First Milbank, then Davis Polk set associate pay benchmarks as latest salary war sparks into life
Starting salary in top firms rises to $202,500 amid concerns over associate burnout and declining attractiveness of law firm model
US law firms are waging an associate salary war as they look to match one another in order to attract and retain talent amid surging volumes of work.
Davis Polk & Wardwell set fresh terms for the pay race last Friday, when it upped associate salaries to between $202,500 and $365,000 per year depending on seniority level. The hike came just a day after Milbank had fired the starting gun by raising first-year associate salaries by $10,000 to $200,000, with its most senior associates receiving $355,000.
Bloomberg Law reported on Friday (11 June) that having matched Milbank’s scale, McDermott Will & Emery nudged up salaries again to be in line with Davis Polk. Proskauer Rose and Baker McKenzie are among other firms to have matched Davis Polk.
Today (14 June), Above the Law was highlighting the potential for the pay scale to increase yet again, with Cravath Swaine & Moore identified as a possible contender for a further hike. Senior editor Kathryn Rubino wrote: ‘There will almost certainly be more of the $200K scale firms moving to the $205K scale, they just might be waiting until… other big players in associate compensation make their move so they don’t have to issue a third compensation memo within a matter of days.’
The latest round of pay rises come three years after Milbank kicked off the last associate pay race, when it boosted associate pay to $190,000 in 2018. And it follows the issuing of special Covid-19 bonuses by leading firms on both sides of the Atlantic in recognition of their associates' hard work during the pandemic.
Robert Bata, founder and principal of WarwickPlace Legal in New York, said while the salary increases allowed top firms to stand out in a hypercompetitive recruiting market, they also demonstrated the diminishing attractiveness of the traditional law firm model for emerging law graduates.
“Many of the most talented law graduates are now tempted to jump into non-traditional law-related jobs, including legal technology-based startups, so the basic law firm model is less attractive than it used to be for many young people, especially now that remote work has opened a lot of possibilities for alternative styles of employment.”
Bata also pointed to the surprising success big US law firms had during the pandemic in terms of profitability as a reason behind their confidence in offering higher paychecks without pushback from their clients.
Tony Williams, principal of Jomati Consultants and former managing partner of Andersen Legal and Clifford Chance, said although UK firms were unlikely to participate in the salary war on their home turf, the rises would have a significant impact by making US firms in London the first port of call for associates seeking the highest salaries.
But he also suggested there was a “disconnect” between firms offering higher associate pay and concerns raised by the associates themselves about burnout and mental health issues which have been exacerbated by the pandemic.
“It’s difficult to square the amount of money being thrown around with concerns over mental wellbeing among associates, as higher salaries are typically accompanied by even higher volumes of work,” he warned.