.

[TLSModBot]

DF is right in that there are firms that could pull this off without experiencing a significant PPP drop or partner loss. I think that number is conservatively about 2 dozen of the Biglaw firms, maybe as high as 30-40. If we assume that firms are willing to take a sub-100K hit to their partner profits, we could possibly get as high as 50. My point is that there are a large number that simply can't, so a universal move to 190 would be difficult.

Let's do another example:

"Smopes and Skray", with a PPP of $1.93M, 773 associates, 268 partners, and no non-equity partners.

773 * 30K = $23.19 Million in increased expenses.

Let's say a full 200 partners equally bear those costs. Only $116K in decreased partner draw... which knocks ole Smopes down a full 7 spots in the PPP rankings, and that's assuming zero partner defections happen.

[smaug]

doesn't this create an incentive for a firm that's well-off but kinda middle of the road re: PPP to be the first mover?

also, obviously, someplace small

[TLSModBot]

doesn't this create an incentive for a firm that's well-off but kinda middle of the road re: PPP to be the first mover?

also, obviously, someplace small

Only if the firm is niche/prestigious enough that partners won't flee (remember: PPP factors pretty strongly these days into partner defections and the firm's ability to grab new lateral hires). That's why we have Desmarais, Williams & Connolly, and mckool smith (actually not sure about the last one - I think they pay under market for midlevels base but I don't know their bonus structure).

In any case, they don't move the market, though.

[TheoO]

doesn't this create an incentive for a firm that's well-off but kinda middle of the road re: PPP to be the first mover?

also, obviously, someplace small

Only if the firm is niche/prestigious enough that partners won't flee (remember: PPP factors pretty strongly these days into partner defections and the firm's ability to grab new lateral hires). That's why we have Desmarais, Williams & Connolly, and McKool Smith (actually not sure about the last one - I think they pay under market for midlevels base but I don't know their bonus structure).

In any case, they don't move the market, though.

So is this "/thread"?

[TLSModBot]

Using last year's AmLaw data, here's what would happen to PPP in the AmLaw 200 if the 30K pay bump happened:

PPEP reduction as a % of current PPEP:
10%+ = 60 Firms
5-10% = 112 Firms
<5% = 28 Firms

In terms of raw figures for money coming out the PPP, 78 firms in the AmLaw 200 would see a decrease in $100K or more per partner (and that's assuming the cost is spread evenly over 75 percent of the equity partners).

[mvp99]

was there a decrease in PPP for all these firms in secondary markets raising salaries to 160k?