Holding back class year Forum

[Anonymous User]

Is it common for V100 firms to hold back mid-level/senior associates’ class year as a cost-cutting measure in bad economies? Thanks

[existentialcrisis]

I don't think it's normal.

I would start looking for a new job ASAP.

[Anonymous User]

I heard that Latham may hold back an associate by a class year if such associate's billable hours were below a certain threshold.

[Anonymous User]

Not common at all in a normal economy, but in a bad economy like the one we are in, yes, quite common. Happened to me earlier this year. They will make it sound like it's a common practice and will say they will raise your class year back to where it should be in no time as long as your performance improves. But in truth, it is simply a cost cutting measure that has nothing to do with your performance, and you will be laid off in a few months if that happens to you. The only class cuts that are typical even a normal economy are those that happen when people switch practice areas or markets. Don't listen to whatever bullshit the firm tells you and start looking elsewhere.

[Anonymous User]

Not common at all in a normal economy, but in a bad economy like the one we are in, yes, quite common. Happened to me earlier this year. They will make it sound like it's a common practice and will say they will raise your class year back to where it should be in no time as long as your performance improves. But in truth, it is simply a cost cutting measure that has nothing to do with your performance, and you will be laid off in a few months if that happens to you. The only class cuts that are typical even a normal economy are those that happen when people switch practice areas or markets. Don't listen to whatever bullshit the firm tells you and start looking elsewhere.

Calling this a cost cutting measure for the firm makes no sense to me. Sure, you have to pay someone more when they bump up a class year, but you also bill them out at a higher rate. We can calculate this: the biggest jump in all in comp comes from 4th to 5th year - $65k all in. Even if you assume that the associate has very low hours (1250 sound low enough?), the salary increase would be completely offset by a rate increase of $52/hr. I think the 4th-5th year increases are probably much more than that at most firms (it's about double that at mine), so anything beyond that is EXTRA profit for the firm over what they would have got holding the associate back.

The better explanations are: (1) the associate actually isn't performing , so the firm can't justify billing them out at a higher rate/paying them more, (2) the associate is working for a client (or set of clients) who can't stomach another class year rate increase due to the current financial environment, or (3) there is not enough work to go around so there's no use retaining the associate at an even higher rate. While the later two aren't the associate's fault and therefore suck, they are just the natural result of law firms doing business. Firms are under no moral obligation to pay people a rate that the market won't support.

[Anonymous User]

Not common at all in a normal economy, but in a bad economy like the one we are in, yes, quite common. Happened to me earlier this year. They will make it sound like it's a common practice and will say they will raise your class year back to where it should be in no time as long as your performance improves. But in truth, it is simply a cost cutting measure that has nothing to do with your performance, and you will be laid off in a few months if that happens to you. The only class cuts that are typical even a normal economy are those that happen when people switch practice areas or markets. Don't listen to whatever bullshit the firm tells you and start looking elsewhere.

Calling this a cost cutting measure for the firm makes no sense to me. Sure, you have to pay someone more when they bump up a class year, but you also bill them out at a higher rate. We can calculate this: the biggest jump in all in comp comes from 4th to 5th year - $65k all in. Even if you assume that the associate has very low hours (1250 sound low enough?), the salary increase would be completely offset by a rate increase of $52/hr. I think the 4th-5th year increases are probably much more than that at most firms (it's about double that at mine), so anything beyond that is EXTRA profit for the firm over what they would have got holding the associate back.

The better explanations are: (1) the associate actually isn't performing , so the firm can't justify billing them out at a higher rate/paying them more, (2) the associate is working for a client (or set of clients) who can't stomach another class year rate increase due to the current financial environment, or (3) there is not enough work to go around so there's no use retaining the associate at an even higher rate. While the later two aren't the associate's fault and therefore suck, they are just the natural result of law firms doing business. Firms are under no moral obligation to pay people a rate that the market won't support.

I'm the anon you quoted. Agree with many of the points you raised. I myself work in a market where clients are extremely fee-conscious. By cost-cutting measure, I meant more like a "you will get laid off soon" measure. Apologies for the confusion. Nobody ever thinks firms owe any moral obligation to keep associates around or pay them well. Just saying OP should look elsewhere because in this economy, if you are getting a class year cut even when you haven't changed your practice area or market, you will be likely to get laid off soon. The writing's on the wall and the firm now has the paper trail.

[Anonymous User]

I work at a V100 that can sometimes be sticklers about hours and getting the class year raise - they will raise your class year if you don't hit hours (by a lot) and are still overall doing fine, but limit your actual raise, do a half-raise, etc. So you'll be, say, a 4th year, but maybe making only $10k over 3rd year pay, or something like that. They'll do this even in a good economy (because they are cheap). It's some internal policy that sometimes partners will push against and sometimes they won't. Not getting the full raise does not always mean you are about to be fired - sometimes it's simply just because there's an internal policy, and your practice group or partners may still think you're doing great.

That said, if no one is assuring you it's fine and that you are still valued, and the holdback doesn't mean you aren't otherwise doing well, and that if you hit hours you'll be put back where you should be...I would definitely start looking.

[Anonymous User]

I heard that Latham may hold back an associate by a class year if such associate's billable hours were below a certain threshold.

Heard Latham NY held back several corporate associates in multiple groups this year (mostly mid-levels)

[GFox345]

Huge assumption that them holding you back a year for purposes of salary/seniority means that they won't still bill you out as if you had advanced in class standing. I doubt firms operate in such an unnecessarily even-handed way.

Not common at all in a normal economy, but in a bad economy like the one we are in, yes, quite common. Happened to me earlier this year. They will make it sound like it's a common practice and will say they will raise your class year back to where it should be in no time as long as your performance improves. But in truth, it is simply a cost cutting measure that has nothing to do with your performance, and you will be laid off in a few months if that happens to you. The only class cuts that are typical even a normal economy are those that happen when people switch practice areas or markets. Don't listen to whatever bullshit the firm tells you and start looking elsewhere.

Calling this a cost cutting measure for the firm makes no sense to me. Sure, you have to pay someone more when they bump up a class year, but you also bill them out at a higher rate. We can calculate this: the biggest jump in all in comp comes from 4th to 5th year - $65k all in. Even if you assume that the associate has very low hours (1250 sound low enough?), the salary increase would be completely offset by a rate increase of $52/hr. I think the 4th-5th year increases are probably much more than that at most firms (it's about double that at mine), so anything beyond that is EXTRA profit for the firm over what they would have got holding the associate back.

The better explanations are: (1) the associate actually isn't performing , so the firm can't justify billing them out at a higher rate/paying them more, (2) the associate is working for a client (or set of clients) who can't stomach another class year rate increase due to the current financial environment, or (3) there is not enough work to go around so there's no use retaining the associate at an even higher rate. While the later two aren't the associate's fault and therefore suck, they are just the natural result of law firms doing business. Firms are under no moral obligation to pay people a rate that the market won't support.

[Anonymous User]

I work at a V100 that can sometimes be sticklers about hours and getting the class year raise - they will raise your class year if you don't hit hours (by a lot) and are still overall doing fine, but limit your actual raise, do a half-raise, etc. So you'll be, say, a 4th year, but maybe making only $10k over 3rd year pay, or something like that. They'll do this even in a good economy (because they are cheap). It's some internal policy that sometimes partners will push against and sometimes they won't. Not getting the full raise does not always mean you are about to be fired - sometimes it's simply just because there's an internal policy, and your practice group or partners may still think you're doing great.

Wow. Is this a firm that claims to pay NY scale?