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

[TLSModBot]

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

Definitionally yes - any jump in expenses that doesn't result in higher revenue means decreased PPP. HOWEVER:

1. Probably fewer associates affected overall - we're looking at particular (and smaller) markets, not NY. So we're looking at probably a very small drop. I'll check out an example or two if I can get the data on one of these recent movers.

2. There is probably less partner mobility at these firms/locations due both to the market and the firm practice areas.

[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.

So is this "/thread"?

Of course not - the dream will never die. On a serious note, there are two non-economic reasons it could still happen:

1. Associate quality decreases so badly that a raise is needed to entice competent new people (and more importantly, laterals) in.

2. Firms that CAN afford this use 190 to pit the nail in the coffin on the growing segmentation in the market. You'll see clearly defined 2 or more " tiers" of law firms in the AmLaw/Vault/Chambers whatever # listings. Top firms will pull away to a permanent lead.

[Betharl]

Firms will use a salary increase to raise rates, and clients will take it--because they'll have to (because everyone is raising rates) or because they aren't that price sensitive to begin with (in the case of V5 clients, and the V5 should be the first to raise salaries/rates).

This why a salary increase is the best thing that can happen to the legal profession. More money from clients going to lawyers. Some lawyers might make less, but overall there will be a net gain. Partners need to suck it up and help out this declining profession that has been so good to them for so long.

[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"?

Of course not - the dream will never die. On a serious note, there are two non-economic reasons it could still happen:

1. Associate quality decreases so badly that a raise is needed to entice competent new people (and more importantly, laterals) in.

2. Firms that CAN afford this use 190 to pit the nail in the coffin on the growing segmentation in the market. You'll see clearly defined 2 or more " tiers" of law firms in the AmLaw/Vault/Chambers whatever # listings. Top firms will pull away to a permanent lead.

People with great grades to 190 then? This would make for quite the cut-throat law school experience.

[Aeon]

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).

If all firms raise associate salaries, leading to a shift down in PPP, that downward shift will affect the entire set of firms, so the relative PPP rankings should not change much, no?

[TLSModBot]

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).

If all firms raise associate salaries, leading to a shift down in PPP, that downward shift will affect the entire set of firms, so the relative PPP rankings should not change much, no?

Yes-ish; it's tied to current PPP as well as the percent dropped so there would be some variance stil in rankings even if everyone moved.. How quickly did firms move to catch up to Simpson in 2007? Did 90% of the current top payers jump to 160 immediately? 75%? Less?

[TLSModBot]

Other factors that might encourage salary growth:

1. A move to $175K or less is more palatable than a jump to $190K

2. If only NY moves (or NY/DC/LA/whatever you define as the top tier markets idk), then firms with a wider national presence can use their larger partner base and lower number of associates getting 190K to spread out the PPP hit to very small levels.

[Aeon]

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).

If all firms raise associate salaries, leading to a shift down in PPP, that downward shift will affect the entire set of firms, so the relative PPP rankings should not change much, no?

Yes-ish; it's tied to current PPP as well as the percent dropped so there would be some variance stil in rankings even if everyone moved.. How quickly did firms move to catch up to Simpson in 2007? Did 90% of the current top payers jump to 160 immediately? 75%? Less?

I haven't looked into it much, but my impression is that many firms moved quickly to match the $160K figure. Are there any definitive numbers out there?

One thing I wonder about is whether firms will pay smaller bonuses if they raise salaries. My hunch is: yes. There might still be a net raise for most associates, but it'll likely not be so large as people assume. As a result, there'll be a lesser impact on PPP than supposed.

[Glasseyes]

Other factors that might encourage salary growth:

1. A move to $175K or less is more palatable than a jump to $190K

2. If only NY moves (or NY/DC/LA/whatever you define as the top tier markets idk), then firms with a wider national presence can use their larger partner base and lower number of associates getting 190K to spread out the PPP hit to very small levels.

I propose we use DC as a test market for 190k.

[El Pollito]

can't they just get rid of the worst partners?

[TLSModBot]

can't they just get rid of the worst partners?

What do you think firms have been doing since 2008? De-equitizing/forcing out under-producing partners en masse has been the name of the game.

If EVERYONE in the AmLaw 200 moves up, here's what happen to the rankings:
24 firms go down 5 or more spot.
39 firms go down 1-4 spots
28 firms see no change (surprise! this tends to be the top dogs - Wachtell, Cravath, etc.)
37 firms go up 1 spot, 35 go up 2-4 spots
37 firms go up more than 5 spots.

So a smaller number go down than go up - that's good, right? Fuck those guys let's get our 190 on.

The problem here is that the vast majority of firms with improved rankings are way smaller (with accordingly tighter leverage ratios) or with practices that are less transferable to other firms (like Jackson Lewis, for example). Those that take serious hits are firms like squire patton boggs, Baker & McKenzie, DLA Piper, and K&L Gates - the mid-quality large firms with a lot to lose.

[Mad Hatter]

Lazy question: Did PPP go down significantly with previous salary raises?

[Desert Fox]

The real answer is that firms would only do the raise when they think it would increase their PPP. Your salary isn't a hand out.

[kcdc1]

The real answer is that firms would only do the raise when they think it would increase their PPP. Your salary isn't a hand out.

long-term, yes; short-term, not necessarily

[Br3v]

What's the general consensus on the effect that declining bar rates have on salary bumps? Any chance firms feel the need to attract "top talent" in a shrinking pool or something? Please resist the urge to say a trained chimp could do biglaw unless that just really is the answer.

[Nekrowizard]

I can't read 88 pages of this thread. Can someone bottom-line it for me? Will I finally be able to live like a human being on $190K, or must I continue to live like a flea-ridden dog on $160K for the foreseeable future?

[Monochromatic Oeuvre]

Lazy question: Did PPP go down significantly with previous salary raises?

No, and it probably never will because firms are highly likely to only raise salaries when profits are increasing (it's only when there's more business out there that competition forces wage increases). So a drop in PPP is just a matter of accounting. Associate costs increase by X. But because it isn't a line item, it can be harder to count beans off of revenue that's lost if your associates keep jumping ship when you could otherwise keep them with a higher salary. Pay increases always happen because they NEED those associates around to generate that revenue. Rest assured that law firms NEVER, under any circumstances, deliberately do anything that will decrease their PPP if they can help it.

[Monochromatic Oeuvre]

What's the general consensus on the effect that declining bar rates have on salary bumps? Any chance firms feel the need to attract "top talent" in a shrinking pool or something? Please resist the urge to say a trained chimp could do biglaw unless that just really is the answer.

We've had looooong discussions of this in other threads. Some people (like me) think that a shrinking talent pool, especially at the top, eventually has to exert some pressure over salaries to compete. But even the most optimistic of us find that breaking point of an entry-level effect to be at least several years away. There's a mini Catch-22 in that the firms in the best position to raise salaries are the ones that are least likely to need to because highly accomplished but poorly prioritized students are already drawn to them because of dat preftige, and there's all this evidence of no one really giving a shit about the fact that Cahill, Kirkland, a bunch of boutiques, etc. all pay above market. Yes, some people really are picking Cravath over Boies. I watched it happen.

Others think trained chimps could do Biglaw. I think it's kind of specious because firms have a disproportionate hard-on for good schools and good grades and clearly must give some sort of a fuck about the competence of their associates, or else we'd all have been replaced by $50k Touro grads a long time ago. Yeah, the number of contract attorneys brought in to do menial bullshit at one-third of the price has gone up, but there must be a reason associates haven't been entirely replaced.

[kcdc1]

What's the general consensus on the effect that declining bar rates have on salary bumps? Any chance firms feel the need to attract "top talent" in a shrinking pool or something? Please resist the urge to say a trained chimp could do biglaw unless that just really is the answer.

Doubt there's much of a connection. Bar passage rates are a product of TTT's admitting people who can qualify for student loans (cuz they have a SSN) but may or may not be able to read. The quality of students at non-T14's has likely declined, but biglaw never hired in volume from non-T14 schools anyway. Some T14 schools dropped a point or two in median LSAT, so maybe current T14 students are a bit dumber than those in years past, but I'm sure we'll handle doc review just fine.

[TheoO]

What's the general consensus on the effect that declining bar rates have on salary bumps? Any chance firms feel the need to attract "top talent" in a shrinking pool or something? Please resist the urge to say a trained chimp could do biglaw unless that just really is the answer.

Others think trained chimps could do Biglaw. I think it's kind of specious because firms have a disproportionate hard-on for good schools and good grades and clearly must give some sort of a fuck about the competence of their associates, or else we'd all have been replaced by $50k Touro grads a long time ago. Yeah, the number of contract attorneys brought in to do menial bullshit at one-third of the price has gone up, but there must be a reason associates haven't been entirely replaced.

Yea but caring about good grades doesn't necessarily correlate with top talent. Really smart people are avoiding law school in increasing numbers, but law schools will still produce Order of the Coifs, Kents and Stones in an age of inflated grades. Law firms can sell these profiles to their clients and clients will still eat it up, even if "the quality has declined". How would firms measure that anyway?

[Johann]

Yea but caring about good grades doesn't necessarily correlate with top talent. Really smart people are avoiding law school in increasing numbers, but law schools will still produce Order of the Coifs, Kents and Stones in an age of inflated grades. Law firms can sell these profiles to their clients and clients will still eat it up, even if "the quality has declined". How would firms measure that anyway?

ding ding ding

[Anonymous User]

Yea but caring about good grades doesn't necessarily correlate with top talent. Really smart people are avoiding law school in increasing numbers, but law schools will still produce Order of the Coifs, Kents and Stones in an age of inflated grades. Law firms can sell these profiles to their clients and clients will still eat it up, even if "the quality has declined". How would firms measure that anyway?

ding ding ding

The way firms (and clients) measure this is when the attorney gets the wrong answer and they lose the case. There are aspects of legal practice that a trained monkey could do (ex making binders) but in a complicated case the quality of the person doing legal research/drafting makes a huge difference.

[Monochromatic Oeuvre]

What's the general consensus on the effect that declining bar rates have on salary bumps? Any chance firms feel the need to attract "top talent" in a shrinking pool or something? Please resist the urge to say a trained chimp could do biglaw unless that just really is the answer.

Others think trained chimps could do Biglaw. I think it's kind of specious because firms have a disproportionate hard-on for good schools and good grades and clearly must give some sort of a fuck about the competence of their associates, or else we'd all have been replaced by $50k Touro grads a long time ago. Yeah, the number of contract attorneys brought in to do menial bullshit at one-third of the price has gone up, but there must be a reason associates haven't been entirely replaced.

Yea but caring about good grades doesn't necessarily correlate with top talent. Really smart people are avoiding law school in increasing numbers, but law schools will still produce Order of the Coifs, Kents and Stones in an age of inflated grades. Law firms can sell these profiles to their clients and clients will still eat it up, even if "the quality has declined". How would firms measure that anyway?

This is predicated on the notion that firms are hiring associates 100% for the purposes of credentialism, and I'm not convinced that's true. It does take some form of higher-order intelligence to do a decent chunk of Biglaw work, and inflated credentials wouldn't hide the fact that less-qualified associates would fuck up more. That's when clients would care.

[Johann]

do you think you can do the work? because statistically you are the dumb people that biglaw would be trying to hire around.

until you work in biglaw, you won't understand how being a good lawyer and delivering a good service is not something needed to be really smart for. everyone that sets foot in a biglaw firm for the most part has the brain power to excel and become a partner. its the other factors that weed people out.

[juzam_djinn]

do you think you can do the work? because statistically you are the dumb people that biglaw would be trying to hire around.

until you work in biglaw, you won't understand how being a good lawyer and delivering a good service is not something needed to be really smart for. everyone that sets foot in a biglaw firm for the most part has the brain power to excel and become a partner. its the other factors that weed people out.

do you really think this is true? at least in lit, while it's not rocket science, it does seem like some people are just better writers than others