Legal News

Sure We?ll Cut Associate Salaries, As Long As Someone Else Does First

By Ashby Jones

Indulge us, if you will, in yet another extended metaphor involving water and steep dropoffs.

Imagine a group of people standing shoulder-to-shoulder on a cliff. About 50 feet below them lies a lake, filled with cool, refreshing water. The sun is blistering on their backs and the cliff-standers all want to be in the water, but are hesitant about jumping. They suspect the water’s deep enough to absorb a jump, but they’re not sure. If only one person would jump, they think, make sure everything was okay, they’d certainly follow. So there they stand, waiting for someone to go first.

The people on the cliff, but of course, are the managing partners of the nation’s big firms. And the jump they all want someone else to make first? To slash associate salaries.

According to an article out Wednesday today in the Philadelphia Legal Intelligencer, many managing partners (at least in Philly, but also presumably across the nation) are just itching to slash their starting salaries for first-year associates, but they’re all afraid to be the first one to do it.

One firm leader told the Intelligencer on starting salaries: “I could see $145,000 go to $100,000 in a nanosecond,” though the lawyer said he wouldn’t be the first to do it.

Another partner in a leadership position at a local firm said he thought cutting salaries was “dangerous,” adding: “I think it just sends a bad signal . . . It’s a lot easier to put in a zero increase than to put in cuts.”

According to the story, talk of salary cuts was enlivened last week when Los Angeles-based Allen Matkins Leck Gamble Mallory & Natsis said that all incoming first-year associates would be brought in at the lower salary of $145,000 and current first-years would be paid the same. Virginia-based McGuire Woods also announced that it would be cutting starting salaries for incoming associates, dropping from $160,000 to $144,000 in its major markets.

But a firm in the top 10 to 15 will likely never do it, consultant Peter Zeughauser told The Recorder. It’s the firms in the top 30 or 40 that may move the market, and they will do it only if they’ve “exhausted all other options,” he said.

Law Blog readers, how do you feel about this? Frankly, we find it ridiculous — law firm managers spend too much time hand-wringing over how the marketplace will respond to a perceived “sign of weakness.” Why shouldn’t the first to jump be applauded for having the fortitude, confidence and business savvy to go first?

Full post as published by Law Blog - WSJ.com on April 08, 2009 (boomark / email).