Will Associate Salaries Increase?
According to information published in a recent Vault.com article, BigLaw associate starting salaries have remained stagnant for several years — so, now that 2015 is upon us, what can we expect from major law firms? Can we expect these firms to increase associate salaries this year? As a reminder, in 2014, first-year associates starting at large law firms in New York typically earn $160,000. Although the starting salary in New York is high, across the nation, most first year associates are less likely to be making that amount. In particular, Vault.com notes that the $160,000 figure “represented only 27% of first-year salaries reported in 2014; whereas in 2013, two-thirds of first-year salaries were at that level”. Not surprisingly now, in 2015, associates across the nation are eager to see an increase in their salaries, especially as the overall legal market has improved and firms are enjoying record profits. Indeed, according to Vault.com, associates have expressed the following concerns about whether law firm profits have “trickled down” to associate salaries and bonuses:
“The fact that base salary hasn’t changed since 2007 is frustrating given inflation and the current health of the industry. Stagnant bonuses are equally as frustrating particularly given the record profits firms enjoyed across the industry this year.”
“Although we are very well paid, our bonuses have never been brought back to the levels they were at pre-economic turndown (despite the fact that the firm is more profitable than ever).”
“There are no financial incentives to work harder here. Partners make ridiculous profits and associates do not share in any of the bounty.”
“Hard to say that I’m being cheated at $300K/year, but no doubt this will be another record-breaking year for the profits per partner, and we haven’t seen associate salaries or bonuses increase since 2007.”
In addition to concern about the fairness of whether associate salaries and bonuses reflect the upturn of the legal market, associates are also concerned about whether their salaries and bonuses have increased to cover increased law school tuition costs. Because law school tuition has increased so much over the past several years, the salary and bonuses that may come from being an associate do not hold the same weight they once have, especially when associates are forced to pay back weighty student loans. Associates have this to say about such an issue:
“Given the amount of time we spend working, the fact that PPP [profits per partner] is higher than ever, the fact that law school wages have gone up since the great recession, one would expect a greater reward. I don’t think partners, who likely paid off their student loans after two or three bonuses, understand how long it will take for associates today to pay off student loans.”
“It is time for a raise. Law school tuition has skyrocketed since the move to $160k and I’m pushing $300,000 in debt paying for both undergrad and law school. The days of the big bonuses helping you pay off your student loans are over, and billing over 200 hours per month has me feeling like even the coveted $160k is not commensurate with my work or sufficient to justify the cost of a legal education.”
Thus, even with these associate concerns, what are Big Law law firm management committees going to decide about associate salaries in 2015? To some, it seems like associate salaries will not increase any time soon. After all, firms have no real incentive to increase the salary market rate as the demand for associates has remained relatively consistent. So, at this point, it’s wait and see! Notoriously, and as we know, law firm management committees make their own decisions and are not always influenced by outside circumstances. As a result, the legal industry will assess the trends as salaries are announced. Regardless, as it stands now, young lawyers and law students are advised to navigate the market carefully, mindful of their debt and seek the best opportunities that their law degree and experience may afford them.
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Are you reviewing your law firm career options? Do you need some assistance in managing your professional development, salary options, and ambitions? If so, contact a Career Counselor with Lexacount Search’s Career Consulting Services. Further, if you are interested in associate, partner, or counsel, in-house or other roles in the legal industry, contact a Search Consultant from Lexacount Search’s Legal Group.