Legal News

Now Arriving: The Long-Awaited Correction in Associate Pay

By Ashby Jones

About a month ago, we gave a gentle admonishment to the leaders of the nation’s big law firms over their collective reluctance, it seemed, to cut associate salaries. We had the sense at the time that too many of them were not making the economically prudent move for fear of how it might play in Peoria (or, perhaps more accurately, New Haven, Cambridge and Palo Alto).

Oh what a difference a month makes. An article in the Recorder today chronicles the latest: firms are, yes, putting associate salaries on the chopping block.

According to the story, about a dozen large and midsize firms have cut associate salaries to some degree, including top 10 Am Law firms Greenberg Traurig and Baker & McKenzie. The latest to cut: Nixon Peabody and Seyfarth Shaw. Click here and here for coverage from Above the Law.

Nixon Peabody said last week it will pay incoming associates $145,000 in its big markets, down from $160,000, with similar pay decreases in other parts of the country. It also reduced base pay for associates already working at the firm. Seyfarth Shaw said that, in addition to laying off 50 attorneys and staff on Friday, it has cut salaries for “segments” of its associates and income partners by 5 percent to 20 percent.

According to the article, managing partners are realizing that the recession has brought them an arguably unprecedented amount of leverage. “That is the balancing act, whether you will retain the ability to attract the best talent,” said recruiter Stacy Miller of Miller, Sabino & Lee. But, she said, graduating law students aren’t going to be picky in this market.

“At the end of the day, I don’t think that many associates are going to return their bar stipend and decline their offers. I don’t think it’s going to happen, and firms realize that,” Miller said.

Full post as published by Law Blog - WSJ.com on May 04, 2009 (boomark / email).