Milbank brings associate pay race into 2022 with hike for first years to $215k
Baker McKenzie, Cadwalader, McDermott and Steptoe & Johnson among first to fall in to line as firms battle to retain associates
Milbank has sparked a new associate salary war among elite US law firms, increasing first year associate salaries by 5% to $215,000 – a move that is being matched by a growing number of rivals, including, most recently, Baker McKenzie.
The salary hike adds $10,000 to the $205,000 salary for first-year associates that Milbank set last June and also applies to its overseas lawyers, making it the highest paying firm in London, according to Legal Cheek, where a similar pay war is taking place.
The latest set of increases, first reported by Above the Law last Thursday (20 January), start at $10k for the class of 2021 and then jump to $20k for the class of 2017 and above, with the most senior associates taking home $385k.
By the end of Friday, the scale had been matched by firms including Cadwalader Wickersham & Taft, McDermott Will & Emery and Steptoe & Johnson. Baker McKenzie followed suit today, Above the Law has reported, putting its US associates on the same pay scale, backdated to 1 January.
It remains to be seen whether the market will settle around the benchmark set by Milbank, or whether firms will seek to gain an advantage in the current hyper-competitive recruitment market by exceeding its rates. The latter scenario played out last summer, when Milbank kicked off the salary war with rises starting at $200,000 – up from $190,000 – only to up them again by $5,000 in a matter of weeks to match rivals that had overtaken it.
The fresh set of increases comes hard on the heels of a generous round of year-end bonuses, the benchmark having been set by Cravath Swaine & Moore, which handed out bonuses ranging from $15,000 to $115,000 depending on seniority.
Keeping hard-working associates happy has quickly become a top priority for many Big Law firms, especially given that the record-breaking wave of deal work that the legal industry saw last year has shown no signs of slowing down.
More than half of the firms surveyed for a report by Thomson Reuters and Georgetown Law last November said they now viewed acquiring and retaining talent as a high risk to future profitability as they scramble to hire lawyers to deal with exploding work volumes. The findings indicated a priority shift for law firm leaders after a year when underperforming lawyers and the general volatility of the global economy were considered the main threats to a firm’s financial success.
This month, the 2022 State of the Legal Market report – also by Georgetown Law Center and Thomson Reuters – warned that increasing attorney salaries were yet to stem attrition rates which were 'edging dangerously close to firms losing one-quarter of their associates in 2021'.