Davis Polk reignites US salary war by topping pacesetter Milbank's associate pay scale
Quartet of top firms quickly follow Wall Street firm's lead amid signs of a market-wide shift
Davis Polk & Wardwell has upped the stakes of the US associate pay war – and potentially paved the way for market-wide increases – offering salaries above the rate set by Milbank last month for its more senior associates.
In an internal memo obtained by Above the Law, the Wall Street stalwart yesterday told its associates it would be paying them between $215,000 to $396,500 depending on seniority. While it has matched Milbank for the classes of 2021, 2020 and 2019, it is handing more senior associates an additional 3%, which amounts to an extra $11,500 for the class of 2014 and above.
'This is not a Milbank match,' Above the Law wrote. 'We repeat, this is not a Milbank match. Davis Polk is offering even MORE money to associates.'
The new scale has been quickly matched by Cleary Gottlieb, Paul Weiss and Kirkland & Ellis while McDermott Will & Emery has tweaked its already announced rises to match Davis Polk's scale. This suggests the entire market will now fall into line, there having been a lull following Milbank's announcement of a new scale in mid-January, when only a handful of firms followed its lead.
The pay war sparked back to life for the first time in three years last summer when Milbank fired the starting gun by raising first-year associate salaries by $10,000 to $200,000 with its most senior associates receiving $355,000. Davis Polk matched Milbank’s terms a day later.
Associates also received a big boost over the holiday season, when firms dished out bonuses of up to $115,000 for their highest billers.
And the war for junior talent is not confined to the US — White & Case announced pay increases in London in November with newly qualified (NQ) associates receiving an 8% pay hike from £130,000 to £140,000. The move placed it just behind US rival Ropes & Gray, which had announced a 13% increase in NQ pay to £147,000 the week before.
Last week, Fried Frank upped its NQ salary by 10% to £160,000, putting its scale just behind market leader Goodwin Procter, which pays £161,500, according to research by Legal Cheek.
Nick Robbins, founder and director of legal recruiters Nicholas Scott, said: “Originally, salary hikes were about retention. Now, a lot of it is about acquisition."
He added: “In order to differentiate themselves in the lateral hiring market, firms will have to keep pushing salaries up, but they might also start to more frequently leverage flexibility related to hours and working models to attract new talent.”
A survey published by Thomson Reuters and Georgetown Law’s Center on Ethics and the Legal Profession last November found that US law firm leaders are now viewing acquiring and retaining talent as a high risk to future profitability compared to last year when the main risk factor was primarily related to the general volatility of the global economy amid the earlier stages of the pandemic.
Some 31% of respondents said they were concerned about staff being poached by competitors, making it the second-highest area of concern for the year ahead, while associate salary increases came in a close third at 29%, the survey revealed.