Junior attorney salaries are rising above $ 200,000 at many top law firms for the first time, following a year of record earnings in the legal industry and competition to retain a workforce that has billed long hours. at home during the pandemic.
Corporate law firms are unique among companies in that they typically increase wages in tandem, with a few market leaders triggering moves across the industry.
New York law firm Milbank LLP kicked off the latest round of wage wars on Thursday, announcing wage increases of between 4.4% and 5.9% for attorneys without a partnership stake in the firm. The raises changed the salary of newly graduated attorneys to $ 200,000, up from the $ 190,000 benchmark that Milbank set in the last sweeping round of raises three years ago.
There were signs on Friday that the new industry standard is likely to rise further, and New York-based Davis Polk & Wardwell LLP told its attorneys that his salary would rise to between $ 202,500 for graduates of the school. of the Class of 2021 and $ 365,000 for those who had been with the company for at least eight years.
Large law firms did well financially during the pandemic. Many reported double-digit earnings for partners, thanks to the boom in transactional work and falling expenses as attorneys no longer traveled around the world to meet with clients.
“It was almost unseemly not to convey some of that” to younger attorneys, said James Leipold, executive director of the National Association for Lawyer Placement, which tracks industry hiring and pay trends.
Attorneys in the lower categories often bill around 2,000 hours a year, which may require spending more than 40 hours a week when taking into account the time spent on tasks that are not directly billed to clients. During the pandemic, many young lawyers worked in isolation at home, missing the social gatherings and late-night office dinners that once helped ease the workload.
“It has been difficult,” said Scott Edelman, president of Milbank. “There is no division between work and no work, and the recharge of social interactions.”
Edelman said the company’s decision to raise salaries followed a successful year for Milbank in which revenue increased 15.6% to $ 1.23 billion and average partner earnings increased nearly 16% to about $ 4.5 million. He said the influx of work and rising cost of living prompted the move.
Other firms that have made raises in the past two days include New York firm Cadwalader, Wickersham & Taft LLP, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, based in Boston, and Proskauer Rose LLP, a 725 attorney. Many law firms have also paid bonuses to their associates during the pandemic.
Not all large companies will immediately compete to match the new pay scale. For example, 600 attorney Nixon Peabody LLP told his attorneys about a new compensation system last week that set starting salaries at $ 120,000 to $ 190,000, and said Friday that he does not plan to make any further changes.
Only a fraction of law school graduates each year land in companies that pay the highest salaries, dwarfing entry-level salary in other industries. New psychologists and CPAs earn less than $ 60,000 a year, according to consultancy Mercer LLC, which also said that beginning teachers earn $ 80,000 and medical assistants $ 110,000.
Law firms typically increase hourly rates that clients are billed each year, which, coupled with the steady flow of work, will make salary increases easy to absorb, firm leaders and consultants said Friday. lawyers.
Large law firms charge their clients between $ 371 and $ 665 an hour for lawyers recently graduated from law school, according to Bodhala, a market intelligence firm. Fees for attorneys in their third year of practice go up to between $ 473 and $ 914, Bodhala data shows.
Law firm leaders say they are in a fight for top talent, as higher-than-usual attrition rates during the pandemic mean they need even more attorneys to work for.
According to the legal intelligence firm Leopard Solutions, there are more than 9,000 attorney job postings and staff positions posted on law firm websites, more than I have ever tracked before.
“Money alone cannot influence many in this market,” said Laura Leopard, founder of the company. “It will take flexibility to work from home and other advantages to win in this atmosphere.”
Write to Sara Randazzo at [email protected]
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