Salary Wars and Associate Hiring

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Salary Wars and Associate Hiring [by BCG Attorney Search] The employment outlook for the upcoming year: so-so.

As a recruiting firm, we talk to both partners

firms like the now-defunct Brobeck Phleger &

making life more difficult for some young as-

and associates at firms in every major legal

Harrison in 1999 and 2000, for example, was

sociates. The dynamics are fairly simple. Many

marketplace on a daily basis. These conversa-

largely fueled by the acquisition of mercenary

firms raised associate salaries to compete

tions often concern why a lawyer is dissatis-

partners who all grouped together because

with other firms. Not all firms who raised

fied with their current firm, or what kind of

Brobeck could pay them the most money.

their compensation did so willingly, and we

lawyer a firm seeks to hire. We have discov-

Money was the defining characteristic of these

have spoken with some partners at law firms

ered that the salary increases that have taken

relationships. When the firm could no longer

who felt railroaded into the decision to raise

place over the past several years have actually

afford to pay explosive salaries to partners,

those salaries. It’s not hard to imagine why:

had the effect of straining professional rela-

one of San Francisco’s oldest and most presti-

an increase in associate salaries may mean

tionships between partners and associates

gious law firms simply collapsed.

less compensation to the firm’s partners. Al-

more that money becomes the dominating

Similarly, while most attorneys are in law

ries handled the expense in different ways, the

factor defining the relationships among attor-

school, they are most concerned about work-

more difficulty a firm had internally in making

neys, the more the profession becomes like a

ing at the highest paying firms. The thought

the adjustments, the more likely the salary

business and less like, well, a profession.

of going to a firm where the salaries might be

issue created or magnified a division between

low but the atmosphere and collegiality better,

associates and the owners of the firm.

though every firm that raised associate sala-

and also between partners. In the end, the

Since late 2000, the results of the salary wars

is something that many law students might

that occurred in the legal marketplace should

simply laugh at. The best attorneys, in their

Associates are Getting Richer. What’s the

have become quite noticeable. One of our

minds, are the attorneys who make the most

Problem?

legal recruiters, who has been recruiting for

money. The issue with all of this is that these

over 20 years, recently told the story of how

same associates are often placing themselves

Ultimately, it’s not important to decide the

just 15 years ago firms in Los Angeles would

in a dynamic where they become fungible and

merits of who is right or wrong. What is im-

almost never fire an associate. This same

can lose their jobs at a moment’s notice.

portant is to understand these conflicts, and

recruiter actually received a phone call from

to minimize the discord.

a major Los Angeles law firm telling him they

This article will explore the division between

would pay him $20,000 if he could recruit away

partners and associates from three angles.

The complaint we hear most often from part-

one of their attorneys and place that attorney

First, we will discuss the complaints we have

ners is that junior associates have a sense of

in another firm (where he would also earn a

heard from and about today’s young associ-

entitlement to both top compensation and an

fee). While this may sound drastic, the thought

ates. Second, we will discuss the impact this

appropriate quality of life offered by a reduced

of this firm forcing the same attorney out, or

divide has had on the legal marketplace.

workload. This may be because many current

firing the attorney, was not something the firm

Third, we will suggest how to handle dynam-

partners began as associates working longer

would do. Lawyers at this firm simply did not

ics at the interview stage, and how to position

hours for less money. At some firms, the per-

do that sort of thing.

your self as a lawyer who can contribute to a

ception is that associates simply do not work

more collegial environment.

the kind of hours, on average, that associ-

nificantly. Law firms have no problem firing

In 1999, the associate salary wars began to

may not be true, depending on the firm or the

associates or partners. In fact, the relation-

affect most major legal markets. Although

individual. What is true is that the attention

ship between associates and partners, as well

these raises came as good news to many as-

to ‘quality of life’ among associates at large

as among partners, has become more defined

sociates, the long-term effect has been mixed.

firms is relatively new. The fact that many

by economic concerns, it seems, than things

Certainly, we have not heard any lawyer tell

associates started using the term quality of

like collegiality or functioning as a group that

us that having more money is bad. However, in

life at the same time the Greedy Associates

supports one another in all respects. This was

some firms, there has been a backlash against

boards popped up is a difficult coincidence for

not always the case. The explosive growth of

those who enjoyed the salary increases,

the management at some firms. We certainly

Today the legal landscape has changed sig-

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ates worked 10 or 15 years ago. This may or

continued on back

1.800. 973. 1177

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suggest that attorneys remain aware of the

effect was more subtle: hourly billable rates

year was enough to convince them to change

differences between firms’ lifestyle, com-

for associates were raised in some cases,

firms, only to be looking at a mass layoff

pensation, or prestige, but an associate who

while some firms decided to take the money

18 months later. Therefore, we believe that

frequently compares his or her firm to other

out of the partners’ share of the pie. Some

the single most important lesson learned is

firms may create the perception of being

firms raised associate salaries without a peep,

that salary distinctions of several thousand

ungrateful for the opportunities “at home.” To

while others did so only after being directly

dollars should not be the principal reason

demand that one’s firm pay a top salary while

petitioned by their associates. Associates

for changing jobs. Although there is certainly

pushing quality of life issues, such as reason-

began ranking firms in their city by how much

prestige in being associated with the highest

able hours, may appear inconsistent.

and how quickly salaries went up.

paying firm in your area, top compensation

Many associates do not understand why the

We are certainly not suggesting that all firms

partners at their firm are so unreceptive to

reacted the same in regards to salary increas-

talking about compensation and quality of life,

es. On the contrary, each firm handled the

When a firm’s dialogue turns entirely to

when the associates are often the top billers,

salary increases (or in some cases, ignored

billable hours and base salary, everyone

and generate significant income for the firm.

them) in its own way. However, there were

involved is missing the bigger picture of what

“If I work big firm hours, I should get paid

trends that emerged as the firms reacted to

associates and partners have to offer to each

big firm salary,” is one of the complaints we

the salary wars. In the best circumstances,

other. It would surprise you how frequently

heard from a lawyer working at a mid-sized

firms were happy to raise salaries to control

we hear from lawyers that they want to look

Washington, D.C. firm. Younger associates

their attrition rate and to reward their associ-

for new opportunities - and how infrequently

want the management of their firm to realize

ates. Some firms, however, took a harder line,

we hear that a lawyer wants to find a new job

that the marketplace isn’t the same as it was

and required more from their associates in

to make more money. Although it’s easy to

when the partners graduated from law school.

exchange for more money, such as increasing

get caught up in money issues, we do not find

Indeed, the demographic of young lawyers

billable hour requirements.

that making the most money on the block is

does not insure long term stability, or even job

has changed considerably, and the shifts in

satisfaction.

what defines success or satisfaction for the

the economy in the past decade have been

Several problems emerged. One was com-

unprecedented.

pression of salaries. So, while a first year got

overwhelming majority of lawyers.

a raise and started making perhaps $125,000,

On the law firm side, we believe that the sal-

There is no right or wrong side to these argu-

often an 8th year associate in the same

ary wars and the recession that followed were

ments, but this division eventually must be

department got only a small raise or no raise

a lesson for firms that information about the

resolved because it causes unnecessary strain

at all. Obviously, there is great potential for

quality of their relationship with associates

on workplace relationships. We recommend

resentment in such a case.

can quickly be widely spread. The Internet

that attorneys try to put themselves in each

has the capability of disseminating private

other’s shoes. Remember that partners are

As the economy regains a more certain foot-

firm information to virtually every other young

owners of the firm. They have the responsibil-

ing, what can associates and partners take

lawyer in a matter of seconds. In some cases,

ity for keeping business with the firm, and

away from the lessons of the past three years?

internal memos to associates regarding salary

increasing associate salaries did seriously

In the same way that the economic slowdown

increases were immediately posted to the

affect the bottom line at many firms. On the

of the early 90’s affected the hiring (and fir-

Internet.

other hand, partners need to realize that well

ing!) practices of firms, the latest recession

qualified associates are necessary to any good

will be a learning tool for both law firms and

Law firms and the lawyers within them will

practice, and keeping those associates by

lawyers alike.

continue to make adjustments with respect

ensuring that they are well respected, valued and paid should remain an on-going concern.

How the Salary Increases Affected the Marketplace

to the salary raises, the economy, and their For some associates, the lesson learned was

ongoing client demands. Going forward, we

that following the money is not necessarily a

believe that it’s important that each firm re-

good long-term strategy. Several of the firms

view the effects that the salary wars have had

who lead the pack in terms of raising associ-

on internal relations, and seek to address any

ate salaries, and who consistently outmatched

divide that may have occurred.

The short-term effect of the salary wars was,

starting salaries, have had some of the most

obviously, to put more money into the pockets

dramatic lay-offs. For a handful of lawyers,

I’m on the Market for a New Job. What does

of associates. For virtually every firm, the next

the lure of 5 or 10 thousand more dollars per

that Mean to Me?

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1.800. 973. 1177

STATE OF MARKET

In some instances, we’ve been approached

the sometimes strained relationships within

by lawyers who are interested in opportuni-

the firm and the firm’s economy. If there is

ties with a new firm because of the tension

any good to be found in the recent recession,

within their own. In many instances though,

it may be that it provided a little perspective

lawyers who are unhappy with the divide

on how we view each other, and how lawyers

between associates and partners should look

define security and success within a firm.

for solutions within their own firm. There have been significant changes in compensation and hiring over the past several years, and it may take many firms some time to work out the issues that arise from the associate salaries, as well as from the depressed economy. In the event that a lawyer has made a decision to move, he or she should keep in mind that how they are perceived at the interview has been affected by these difficulties.

The single most important way to overcome whatever remaining tension may exist is to be enthusiastic. The “what’s in it for me?” attitude, which may have worked two years ago, is generally unacceptable in this hiring climate. Interviewing for a position should be a dialogue about what contributions the interviewing lawyer can make to the firm, and not simply what he or she can take out.

On the law firm side, it’s important to note that many lawyers’ agendas have changed.

Stability and profitability is an increasing concern for lawyers, and an interviewing attorney should provide enough information for an interviewing lawyer to understand the firm’s environment. Firms who believe they may have gotten a bad reputation throughout the salary wars should work to correct this.

Conclusions Many associates have changed their focus from associate raises to lay-offs, bonuses, and workload, given the recent downturn in the economy. However, it is important to remember that the associate salary boom of the late 1990’s may still have an effect on inter-firm relationships, and how partners and associates view each other as a whole. Where those tensions exist, lawyers should be aware of how they view each other and themselves in

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