Milbank/Davis Polk/Cravath Scale: NYC to 215-415k Forum

[Anonymous User]

The weird thing about this cartel system is that if a firm can afford to match, and without having to even consider it much, why do they need to wait until other firms raise first? It's objectively strange.

because equity partners don't like losing money? lol. of course they aren't going to raise salaries unless they have no real choice or they feel strong enough to be a market setter.

[Anonymous User]

The weird thing about this cartel system is that if a firm can afford to match, and without having to even consider it much, why do they need to wait until other firms raise first? It's objectively strange.

Biglaw is basically the opposite of a cartel. Conflicts/ethics rules have prevented what would have otherwise been massive consolidation (like in every other industry), leaving us with dozens and dozens of firms competing for the same employees and clients.

The rest of your comment doesn’t make sense: is your question really “Why doesn’t a firm give a raise when it can afford to do so?” Because partners like money too.

The number of firms is good for associates: a firm will raise salaries when it thinks that’s good for its business, and every other firm will match that move. We basically all benefit every time a single firm decides that increased associate comp is in its interests. And there are dozens of them that could do so at any moment.

[Anonymous User]

I might be missing something, but I've always wondered why a "lower-tier" (vault wise --but still market-paying) firm with strong financials like Sheppard Mullin, Gunderson, Fenwick, Mintz etc, doesn't just take a gamble and raise to $240k for first years or something ridiculous. I could see the V10 or whatever not raising in response because "that firm isn't our peer" -- but I think those firms would then attract a lot of students from T-14s that would otherwise go to higher firms. In the long run, that firm is then seen as a market leader on comp and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

I feel like this is a dumb idea but maybe someone with a little bit more knowledge of how the legal market operates can educate me.

[Anonymous User]

and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

that's not how this works at all.

Lot's of high PPP V100s have billing rates equal to V30s. Vault is not real life

[Anonymous User]

Funny. Still depressed despite these raises. Money doesn't buy happiness.

[Anonymous User]

I might be missing something, but I've always wondered why a "lower-tier" (vault wise --but still market-paying) firm with strong financials like Sheppard Mullin, Gunderson, Fenwick, Mintz etc, doesn't just take a gamble and raise to $240k for first years or something ridiculous. I could see the V10 or whatever not raising in response because "that firm isn't our peer" -- but I think those firms would then attract a lot of students from T-14s that would otherwise go to higher firms. In the long run, that firm is then seen as a market leader on comp and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

I feel like this is a dumb idea but maybe someone with a little bit more knowledge of how the legal market operates can educate me.

The argument for: Milbank. The argument against: if they are doing well financially without doing this, why should they?

[Jakobe]

The weird thing about this cartel system is that if a firm can afford to match, and without having to even consider it much, why do they need to wait until other firms raise first? It's objectively strange.

Biglaw is basically the opposite of a cartel. Conflicts/ethics rules have prevented what would have otherwise been massive consolidation (like in every other industry), leaving us with dozens and dozens of firms competing for the same employees and clients.

The rest of your comment doesn’t make sense: is your question really “Why doesn’t a firm give a raise when it can afford to do so?” Because partners like money too.

The number of firms is good for associates: a firm will raise salaries when it thinks that’s good for its business, and every other firm will match that move. We basically all benefit every time a single firm decides that increased associate comp is in its interests. And there are dozens of them that could do so at any moment.

Look no further than accounting firm salaries and you’ll realize that legal conflicts are the greatest boon to associate salaries.

[nahumya]

These associate raises are still below the relative increase in compensation that equity partners have experienced over the past 5 years.

[Anonymous User]

So with how much money these firms are paying for 7th year associates... What happens if that 7th year fails to make partner? What does the scale look like for the class of 2013? 2012? Are these associates going to get pushed out if they don't make partner?

[Anonymous User]

So with how much money these firms are paying for 7th year associates... What happens if that 7th year fails to make partner? What does the scale look like for the class of 2013? 2012? Are these associates going to get pushed out if they don't make partner?

The short answer is yes, if they don't make partner then they are normally pushed out, unless they are like an ERISA specialist or similar, in which case they can stay as senior assocs for life

[Anonymous User]

I think firms are wising up regarding associates giving notices after receiving their bonuses so firms are baking in bonuses to the base salaries to make them stay long enough to earn their salaries.

[Anonymous User]

I think firms are wising up regarding associates giving notices after receiving their bonuses so firms are baking in bonuses to the base salaries to make them stay long enough to earn their salaries.

Then why did we see an across the board increase in base bonus last year by up to 15%? And why do firms like DPW keep offering special bonuses? Kind of kill your argument, don't they?

I haven't heard anybody say bonuses made them stay for a shorter time than they wanted to. To the contrary, I think lots of people tough it out for the remainder of a year just to get one last bonus when they otherwise would have quit earlier.

[Anonymous User]

I think firms are wising up regarding associates giving notices after receiving their bonuses so firms are baking in bonuses to the base salaries to make them stay long enough to earn their salaries.

This argument gets things backwards, because, for a given year, bonuses always pay out later than salary. You don't get a bonus in 2022 for 2023, but for prior work you already did in 2022. A salary pays for work before any bonus does, so increases in salary help retention less because you don't lose any part of your earnings by leaving at any given time.

[Anonymous User]

So with how much money these firms are paying for 7th year associates... What happens if that 7th year fails to make partner?

I don't even know where to start with this question. Are you a law student? In biglaw? First off, class of 2014 is an 8th year (which is included on the CSM scale) - I assume what you meant is what happens if an 8th year doesn't make partner?

What does the scale look like for the class of 2013? 2012?

As we've seen for the DPW scale, which also went to 2014, some firms just pay 2014+ the same rate (often listed in the memo as 2014+). Other firms have gone a step above (I think $10k) for 2013. Other firms are intentionally opaque about pay for 2013+. That's to say, it's entirely firm dependent. Some may pay even more to signal to certain seniors that partnership is a real possibility.

Are these associates going to get pushed out if they don't make partner?

Again, this is incredibly firm dependent. But if you're question is "are all associates after 2014 pushed out immediately because there isn't a specific salary figure on the CSM scale for them?" then the answer is absolutely not. A quick search through the attorney roles at any firm that lists graduation years could answer that. Lots of firms have a 10y+ track to partnership. Plus, lots of firms are opening up permanent counsel roles as an alternative to the up or out model.

[LIQUES]

I might be missing something, but I've always wondered why a "lower-tier" (vault wise --but still market-paying) firm with strong financials like Sheppard Mullin, Gunderson, Fenwick, Mintz etc, doesn't just take a gamble and raise to $240k for first years or something ridiculous. I could see the V10 or whatever not raising in response because "that firm isn't our peer" -- but I think those firms would then attract a lot of students from T-14s that would otherwise go to higher firms. In the long run, that firm is then seen as a market leader on comp and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

I feel like this is a dumb idea but maybe someone with a little bit more knowledge of how the legal market operates can educate me.

Aside from the points made elsewhere that billing rates have no direct bearing on what school the associates come from, there is a delicate firm financial dance at play with the lower profitable biglaw firms.

Lower profitable firms have to consider their PPP more carefully than the larger top firms (larger partner base, more distinct practice groups, institutional clients) and salaries are the number one expense bringing that down. If a firm loses too much PPP relative to its peers, it becomes vulnerable to partner poaching by other firms which further reduces its income. If this happens enough the firm goes into a death spiral and has to do an emergency merger into another firm or risk going under.

Certain firms with the comfort that they'll be matched by other firms and the financial security to weather a slightly lowered PPP ("lowered" really meaning here "making slightly lower increased profits" rather than actually seeing a decrease given raises happen in busy years) are the only ones that can structurally move markets.

[Anonymous User]

This is very petty of Cravath but I am absolutely here for it.

[Anonymous User]

DPW counter? Who has the biggest P(E)P??

[Anonymous User]

I might be missing something, but I've always wondered why a "lower-tier" (vault wise --but still market-paying) firm with strong financials like Sheppard Mullin, Gunderson, Fenwick, Mintz etc, doesn't just take a gamble and raise to $240k for first years or something ridiculous. I could see the V10 or whatever not raising in response because "that firm isn't our peer" -- but I think those firms would then attract a lot of students from T-14s that would otherwise go to higher firms. In the long run, that firm is then seen as a market leader on comp and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

I feel like this is a dumb idea but maybe someone with a little bit more knowledge of how the legal market operates can educate me.

Fenwick and Gunderson, regardless of vault rank, have no problem attracting top tier talent. This is clearly written by a 1L.

[Anonymous User]

Just need someone to see the "inherent value" that we junior associates bring to the table and match Cravath but raise for the junior classes.

Signed, a junior who knows they are useless but aspires to have surf and turf at their wedding some day.

[Anonymous User]

DPW counter? Who has the biggest P(E)P??

DPW is “officially” RTO starting today. I just saw Neil Barr and he was beaming. I wonder why. We have a practice group lunch meeting later so I’ll stare at him and try to figure out what is going on

[attorney589753]

I might be missing something, but I've always wondered why a "lower-tier" (vault wise --but still market-paying) firm with strong financials like Sheppard Mullin, Gunderson, Fenwick, Mintz etc, doesn't just take a gamble and raise to $240k for first years or something ridiculous. I could see the V10 or whatever not raising in response because "that firm isn't our peer" -- but I think those firms would then attract a lot of students from T-14s that would otherwise go to higher firms. In the long run, that firm is then seen as a market leader on comp and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

I feel like this is a dumb idea but maybe someone with a little bit more knowledge of how the legal market operates can educate me.

Because there is competition for talent across the spectrum of lawyers, not just at the first year level. If you are a rainmaker partner with a $5-10M book of business, do you want to pay first year associates "above market" and take home less pay with your book than you would at a different firm? Are your clients going to pay 10-20% higher billing rates because the junior associate (who they barely know/interact with) went to Cornell instead of Fordham? (No, they will not.). If you were looking at the pure numbers, those mid-tier V100 firms are less profitable per-associate (both because lower rate, and lower average hours/associate) than the V10/V25 firms. So I doubt they will ever be market leaders on associate compensation. I think the more interesting question is why the most profitable firms don't try to increase to a compensation level that other firms can't keep up, but suspect the sad/cynical answer is partner profits combined with "they don't have to".

[Anonymous User]

Anyone know if Kirkland re-raised to match Cravath or still only matched DPW?

[Anonymous User]

What's going on at S&C, Latham, W&C, Shearman, etc that still haven't announced anything?

[Anonymous User]

I might be missing something, but I've always wondered why a "lower-tier" (vault wise --but still market-paying) firm with strong financials like Sheppard Mullin, Gunderson, Fenwick, Mintz etc, doesn't just take a gamble and raise to $240k for first years or something ridiculous. I could see the V10 or whatever not raising in response because "that firm isn't our peer" -- but I think those firms would then attract a lot of students from T-14s that would otherwise go to higher firms. In the long run, that firm is then seen as a market leader on comp and can maybe justify higher billable rates -- and more $$ -- partly because their median associate was top 25% at Cornell, not top 40% at Fordham.

I feel like this is a dumb idea but maybe someone with a little bit more knowledge of how the legal market operates can educate me.

Because there is competition for talent across the spectrum of lawyers, not just at the first year level. If you are a rainmaker partner with a $5-10M book of business, do you want to pay first year associates "above market" and take home less pay with your book than you would at a different firm? Are your clients going to pay 10-20% higher billing rates because the junior associate (who they barely know/interact with) went to Cornell instead of Fordham? (No, they will not.). If you were looking at the pure numbers, those mid-tier V100 firms are less profitable per-associate (both because lower rate, and lower average hours/associate) than the V10/V25 firms. So I doubt they will ever be market leaders on associate compensation. I think the more interesting question is why the most profitable firms don't try to increase to a compensation level that other firms can't keep up, but suspect the sad/cynical answer is partner profits combined with "they don't have to".

I suspect some firms can't afford to match the new Cravath scale.

[Anonymous User]

Anyone know if Kirkland re-raised to match Cravath or still only matched DPW?

no news yet