IB increasing base salary by ~17%: Time to push up Biglaw base?? Forum

[Anonymous User]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

You guys are working 60~80 hours now? We're being crushed with +80/weeks. I don't think I work meaningfully less than my friends in banking.

[Anonymous User]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

You guys are working 60~80 hours now? We're being crushed with +80/weeks. I don't think I work meaningfully less than my friends in banking.

Typical week (aka pre-COVID).

Yeah biglaw sucks right now (80-100 hr weeks). But again, banking is worse. They have 100-120 hour weeks right now no joke.

[Ultramar vistas]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

You guys are working 60~80 hours now? We're being crushed with +80/weeks. I don't think I work meaningfully less than my friends in banking.

All this is fascinating but the real comp biglaw has to worry about is in-house. The annually published stats are always most helpful but anecdotally, it seems like more and more biglaw midlevels are choosing to take low 2xx,xxx salaries + bonus and a quality life over high 2xx,xxx salaries + bonus, and that’s where the immediate attrition happens.

Unfortunately, the firm best placed to raise salaries also has no balls whatsoever when it comes to leading the market, so we’ll just have to see if Milbank or DPW can save the day once again.

[Anonymous User]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

You guys are working 60~80 hours now? We're being crushed with +80/weeks. I don't think I work meaningfully less than my friends in banking.

All this is fascinating but the real comp biglaw has to worry about is in-house. The annually published stats are always most helpful but anecdotally, it seems like more and more biglaw midlevels are choosing to take low 2xx,xxx salaries + bonus and a quality life over high 2xx,xxx salaries + bonus, and that’s where the immediate attrition happens.

Unfortunately, the firm best placed to raise salaries also has no balls whatsoever when it comes to leading the market, so we’ll just have to see if Milbank or DPW can save the day once again.

Quick Q - which ones are best placed to raise salaries?

[Anonymous User]

People are absolutely right that IB salaries don't directly mean anything to biglaw. But if IB is feeling bullish enough to give raises to their associates, it's indicative of the same robust deal flow that is also driving law firms to hand out special bonuses.

This is why this news is relevant. Of course, biglaw is also increasing compensation substantially in 2021 through the special bonuses.

It doesn’t really surprise me that famously risk averse lawyers are giving this comp increase in the way that’s easiest to roll back in 2022, rather than doing it through a base salary increase. But if the economy keeps up and there is this much work (and this many opportunities for associates to exit biglaw and/or lateral), compensation will not go down and may even continue rising.

[Anonymous User]

wow, there are several classmates at my school (CCN) worked as IB analysts in bulge bracket before law school ... wonder why they chose to go to law school instead (they are doing corporate law after graduation)

[Anonymous User]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

I don't think there is a meaningful difference in hours between IB vs biglaw, at least for the last couple years. It's also not "significantly" easier to go up the ladder in biglaw; promotion to VP level is fairly easy at banking, which means you can pretty much easily keep your job in banking for +7 years (or +10 years after undergrad) as long as you're willing to.

If you go with hours/comp rationale, biglaw looses every time to banking. Hours are getting better in banking as you move up the ladder but it goes pretty much to the other way in biglaw. If you have a strong will (which is unlikely in both professions) to stay in biglaw for 7+ years, you'd work much more hours than your counterpart in banking and still earns ~400K when in banking you gets paid ~800K with less hours.

Of course, I'm not saying banking is better than biglaw. I'm just saying talking about comps/hours is not the strongest argument we can make when comparing it with banking. And that's surely not the reason why I'm in biglaw.

[Anonymous User]

wow, there are several classmates at my school (CCN) worked as IB analysts in bulge bracket before law school ... wonder why they chose to go to law school instead (they are doing corporate law after graduation)

I'm one of those and starting to question myself if I've made the right choice...Of course I wouldn't go to law school if I only cared about money, but you know, making the same money in 8 years in biglaw when you could've made it in 2 years without going to law school (adding 3 additional years), this is something to question yourself.

Adding 3 years of law school, the difference in years to make $400K is actually 9 years (6+3), from 3rd year IBD analyst's point of view. Hah. Of course I'm one of the very few people who wanted to go to law after banking but this is... a lot man.

[Anonymous User]

yeah market thinks biglaw associates are not worth enough to get paid similar to banking. Suck it up guys.

[Anonymous User]

Just FYI, the run-of-the-mill BofA associate will NOT be making $350k. Banks last bumped comp ~7 years ago from $125 to $150k but took that $25k out of bonuses so total comp was roughly flat. I'm not super plugged into the IBD community these days but my impression was that your typical associate bonus was ~$100-125k, with the absolute rockstars getting $150k. I'd imagine something similar this year, maybe bumped up a bit -- call it $250-300k all-in with a handful of outliers on the high end. Still much higher than biglaw but the hours are worse, your odds of getting fired are higher, and the jobs are harder to get so I'd call it a wash.

[2013]

Realistically, how many banks are paying associates this much? 10? 20?

I have friends at BoA and they were nowhere near these amounts as associates, so I’m confused as to why everyone on here makes it seem like this is lockstep.

[Anonymous User]

Realistically, how many banks are paying associates this much? 10? 20?

I have friends at BoA and they were nowhere near these amounts as associates, so I’m confused as to why everyone on here makes it seem like this is lockstep.

Are your friends in investment baking at BOA? They just announced today that 25K pay raise for IB associates and VPs. I'm from one of top BB IBD and my friends there are making 90~120% bonus out of their base. Of course, it is not lock step, but the variance is not that big. After all, they are not hedge funds.

To respond to another anon's saying that they'd cut the bonus so the total comp would stay largely the same, the word on the street is that this will not likely drag down the bonus % as PE firms are increasing the comp (both in salary and bonus) at the same time.

About the size of the pool in ib, yeah it's much smaller than biglaw. There'd typically 15-20 IBs (bulge bracket firms and some elite boutique firms) to match new BoA base salary, and averaging out their intake size for associate positions, it would be close to V10's intake for NY and some other major offices. To follow your logic, those people should be pissed off then.

[2013]

Realistically, how many banks are paying associates this much? 10? 20?

I have friends at BoA and they were nowhere near these amounts as associates, so I’m confused as to why everyone on here makes it seem like this is lockstep.

Are your friends in investment baking at BOA? They just announced today that 25K pay raise for IB associates and VPs. I'm from one of top BB IBD and my friends there are making 90~120% bonus out of their base. Of course, it is not lock step, but the variance is not that big. After all, they are not hedge funds.

To respond to another anon's saying that they'd cut the bonus so the total comp would stay largely the same, the word on the street is that this will not likely drag down the bonus % as PE firms are increasing the comp (both in salary and bonus) at the same time.

About the size of the pool in ib, yeah it's much smaller than biglaw. There'd typically 15-20 IBs (bulge bracket firms and some elite boutique firms) to match new BoA base salary, and averaging out their intake size for associate positions, it would be close to V10's intake for NY and some other major offices. To follow your logic, those people should be pissed off then.

I should clarify that my friend was in IB but this was 4-5 years ago.

[Anonymous User]

Realistically, how many banks are paying associates this much? 10? 20?

I have friends at BoA and they were nowhere near these amounts as associates, so I’m confused as to why everyone on here makes it seem like this is lockstep.

Are your friends in investment baking at BOA? They just announced today that 25K pay raise for IB associates and VPs. I'm from one of top BB IBD and my friends there are making 90~120% bonus out of their base. Of course, it is not lock step, but the variance is not that big. After all, they are not hedge funds.

To respond to another anon's saying that they'd cut the bonus so the total comp would stay largely the same, the word on the street is that this will not likely drag down the bonus % as PE firms are increasing the comp (both in salary and bonus) at the same time.

About the size of the pool in ib, yeah it's much smaller than biglaw. There'd typically 15-20 IBs (bulge bracket firms and some elite boutique firms) to match new BoA base salary, and averaging out their intake size for associate positions, it would be close to V10's intake for NY and some other major offices. To follow your logic, those people should be pissed off then.

I should clarify that my friend was in IB but this was 4-5 years ago.

Yeah i dont know what the comps were back then but that makes sense. IB associates at big banks are now starting at 150K with 80~120% bonus on top of it. But BoA announced today 25K increase in base salary and it's expected to be followed by many other peer firms on the street. One mega PE firm announced today 30% increase in total comps too, making 2nd year to 400K (typically 4th year out of undergrad) The finance market is going crazy now.

[Anonymous User]

A raise in base pay would have to come from one of the top firms, and they really have no incentive to shake the boat. It's in DPW's interest to keep the current system where a firm with an RPL of 700k and a firm with an RPL of 1.5m pay the same base salary to associates.

Currently, there is a non-negligible concern that the Baker McKenzie's and the DLA Piper's of the legal industry would genuinely be unable to match a base pay increase to 220-230K. That could end lockstep compensation for Biglaw and firms would be forced to differentiate more via comp.

All of that eats into the Yacht Fund, so why would partners ever choose to do so?

[Anonymous User]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

You guys are working 60~80 hours now? We're being crushed with +80/weeks. I don't think I work meaningfully less than my friends in banking.

What? 80hrs is the LOW low end in IB, and it's been like that pre-COVID. Hour range for friends in IB who started as analysts has been closer to 100-120hrs. Even for associates, it's more like 90-110hrs.

[Anonymous User]

Also IB hours are significantly worse than big law.

Big law: 60-80 hrs in typical week
IB: 80-100 hrs in typical week

It's less pay but I'll accept that tradeoff. Not to mention that it is significantly easier to coast in biglaw while IB is very much you're out after 2-3 years

You guys are working 60~80 hours now? We're being crushed with +80/weeks. I don't think I work meaningfully less than my friends in banking.

What? 80hrs is the LOW low end in IB, and it's been like that pre-COVID. Hour range for friends in IB who started as analysts has been closer to 100-120hrs. Even for associates, it's more like 90-110hrs.

Well yeah I'm comparing with associates and above in banking because they are the counterpart ranks. My friends who are still in banking are at least senior associates or VPs and they work +80 hours, possibly more than I do in biglaw but not meaningfully more.

[Anonymous User]

In the 90s, big law comp was pushed up to meet rising banker comp because corporate associates from Cravath, S&C, DPW and the like can (and sometimes do) transition into banking. It’s not most or even many who make the jump but the last thing law firms need is a “brain drain” of their best corporate talent to banking. Given the ever declining QOL for those particularly at the top of big law, I wouldn’t be shocked if DPW or some similarly slammed shop decided that it needed to increase pay again to keep the kind of people it wants to stay from jumping to banks.

[Anonymous User]

In the 90s, big law comp was pushed up to meet rising banker comp because corporate associates from Cravath, S&C, DPW and the like can (and sometimes do) transition into banking. It’s not most or even many who make the jump but the last thing law firms need is a “brain drain” of their best corporate talent to banking. Given the ever declining QOL for those particularly at the top of big law, I wouldn’t be shocked if DPW or some similarly slammed shop decided that it needed to increase pay again to keep the kind of people it wants to stay from jumping to banks.

I think it's likely since the lateral market in biglaw is on fire but they are not getting the number of man power they need to take up the endless work. It's a signal that there is not enough supply of legal labor to do the work at current market rate. So I'm cautiously hopeful that top biglaw firms will sooner or later push up the base salary - and eventually there'd be salary gap between top biglaw and mid-tier biglaw.

[2013]

In the 90s, big law comp was pushed up to meet rising banker comp because corporate associates from Cravath, S&C, DPW and the like can (and sometimes do) transition into banking. It’s not most or even many who make the jump but the last thing law firms need is a “brain drain” of their best corporate talent to banking. Given the ever declining QOL for those particularly at the top of big law, I wouldn’t be shocked if DPW or some similarly slammed shop decided that it needed to increase pay again to keep the kind of people it wants to stay from jumping to banks.

I think it's likely since the lateral market in biglaw is on fire but they are not getting the number of man power they need to take up the endless work. It's a signal that there is not enough supply of legal labor to do the work at current market rate. So I'm cautiously hopeful that top biglaw firms will sooner or later push up the base salary - and eventually there'd be salary gap between top biglaw and mid-tier biglaw.

The cutoff will probably be firms with RPLs over $1M.

[Anonymous User]

In the 90s, big law comp was pushed up to meet rising banker comp because corporate associates from Cravath, S&C, DPW and the like can (and sometimes do) transition into banking. It’s not most or even many who make the jump but the last thing law firms need is a “brain drain” of their best corporate talent to banking. Given the ever declining QOL for those particularly at the top of big law, I wouldn’t be shocked if DPW or some similarly slammed shop decided that it needed to increase pay again to keep the kind of people it wants to stay from jumping to banks.

I think it's likely since the lateral market in biglaw is on fire but they are not getting the number of man power they need to take up the endless work. It's a signal that there is not enough supply of legal labor to do the work at current market rate. So I'm cautiously hopeful that top biglaw firms will sooner or later push up the base salary - and eventually there'd be salary gap between top biglaw and mid-tier biglaw.

The cutoff will probably be firms with RPLs over $1M.

Yeah probably, but it's gonna be partly based on their economics but also based on law firms' long term strategy. Some may be willing to sacrice the possibility of not getting the top talent but target to shift gears to economies of scale strategy if there is enough work in the market.

In any scenario, the same pay system in the broad biglaw is at near end. There is no profession or industry where ~100 firms have been paying at the same scale, at least for this long. Law firms in other countries for example have evolved into ones with differentiated pay scale over time.

[Anonymous User]

Regardless of what IB salaries are doing, BL salaries should rise soon given the increase in profits/work most firms are experiencing. I really hope so at least.

[Anonymous User]

DPW’s profits per partner jumped an insane 40% this year to $6.3 million, second only to Wachtell based on the preliminary reports from Law.com. They’re head and shoulders above Cravath/S&C/Paul Weiss/etc. PPP figures right now, so they might be the best positioned to lead a raise - if they wanted to. But since they just led the bonus round, I don’t see them raising base salaries anytime soon.

[Anonymous User]

DPW’s profits per partner jumped an insane 40% this year to $6.3 million, second only to Wachtell based on the preliminary reports from Law.com. They’re head and shoulders above Cravath/S&C/Paul Weiss/etc. PPP figures right now, so they might be the best positioned to lead a raise - if they wanted to. But since they just led the bonus round, I don’t see them raising base salaries anytime soon.

I thought KE's PPEP is higher?

[Anonymous User]

DPW’s profits per partner jumped an insane 40% this year to $6.3 million, second only to Wachtell based on the preliminary reports from Law.com. They’re head and shoulders above Cravath/S&C/Paul Weiss/etc. PPP figures right now, so they might be the best positioned to lead a raise - if they wanted to. But since they just led the bonus round, I don’t see them raising base salaries anytime soon.

I thought KE's PPEP is higher?

I guess I was focusing on the NYC shops. KE’s PPEP jumped 20% to $6.2 million. So I guess they could make the move if they wanted to as well.