Entry-level salaries at many law firms are topping $200,000, an increase for the first time in years, as they compete to retain talent after a year that has seen large profit increases – despite the pandemic- in the industry.
New York-based firm Milbank LLP appeared to herald the latest round of raises for first-year associates at large, competitive firms with an announcement last week that new law school graduates would start at $200,000.
The previous median starting salary for large firms, which employ 700 or more attorneys, was $190,000, according to the National Association for Law Placement (NALP), which tracks industry hiring trends.
Median salaries for first-year lawyers have been steadily increasing over the years reaching around $190,000 for the largest firms, according to the National Association for Law Placement. This year, a handful of large firms have announced a raises to $200,000 for their entry-level associates
Milbank, which employs around 765 lawyers, set a previous benchmark in 2018, according to the Wall Street Journal.
The figure could climb even higher, the outlet also reported, with an announcement Friday by New York-based Davis Polk & Wardell LLP that 2021 law-school graduates could be paid $202,500 at the firm, which employs nearly 1,000 attorneys.
Many of these associates will not have passed the bar exam yet, and in a few cases may never need to. A handful of states’ bar associations have opted to substitute ‘diploma privilege’ for passing the biannual exam, Bloomberg Law reported.
The huge salaries can come with a heavy workload; many junior associates at the largest firms bill more than 2,000 hours a year, according to the NALP, which can mean work weeks far exceeding 40 hours.
Milbank LLP set a new benchmark for hiring salaries with an announcement last week that recent law-school graduates at the firm would start at $200,000. Pictured is Milbank’s New York offices
Additionally, with remote work becoming the norm at many firms, long hours at home have taken a toll on associate mental health.
‘It’s been tough,’ said Scott Edelman, chairman at Milbank told the Wall Street Journal. ‘There’s no division between work and nonwork, and the recharging from social interactions.’
Some have responded by increasing time off, Law.com reported.
‘We’ve basically been telling them, telling our talent, you need to take a vacation,’ said Margaux Trammell, director of professional development at the Colorado-based Brownstein Hyatt Farber Schreck, which employs around 250 attorneys.
The raises come as larger firms have seen increased profits with steady business but travel expenses that have dropped to virtually zero.
New York-based Davis Polk & Wardell LLP also announced increased pay scales, with the firm telling its lawyers that first-year associate salaries would start at $202,500, as large firms pass a year of record-setting profits to its workers
A report last month from the Thomson Reuters Peer Monitor Index, which tracks law firm performance, showed that legal rates increased 4.7 percent over the past year, while office costs sank 37.2 percent, and overall overhead dropped on average 8.5 percent, translating into increased profits.
At Milbank, revenue grew 15.6 percent to $1.23 billion, and profits 16 percent, nearing $4.5 million, the Journal reported, and the firm decided pass those profits on to its workers.
Other firms announcing raises over the past week include New York-based Cadwalader, Wickersham & Taft LLP, Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC and Proskauer Rose LLP.
Others, however, are holding off on increasing their salary scales, with global firm Nixon Peabody LLP announcing last week that it has set its starting salary range at $120,000 to $190,000 depending on the market, the Journal reported.
While only a fraction of law-school graduates get jobs at the largest and highest-paying firms, their entry-level salaries are many times more than in other industries.
New psychologists and CPAs, for instance make less than $60,000 when starting out, according to the Journal, and university professors and physician assistants start at $80,000 and $110,000 respectively.