Bar News - May 9, 2008
The Big Apple, Big Salaries and Rethinking Re-entry
By: Jessica E. Storey
|Jessica E. Storey
Last year, when one large NYC firm (Simpson Thacher) bumped first year associate salaries to $160,000, that news flew through the ranks of associates around the country and then into newspapers and countless blogs. The increase was noteworthy for several reasons – not the least of which was the absolute value it represents. It followed a similarly impressive increase from $120,000 to $145,000 made the previous year. It was followed by immediate decisions at several large, competing firms to match – an expected match, but perhaps one that management at those firms had hoped not to have to make.
Those increases are not matched by New Hampshire, or even most Boston firms, but they certainly have (and had) a ripple effect of pushing associates’ salaries up throughout the country.
The news on associates’ salaries this year is no news from NYC so far. In fact, the Wall Street Journal Online reported recently that some large law firms around the country have scaled back their summer and first-year associate programs, either rescinding offers or shortening summer programs by a few weeks. Apparently, the slumping mortgage and private equity markets is taking its toll on soon-to-be lawyers. (One of the pressures creating the gross increases in the NYC associates’ salaries is the opportunity in investment banking that those associates have proximity to. There is a lot of money to be made in that market – and reports are that the hours are better. The flip-side is that when the market flips over, large NYC law firms do not have to raise new associate salaries to compete for that talent.)
Many readers may find this reminiscent of the magnitude of starting salary increases in the late 1990s and the subsequent stall in salaries and tightening in the associate job market.
While big firms once again seem to be a bit more cautious about investing in the newest of their associates (I suppose we should keep it real by remembering that $160,000 is still a remarkable starting point), they are beginning to make changes that could represent significant investments in their mid-level associates and partners, especially new mothers and fathers. For example, Skadden Arps has introduced two programs, Flexible Return from Maternity and Sidebar, – which are "on-ramp" programs, i.e., formal re-entry programs after lawyers take time off. These programs are modeled on programs that have been implemented in a few large accounting firms to encourage people who take time off and start a family to come back to work by providing targeted networking and educational opportunities.
These types of programs are beginning to spread to other large law firms. Another example is the ABA’s Back to Business Law project, which offers CLEs on hot business law issues to attorneys who are taking time off (in particular new mothers) to keep them up-to-date and provide networking. A pilot project begun in 2006, the ABA program is available in NYC.
What is a ripple effect on salaries might be more aptly characterized as a trickle-down effect on benefit or work/life balance initiatives when it comes to whether the latter initiated in the biggest, most financially able firms will be initiated in smaller markets. No one would accuse the practice of law of changing too quickly, but it appears that an industry shift is in the works, whether in response to persistent data showing that many women enter the field and many women leave it (see Kristin A. Mendoza’s article in Bar News March 7, 2008), or to criticism of paying startling starting salaries to the greenest lawyers rather than increasing investments in associates who are beginning to provide a return on the firm’s investment.
Formal re-entry programs are one new way that law firms may begin to address some of the work/life balance issue.
Jessica E. Storey is an attorney with Orr & Reno in Concord. She has been a NH Bar member since 2005.