2014 was gangbusters all around...NYC to 190k? Forum

[Hutz_and_Goodman]

The issue for big law firms is whether they want to "fill their classes" or actually have relatively competent associates. It's true that right now there are a couple hundred people graduating each year in the bottom 10% of the T14 without a job, and hundreds graduating in the top 1/3 range from a T15-35 without a job. If big law firms are happy to hire people like this then they can stay at 160K. But if they want to attract people who have done relatively well at a T14 or killed it at a lower ranked school they will run out of labor in the current market. Applications are down every year (~40% since 2007) and with the economy improving it is increasingly possible for law grads to get jobs in other fields.

[84651846190]

The issue for big law firms is whether they want to "fill their classes" or actually have relatively competent associates. It's true that right now there are a couple hundred people graduating each year in the bottom 10% of the T14 without a job, and hundreds graduating in the top 1/3 range from a T15-35 without a job. If big law firms are happy to hire people like this then they can stay at 160K. But if they want to attract people who have done relatively well at a T14 or killed it at a lower ranked school they will run out of labor in the current market.

lol, no. it would blow your mind to see how many superbly qualified applicants are getting turned down at my firm recently. i'm talking about people who are in the top 10% at T14s

[Hutz_and_Goodman]

I have never heard of someone top 10% at a T14 who cannot get big law
Is this person autistic?

[84651846190]

I have never heard of someone top 10% at a T14 who cannot get big law
Is this person autistic?

dude, i'm talking about before the callback or even initial interview phases. we get shitloads of resumes for lateral and entry level candidates all the time

[A. Nony Mouse]

I mean, there are still tons of people going to top law schools. What do biglaw firms have to worry about? They're filling their classes. Why on earth would they need to recruit people to go to law school - and even if they did, again, is salary really the issue? Is there any meaningfully-sized group of people who would turn down biglaw at $160k but bite at $175k or $190?

Who knows if there is a group of people who would turn down biglaw at $160k but would bite at $190k? The answer is probably yes, and the people are probably populated by very high achieving college students that have other very lucrative options. But I haven't done a survey, so maybe not.

Some firms care more than just filling their classes. A Cravath doesn't hire lateral partners (or does so very rarely). They need at least some of their associates to not only be partner material, but also to stay long enough to make partner. Sure, most of their class is just warm bodies who will be gone in a couple years - but they still need to attract and retain that type of talent.

That said, it makes more sense to compensate with a bonus that can be taken away in a down year.

Sorry to double post, but: yeah, I'm sure there are some firms who care more than I made that sound and are very concerned about retention. "Fill their classes" is probably more flippant than is accurate. I still don't see any evidence that they think 1) the solution is to encourage more people to go to law school and 2) raising salaries is the best way to do so. (Not suggesting you mean that either, just wanted to make clear the limits of what I meant to say.)

If anyone has evidence of that, that's great. It may be true, or true of some firms. I'd like something beyond "it's economically logical that this is true," though, because I don't buy that.

Also, re: applications going down - have any of the T14 [or insert scale of choice here] actually reduced class sizes? I'm pretty sure it's only lower-ranked schools really feeling the hurt.

[Yardbird]

I mean, there are still tons of people going to top law schools. What do biglaw firms have to worry about? They're filling their classes. Why on earth would they need to recruit people to go to law school - and even if they did, again, is salary really the issue? Is there any meaningfully-sized group of people who would turn down biglaw at $160k but bite at $175k or $190?

Who knows if there is a group of people who would turn down biglaw at $160k but would bite at $190k? The answer is probably yes, and the people are probably populated by very high achieving college students that have other very lucrative options. But I haven't done a survey, so maybe not.

Some firms care more than just filling their classes. A Cravath doesn't hire lateral partners (or does so very rarely). They need at least some of their associates to not only be partner material, but also to stay long enough to make partner. Sure, most of their class is just warm bodies who will be gone in a couple years - but they still need to attract and retain that type of talent.

That said, it makes more sense to compensate with a bonus that can be taken away in a down year.

Sorry to double post, but: yeah, I'm sure there are some firms who care more than I made that sound and are very concerned about retention. "Fill their classes" is probably more flippant than is accurate. I still don't see any evidence that they think 1) the solution is to encourage more people to go to law school and 2) raising salaries is the best way to do so. (Not suggesting you mean that either, just wanted to make clear the limits of what I meant to say.)

If anyone has evidence of that, that's great. It may be true, or true of some firms. I'd like something beyond "it's economically logical that this is true," though, because I don't buy that.

Also, re: applications going down - have any of the T14 [or insert scale of choice here] actually reduced class sizes? I'm pretty sure it's only lower-ranked schools really feeling the hurt.

UVA reduced from 356 to 330 to 307 for Class of 2015>Class of 2016>Class of 2017.

[Hutz_and_Goodman]

Most of the T14 has been reducing class size, although not as severely as lower ranked schools

[Hutz_and_Goodman]

I have never heard of someone top 10% at a T14 who cannot get big law
Is this person autistic?

dude, i'm talking about before the callback or even initial interview phases. we get shitloads of resumes for lateral and entry level candidates all the time

This is hard to believe unless the lateral is currently working at Legal Aid or something

[baal hadad]

No reason to raise jr assoc salaries

Use $ to retain valuable/partner track midlevels

Or better yet to keep business generating partners from leaving for other firms

[Johann]

The issue for big law firms is whether they want to "fill their classes" or actually have relatively competent associates. It's true that right now there are a couple hundred people graduating each year in the bottom 10% of the T14 without a job, and hundreds graduating in the top 1/3 range from a T15-35 without a job. If big law firms are happy to hire people like this then they can stay at 160K. But if they want to attract people who have done relatively well at a T14 or killed it at a lower ranked school they will run out of labor in the current market. Applications are down every year (~40% since 2007) and with the economy improving it is increasingly possible for law grads to get jobs in other fields.

this isnt the issue at all. less associates are needed than 10 years ago and overall supply has gone up. i would wager associates now are more competent than ever because you now have the bottom 10% of t14 getting shutout where they used to get hired and you also now have only the top of regional schools getting biglaw where half the class used to be solid. there is no law firm having this problem with 1st years relative to 10, 20, 30 years ago. this also assumes that being a good lawyer means being good at law school - which it doesnt really.

in addition, more of the job is automated with good tech. the shit you used to have lawyers spend long manual hours doing is automated to a great deal with much less margin of error. it really is hilarious to hear nonpracticing attorney talk about how valuable they think they are.

to give you people another data point - most lawyers fresh out of law school make like 60k. Your value is a lot closer to that (as a first year) than 190k.

[Johann]

to all you people parroting decreasing class sizes in the last couple years - you are being blinded. a much better ratio to track is:

T-14 graduates/Biglaw entry level hiring. You want to look at that ratio from about 1985 every 5 years to today. I would bet we are at close to an all time high ratio (which means supply is way above demand) relative to the history of being a lawyer.

you guys thinking you are buying low on legal education right now are dumb. This is like the collapse of AOL and everyone buying the stock after it loses 50%. It still has a lot further to go.

[Tiago Splitter]

to all you people parroting decreasing class sizes in the last couple years - you are being blinded. a much better ratio to track is:

T-14 graduates/Biglaw entry level hiring. You want to look at that ratio from about 1985 every 5 years to today. I would bet we are at close to an all time high ratio (which means supply is way above demand) relative to the history of being a lawyer.

you guys thinking you are buying low on legal education right now are dumb. This is like the collapse of AOL and everyone buying the stock after it loses 50%. It still has a lot further to go.

Hiring in 2013 was basically the same as was happening prior to the 2007-2008 bubble and T14 class sizes have been pretty stable. Biglaw hiring in the 90's was half of what it was in 2013.

[sublime]

..

[Johann]

ah. well my apple to apples failed. but im still confident that the oversupply is near an all time high but the numbers would get trickier. instead of t14 the numerator should be t14 grads +.25(t15-t50) grads + .10(t50-t100) grads +.03 (t100 and below). wherever we are at on 40,000 to 6,000 jobs is insane and really doesn't beg for a price increase for first years.

i do however agree midlevels will be looking at 30k increased salaries soon

[Johann]

I think the only way it happens is if at some point NYC firms feel they are losing juniors to other markets (Texas being the main one).

yeah agree with something like this but not gonna happen. people like nyc and oil and gas is about to reek a little negative havoc on texas market.

[Tiago Splitter]

wherever we are at on 40,000 to 6,000 jobs is insane and really doesn't beg for a price increase for first years.

I'm with you and last year was 48k/6100, but even 2007 was 43,500/8200 so who knows. Things have always sucked but class of 2018 at like 30k grads might be interesting.

[DELG]

i didn't read the whole thread but doesn't really have much to do with attracting first years. First year salary just floats up with midlevel and senior salaries as firms try to squeeze a little more life out of you.

And it's not so much to pay more than the alternatives, it's just tightening the golden handcuffs, because if the state AG's office isn't a big enough pay cut, fuck you, I'm gone.

Also who gives a shit how many people graduate from LS every year. The only question is, how many people went to a large law firm and stuck it out long enough to be desirable as a lateral in their practice area. Hot practice areas are desperate for people.

[Hutz_and_Goodman]

ah. well my apple to apples failed. but im still confident that the oversupply is near an all time high but the numbers would get trickier. instead of t14 the numerator should be t14 grads +.25(t15-t50) grads + .10(t50-t100) grads +.03 (t100 and below). wherever we are at on 40,000 to 6,000 jobs is insane and really doesn't beg for a price increase for first years.

i do however agree midlevels will be looking at 30k increased salaries soon

This doesn't account for a lot of stuff including that not every T14 grad wants big law and lot of top grads from T15-200 are not leaving the region of their school no matter what (they aren't competing for big law in a big market). I wasn't trying to suggest above that there is a labor crisis in big law for 1st years but I really do think firms are going to be pressed more and more, and everything suggests the market for mid levels is getting a lot better.

[Hutz_and_Goodman]

Also johann of course a lot of tasks once done by attorneys are now automated
But the population is increasing, the stock market is above 18,000 there is more activity every year which requires legal services
So this is an important counterforce

[philly33]

As many have pointed out, midlevel retention is what would drive up salaries. But be clear, if midlevel salaries go up, entry level is almost certain to increase as well. That's because pay increases, as least in the past, have been retroactive. Imagine a law firm raising salaries for mildevels, while telling their brand new associates to shove it. Not good for morale. So instead they just increase midlevel bonuses more than first-year bonuses.

Companies seem to be slowly increasing the size of their legal departments because it makes financial sense. A couple associates who left the firm I summered at told me the firm was surprised to hear how much money they were getting paid to go in house. It's probably not serious enough yet, but it's likely firms will continue to feel pressure from other entities poaching their legal talent. Let's hope this leads them eventually increase compensation in a more permanent manner.

[Johann]

Honestly instead of NYC to 190k people should be preching inhouse to smart raises. Inhouse companies have been stacking legal teams and they are loving the dollars saved and its creating great relationships - 1 client you focus on with worklife balance. And this is actually a movement. Inhouse companies to 160 and lockstep!!!

[UnicornHunter]

As many have pointed out, midlevel retention is what would drive up salaries. But be clear, if midlevel salaries go up, entry level is almost certain to increase as well. That's because pay increases, as least in the past, have been retroactive. Imagine a law firm raising salaries for mildevels, while telling their brand new associates to shove it. Not good for morale. So instead they just increase midlevel bonuses more than first-year bonuses.

Companies seem to be slowly increasing the size of their legal departments because it makes financial sense. A couple associates who left the firm I summered at told me the firm was surprised to hear how much money they were getting paid to go in house. It's probably not serious enough yet, but it's likely firms will continue to feel pressure from other entities poaching their legal talent. Let's hope this leads them eventually increase compensation in a more permanent manner.

I'm not saying that you're wrong, but a: since when have law firms cared about low-level associate morale and b: why would midlevels getting a pay raise hurt new associate morale? They will be benefiting from that raise in a year or two, it would be the height of pettiness to get upset that midlevels got a salary boost.

[philly33]

As many have pointed out, midlevel retention is what would drive up salaries. But be clear, if midlevel salaries go up, entry level is almost certain to increase as well. That's because pay increases, as least in the past, have been retroactive. Imagine a law firm raising salaries for mildevels, while telling their brand new associates to shove it. Not good for morale. So instead they just increase midlevel bonuses more than first-year bonuses.

Companies seem to be slowly increasing the size of their legal departments because it makes financial sense. A couple associates who left the firm I summered at told me the firm was surprised to hear how much money they were getting paid to go in house. It's probably not serious enough yet, but it's likely firms will continue to feel pressure from other entities poaching their legal talent. Let's hope this leads them eventually increase compensation in a more permanent manner.

I'm not saying that you're wrong, but a: since when have law firms cared about low-level associate morale and b: why would midlevels getting a pay raise hurt new associate morale? They will be benefiting from that raise in a year or two, it would be the height of pettiness to get upset that midlevels got a salary boost.

The firms that would raise salary (an STB/Cravath/Skadden) would care more about the morale than other firms might, especially since it's a salary raise. No need to upset morale in good times. Plus law firms are just as insecure as law students. What kind of message would it send to raise salaries for only some lawyers? Firms want to be seen as strong as possible. Only being able to raise salaries for some associates could be viewed as weakness.

Plus those firms are also lockstep. Raising salaries for only some associates would violate the spirit of the lockstep model that some of these places still pride themselves on

It would hurt morale because lawyers can be petty. How many firms were shamed into going from STB scale to DPW scale by ATL? A lot of associates viewed it as their firm not valuing associates as much as other firms valued their associates. The same kind of animosity could easily be aimed internally at different class levels.

It's all just dumb speculation anyways.

[lacrossebrother]

No reason to raise jr assoc salaries

Use $ to retain valuable/partner track midlevels

Or better yet to keep business generating partners from leaving for other firms

Nah dude. You up Capex. Get your name on a tower.

Standing desks and quad monitors for everyone.

Maybe sponsor a bowl game?

[wiz]

I think the only way it happens is if at some point NYC firms feel they are losing juniors to other markets (Texas being the main one).

I'm not sure that would even work at this point. Latham and GDC are already heavy hitters in Texas, and Kirkland will be there soon (STB, Sidley, and Jones Day also have established/growing presences). Even if NYC went up, one of those firms would match, meaning their TX offices would also go up, and then presumably the larger firms in TX would also increase. Doesn't make much sense to drive entry level salaries up if retention is the goal.