Inflation Adjusted Salary Scale Increase? Forum

[Anonymous User]

It seems almost certain that bonuses this year will be disappointing after the last two years of endless special bonuses on top of special bonuses.

But does anyone think firms may feel a need to at least raise the salary scale to account for inflation?

The scale was just raised earlier this year so I'm not optimistic, but I think we deserve it.

[Anonymous User]

It seems almost certain that bonuses this year will be disappointing after the last two years of endless special bonuses on top of special bonuses.

But does anyone think firms may feel a need to at least raise the salary scale to account for inflation?

The scale was just raised earlier this year so I'm not optimistic, but I think we deserve it.

I kinda just wanted to say "lolno," but no. The raises of the last few years are already overcompensating for inflation compared to compensation previously. For example, the total compensation in 2012 inflation adjusted was $201K for first years and $403k for either years. Current salaries are above that, without bonuses.

[Res Ipsa Loquitter]

It seems almost certain that bonuses this year will be disappointing after the last two years of endless special bonuses on top of special bonuses.

But does anyone think firms may feel a need to at least raise the salary scale to account for inflation?

The scale was just raised earlier this year so I'm not optimistic, but I think we deserve it.

I kinda just wanted to say "lolno," but no. The raises of the last few years are already overcompensating for inflation compared to compensation previously. For example, the total compensation in 2012 inflation adjusted was $201K for first years and $403k for either years. Current salaries are above that, without bonuses.

Overcompensating for the portion of inflation the federal government has conceded actually occurred.

Fixed that for you. Actual inflation has been much higher than the Biden administration’s cooked books.

[mandrewsf]

It seems almost certain that bonuses this year will be disappointing after the last two years of endless special bonuses on top of special bonuses.

But does anyone think firms may feel a need to at least raise the salary scale to account for inflation?

The scale was just raised earlier this year so I'm not optimistic, but I think we deserve it.

I kinda just wanted to say "lolno," but no. The raises of the last few years are already overcompensating for inflation compared to compensation previously. For example, the total compensation in 2012 inflation adjusted was $201K for first years and $403k for either years. Current salaries are above that, without bonuses.

Overcompensating for the portion of inflation the federal government has conceded actually occurred.

Fixed that for you. Actual inflation has been much higher than the Biden administration’s cooked books.

My man, we don't live in Communist China. No one cooks (nor could anyone cook) any books.

[giggaman1228]

yes it is impossible for the government to deceive anyone in america

-Chris

[nealric]

yes it is impossible for the government to deceive anyone in america

-Chris

Mod Note: Let's keep this thread on topic. The political response to inflation is not within scope of a legal employment forum. Feel free to discuss potential salary adjustments in response to it.

[Anonymous User]

I suspect partners already think we're overpaid. Maybe non-lawyer staff could get adjustments (which I hope they do as here in New York inflation is insane and they need it).

[nealric]

I suspect partners already think we're overpaid. Maybe non-lawyer staff could get adjustments (which I hope they do as here in New York inflation is insane and they need it).

I think business management would always prefer that their costs be lower. In the case of a law firm, the vast majority of overhead is paying employees. They may gripe, but it's really the same gripe as a restaurant owner complaining the rent is going up.

In any event, I think the term "overpaid" just means that they are being paid above market for the work they do. If you spent $50,000 on a car that the dealer across town would have sold you for $40,000, you overpaid. But just because you spent $100,000 on a car doesn't necessarily mean you overpaid- it just means you bought an expensive car. In fact, you could have gotten a good deal if the car normally sells for $110,000. Law firms are looking at the high end of the labor pool. If they wanted find people willing to work as associates for $50,000/yr, they could do so.

I think whether wages keep up with inflation will depend quite a bit on how strong the legal economy is and how big an issue retention is. Salaries go up when law firms are struggling to retain associates and get enough in the door to service the business they have. Salaries will stagnate when law firms stop having that problem. Right now, it seems to be a mixed bag, with some subgroups seeing big slowdowns and others humming along.

[cornerstone]

I suspect partners already think we're overpaid. Maybe non-lawyer staff could get adjustments (which I hope they do as here in New York inflation is insane and they need it).

I think business management would always prefer that their costs be lower. In the case of a law firm, the vast majority of overhead is paying employees. They may gripe, but it's really the same gripe as a restaurant owner complaining the rent is going up.

In any event, I think the term "overpaid" just means that they are being paid above market for the work they do. If you spent $50,000 on a car that the dealer across town would have sold you for $40,000, you overpaid. But just because you spent $100,000 on a car doesn't necessarily mean you overpaid- it just means you bought an expensive car. In fact, you could have gotten a good deal if the car normally sells for $110,000. Law firms are looking at the high end of the labor pool. If they wanted find people willing to work as associates for $50,000/yr, they could do so.

I think whether wages keep up with inflation will depend quite a bit on how strong the legal economy is and how big an issue retention is. Salaries go up when law firms are struggling to retain associates and get enough in the door to service the business they have. Salaries will stagnate when law firms stop having that problem. Right now, it seems to be a mixed bag, with some subgroups seeing big slowdowns and others humming along.

I don't have much to add, except that when inflation surges like it is now it's hard for wages to keep pace. Partners (who make a lot of money) are way more insulated from inflation (they don't see the price of bread going up), so they are going to be less concerned with matching it. As a midlevel, I have hardly noticed inflation.

The "we pay them too much already" mentality is real, and asking partners to raise total comp for seniors by $50k in a single year (in which there has already been a raise) simply because inflation is nearing 10% is not going to resonate with them. Of course, as you point out, it's a different story if they can't staff matters that will make them money.

[nealric]

I suspect partners already think we're overpaid. Maybe non-lawyer staff could get adjustments (which I hope they do as here in New York inflation is insane and they need it).

I think business management would always prefer that their costs be lower. In the case of a law firm, the vast majority of overhead is paying employees. They may gripe, but it's really the same gripe as a restaurant owner complaining the rent is going up.

In any event, I think the term "overpaid" just means that they are being paid above market for the work they do. If you spent $50,000 on a car that the dealer across town would have sold you for $40,000, you overpaid. But just because you spent $100,000 on a car doesn't necessarily mean you overpaid- it just means you bought an expensive car. In fact, you could have gotten a good deal if the car normally sells for $110,000. Law firms are looking at the high end of the labor pool. If they wanted find people willing to work as associates for $50,000/yr, they could do so.

I think whether wages keep up with inflation will depend quite a bit on how strong the legal economy is and how big an issue retention is. Salaries go up when law firms are struggling to retain associates and get enough in the door to service the business they have. Salaries will stagnate when law firms stop having that problem. Right now, it seems to be a mixed bag, with some subgroups seeing big slowdowns and others humming along.

I don't have much to add, except that when inflation surges like it is now it's hard for wages to keep pace. Partners (who make a lot of money) are way more insulated from inflation (they don't see the price of bread going up), so they are going to be less concerned with matching it. As a midlevel, I have hardly noticed inflation.

The "we pay them too much already" mentality is real, and asking partners to raise total comp for seniors by $50k in a single year (in which there has already been a raise) simply because inflation is nearing 10% is not going to resonate with them. Of course, as you point out, it's a different story if they can't staff matters that will make them money.

Yeah, I don't see wages following just to "compensate" employees for inflation. They aren't running a charity. They will raise wages if supply/demand require them to do so in order to attract and retain the sort of people they want to hire.

[Anonymous User]

It seems almost certain that bonuses this year will be disappointing after the last two years of endless special bonuses on top of special bonuses.

But does anyone think firms may feel a need to at least raise the salary scale to account for inflation?

The scale was just raised earlier this year so I'm not optimistic, but I think we deserve it.

We're all going to be billing far less over the next few years than we were before. You be the first to ask the Partners for a raise despite that. I'll be right behind you.

[Anonymous User]

It seems almost certain that bonuses this year will be disappointing after the last two years of endless special bonuses on top of special bonuses.

But does anyone think firms may feel a need to at least raise the salary scale to account for inflation?

The scale was just raised earlier this year so I'm not optimistic, but I think we deserve it.

We're all going to be billing far less over the next few years than we were before. You be the first to ask the Partners for a raise despite that. I'll be right behind you.

Sorta. Yeah, I won't bill 2500+ again, but I'm back in line with what I billed in 2018 and 2019, ~2000.

Agree though - we're not getting raises. We're heading into a recession (if we're not there already).

[mvp99]

yea I don’t get this will be the third quarter we’ve had a contraction and many other developed countries aren’t growing either. Isn’t that the basic definition of a recession since forever. But now all of the suden I’m reading arguments about why that metric doesn’t work we need to account for other factors blahblahblah it’s 2007-2008 all over again in terms of denial. We are in a recession.

[hkvkhgvhjkv6]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

[temp69420]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

[cornerstone]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

There's a clear explanation for this. Pre-'08, large corps would pay gobs of $$$ for green juniors to do endless amounts of low value, highly leveraged work like doc review or diligence. Partners could rake in gobs of cash as their junior armies slaved away.

But after the crash, in-house counsel started scrutinizing the value of the work they farmed out to expensive firms, and took an even closer eye to junior work. Some clients now refuse to pay for first years. That sparked a shift in the market from leveraged work to "high value" work - the work that clients will continue to pay top dollar for (whatever that is). I'm not saying leverage is irrelevant or that there wasn't high value work before, but things have definitely shifted.

That means firm economics are changing. Up or out isn't completely dead everywhere, but it's certainly dying. Profits are increasingly coming from mid-levels, seniors, counsel, or even NEPs who bill at near-partner rates but take a fraction of the cut. Thus, firms have intentionally incentivized associates to stay longer by raising the relative salaries of Y3+. But because law students will always flock to biglaw, and because junior work is less important to the bottom line, there hasn't been as much of an incentive for firms to do the same for juniors.

[Anonymous User]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

There's a clear explanation for this. Pre-'08, large corps would pay gobs of $$$ for green juniors to do endless amounts of low value, highly leveraged work like doc review or diligence. Partners could rake in gobs of cash as their junior armies slaved away.

But after the crash, in-house counsel started scrutinizing the value of the work they farmed out to expensive firms, and took an even closer eye to junior work. Some clients now refuse to pay for first years. That sparked a shift in the market from leveraged work to "high value" work - the work that clients will continue to pay top dollar for (whatever that is). I'm not saying leverage is irrelevant or that there wasn't high value work before, but things have definitely shifted.

That means firm economics are changing. Up or out isn't completely dead everywhere, but it's certainly dying. Profits are increasingly coming from mid-levels, seniors, counsel, or even NEPs who bill at near-partner rates but take a fraction of the cut. Thus, firms have intentionally incentivized associates to stay longer by raising the relative salaries of Y3+. But because law students will always flock to biglaw, and because junior work is less important to the bottom line, there hasn't been as much of an incentive for firms to do the same for juniors.

As someone in house who helps decide what type of outside counsel we get, I can second this from a real life experience. My company definitely will not pay for 1st or sometimes even 2nd year associates.
On a related note, NEPs are probably one of the cleverest things biglaw has done. As a client, I generally prefer to have my matters staffed/ran by a partner and will pay partner level rates, but I have no idea whether the partner is equity or not.

[CLS2023A]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

There's a clear explanation for this. Pre-'08, large corps would pay gobs of $$$ for green juniors to do endless amounts of low value, highly leveraged work like doc review or diligence. Partners could rake in gobs of cash as their junior armies slaved away.

But after the crash, in-house counsel started scrutinizing the value of the work they farmed out to expensive firms, and took an even closer eye to junior work. Some clients now refuse to pay for first years. That sparked a shift in the market from leveraged work to "high value" work - the work that clients will continue to pay top dollar for (whatever that is). I'm not saying leverage is irrelevant or that there wasn't high value work before, but things have definitely shifted.

That means firm economics are changing. Up or out isn't completely dead everywhere, but it's certainly dying. Profits are increasingly coming from mid-levels, seniors, counsel, or even NEPs who bill at near-partner rates but take a fraction of the cut. Thus, firms have intentionally incentivized associates to stay longer by raising the relative salaries of Y3+. But because law students will always flock to biglaw, and because junior work is less important to the bottom line, there hasn't been as much of an incentive for firms to do the same for juniors.

As someone in house who helps decide what type of outside counsel we get, I can second this from a real life experience. My company definitely will not pay for 1st or sometimes even 2nd year associates.
On a related note, NEPs are probably one of the cleverest things biglaw has done. As a client, I generally prefer to have my matters staffed/ran by a partner and will pay partner level rates, but I have no idea whether the partner is equity or not.

I know Kirkland has the "PC" thing (but not all equity partners use it, apparently), but is there really no other way for someone outside the firm to know who is an SP/NSP for all other firms?

[Anonymous User]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

There's a clear explanation for this. Pre-'08, large corps would pay gobs of $$$ for green juniors to do endless amounts of low value, highly leveraged work like doc review or diligence. Partners could rake in gobs of cash as their junior armies slaved away.

But after the crash, in-house counsel started scrutinizing the value of the work they farmed out to expensive firms, and took an even closer eye to junior work. Some clients now refuse to pay for first years. That sparked a shift in the market from leveraged work to "high value" work - the work that clients will continue to pay top dollar for (whatever that is). I'm not saying leverage is irrelevant or that there wasn't high value work before, but things have definitely shifted.

That means firm economics are changing. Up or out isn't completely dead everywhere, but it's certainly dying. Profits are increasingly coming from mid-levels, seniors, counsel, or even NEPs who bill at near-partner rates but take a fraction of the cut. Thus, firms have intentionally incentivized associates to stay longer by raising the relative salaries of Y3+. But because law students will always flock to biglaw, and because junior work is less important to the bottom line, there hasn't been as much of an incentive for firms to do the same for juniors.

As someone in house who helps decide what type of outside counsel we get, I can second this from a real life experience. My company definitely will not pay for 1st or sometimes even 2nd year associates.
On a related note, NEPs are probably one of the cleverest things biglaw has done. As a client, I generally prefer to have my matters staffed/ran by a partner and will pay partner level rates, but I have no idea whether the partner is equity or not.

I know Kirkland has the "PC" thing (but not all equity partners use it, apparently), but is there really no other way for someone outside the firm to know who is an SP/NSP for all other firms?

You can guess based on longevity and leadership organization, but it’s often hard to tell even if you work there. If it was easy to tell externally, that kinda defeats part of the purpose.

[Anonymous User]

As someone in house who helps decide what type of outside counsel we get, I can second this from a real life experience. My company definitely will not pay for 1st or sometimes even 2nd year associates.
On a related note, NEPs are probably one of the cleverest things biglaw has done. As a client, I generally prefer to have my matters staffed/ran by a partner and will pay partner level rates, but I have no idea whether the partner is equity or not.

I know Kirkland has the "PC" thing (but not all equity partners use it, apparently), but is there really no other way for someone outside the firm to know who is an SP/NSP for all other firms?

You can guess based on longevity and leadership organization, but it’s often hard to tell even if you work there. If it was easy to tell externally, that kinda defeats part of the purpose.

I'm not sure the distinction matters, right? Making equity often has more to do with knack for business development than skill as a lawyer. The reasons clients prefer partners is because the name is roughly proportionate to experience/skill, not because they are good at sales. That's why clients want more work done by the most senior person they're willing to pay for (I get that experience/cost are at odds from a client perspective). If not a partner, a senior. If not a senior, a mid. But heavens no we don't want that junior taking a depo, or even billing for that matter. So if a client gives a matter to a rainmaking partner who staffs it with a bunch of super-competent NEPs, I don't think the client is going to be concerned that rainmaker isn't billing doing much of the work.

Maybe I'm wrong, though. I'm just a midlevel in lit with average client-facing experience.

[nealric]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

There's a clear explanation for this. Pre-'08, large corps would pay gobs of $$$ for green juniors to do endless amounts of low value, highly leveraged work like doc review or diligence. Partners could rake in gobs of cash as their junior armies slaved away.

But after the crash, in-house counsel started scrutinizing the value of the work they farmed out to expensive firms, and took an even closer eye to junior work. Some clients now refuse to pay for first years. That sparked a shift in the market from leveraged work to "high value" work - the work that clients will continue to pay top dollar for (whatever that is). I'm not saying leverage is irrelevant or that there wasn't high value work before, but things have definitely shifted.

That means firm economics are changing. Up or out isn't completely dead everywhere, but it's certainly dying. Profits are increasingly coming from mid-levels, seniors, counsel, or even NEPs who bill at near-partner rates but take a fraction of the cut. Thus, firms have intentionally incentivized associates to stay longer by raising the relative salaries of Y3+. But because law students will always flock to biglaw, and because junior work is less important to the bottom line, there hasn't been as much of an incentive for firms to do the same for juniors.

As someone in house who helps decide what type of outside counsel we get, I can second this from a real life experience. My company definitely will not pay for 1st or sometimes even 2nd year associates.
On a related note, NEPs are probably one of the cleverest things biglaw has done. As a client, I generally prefer to have my matters staffed/ran by a partner and will pay partner level rates, but I have no idea whether the partner is equity or not.

Also in-house. Frankly, I think the “no first year” rule is kind of dumb. All it does is make the same grunt work get billed at a higher rate and annoys the firm to boot.

Better strategy is to carefully define the scope of engagement to minimize the amount of grunt work that needs to be done in the first place. Sometimes there’s no avoiding it, but there are ways to prevent firms from assigning pointless research rabbit holes.

[trebekismyhero]

First year total compensation was about $270k in 2007, adjusted for inflation. While PPP have soared since the financial crisis, associate compensation for juniors has declined dramatically, while midlevel associate compensation has remained stagnant. Below is the inflation adjusted total compensations for juniors and midlevels (salary + bonus) for associates in 2007, rounded to nearest 1000:

1st year: 270k (2007), 235k (2022)
2nd year: 296k (2007), 255k (2022)
3rd year: 329k (2007), 308k (2022)
4th year: 382k (2007), 370k (2022)
5th year: 428k (2007), 435k (2022)
6th year: 474k (2007), 475k (2022)

All figures can be verified on the biglawinvestor salary scale website.

Yes, it's time for a raise. 2022 compensation should be blowing this out of the water given the increase in PPP.

Why would you compare total comp in 2022 to a peak year like 2007? Here's what happens if we do the same for 2009 (and also don't cut out the last two class years, which are inconvenient for your argument):

1st year: 213k (2009), 235k (2022)
2nd year: 229k (2009), 255k (2022)
3rd year: 254k (2009), 308k (2022)
4th year: 292k (2009), 370k (2022)
5th year: 323k (2009), 435k (2022)
6th year: 355k (2009), 475k (2022)
7th year: 375k (2009), 515k (2022)
8th year: 394k (2009), 530k (2022)

So in a 13 year period, inflation-adjusted pay went up an average of 26%.

As another more comparable pair of years, here's 2021 vs 2007:

1st year: 270k (2007), 234k (2021)
2nd year: 296k (2007), 260k (2021)
3rd year: 329k (2007), 331k (2021)
4th year: 382k (2007), 399k (2021)
5th year: 428k (2007), 453k (2021)
6th year: 474k (2007), 503k (2021)
7th year: 493k (2007), 540k (2021)
8th year: 513k (2007), 555k (2021)

What's interesting about this is that it shows that the big change has been a shift in pay from the first-years to later classes. The economics of that seems like the much more interesting thing to think about.

There's a clear explanation for this. Pre-'08, large corps would pay gobs of $$$ for green juniors to do endless amounts of low value, highly leveraged work like doc review or diligence. Partners could rake in gobs of cash as their junior armies slaved away.

But after the crash, in-house counsel started scrutinizing the value of the work they farmed out to expensive firms, and took an even closer eye to junior work. Some clients now refuse to pay for first years. That sparked a shift in the market from leveraged work to "high value" work - the work that clients will continue to pay top dollar for (whatever that is). I'm not saying leverage is irrelevant or that there wasn't high value work before, but things have definitely shifted.

That means firm economics are changing. Up or out isn't completely dead everywhere, but it's certainly dying. Profits are increasingly coming from mid-levels, seniors, counsel, or even NEPs who bill at near-partner rates but take a fraction of the cut. Thus, firms have intentionally incentivized associates to stay longer by raising the relative salaries of Y3+. But because law students will always flock to biglaw, and because junior work is less important to the bottom line, there hasn't been as much of an incentive for firms to do the same for juniors.

As someone in house who helps decide what type of outside counsel we get, I can second this from a real life experience. My company definitely will not pay for 1st or sometimes even 2nd year associates.
On a related note, NEPs are probably one of the cleverest things biglaw has done. As a client, I generally prefer to have my matters staffed/ran by a partner and will pay partner level rates, but I have no idea whether the partner is equity or not.

Also in-house. Frankly, I think the “no first year” rule is kind of dumb. All it does is make the same grunt work get billed at a higher rate and annoys the firm to boot.

Better strategy is to carefully define the scope of engagement to minimize the amount of grunt work that needs to be done in the first place. Sometimes there’s no avoiding it, but there are ways to prevent firms from assigning pointless research rabbit holes.

Agree with Nealric. Why would I want to pay 3rd year rates to do basic due diligence? We just demand a certain % cut across the board for all rates and then for smaller matters to keep within a defined budget

[Anonymizer]

This thread has become somewhat discursive, from eoy compensation to boom/bust years inflationary comparison and now, will companies pay for juniors to do mindless work. Plz refocus on the topic at hand - should we plan to stay because firms will increase our pay or leave because they’ll be tight with $$?

DWP/MB/CSM associates, are you noticeably slower in Q2/Q3 than same time in 2021?

[Anonymous User]

This thread has become somewhat discursive, from eoy compensation to boom/bust years inflationary comparison and now, will companies pay for juniors to do mindless work. Plz refocus on the topic at hand - should we plan to stay because firms will increase our pay or leave because they’ll be tight with $$?

DWP/MB/CSM associates, are you noticeably slower in Q2/Q3 than same time in 2021?

I feel like it's been asked & answered, and we've all moved onto other topics, but to spell it out for everyone:

1. Your EOY bonus will match last year's EOY bonus (without taking into effect any COVID bonuses);
2. There will be no change in salary scale this year or the first two quarters of 2023.

[Anonymizer]

Wow, it’s all clear now. Really appreciate you spelling it out so clearly. Hmm, nope. Actually your response confirms that you are either a partner seeking to shut up the rabble of discontent associates, a soon-to-be partner who’s drinking the koolaid, or an apathetic attorney whose prospects for advancement have dwindled (i.e., soon-to-be washout). On the very off chance you’re an associate at DWP/MB/CSM, then the least you could do is meaningfully share your workflow experience. Otherwise, you’ve added nothing here. If you’re not, then you can go back anon-sniping associates on other threads.