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ANALYSIS: First-Year Pay—Too Much, Too Little, or Just Right?

Aug. 15, 2022, 9:00 AM

First-year associate compensation has been a hot topic lately, as law firms continue to increase starting salaries in an effort to recruit high talent at their firms. Bloomberg Law’s State of Practice survey asked attorneys to estimate the starting salaries for first-year associates at their firms, as well as share their thoughts on first-year compensation.

The average starting salary for first-year associates, according to the best estimates of 287 law-firm lawyers nationwide, is $139,945.

Lawyers’ Views on Pay Adequacy for Associates

As a follow-up, respondents were asked whether they believed the first-year associates at their firm are being overcompensated, undercompensated, or appropriately compensated, based on their salaries and bonuses. More than half (57%) said they feel that compensation for first-years at their firm misses the mark, either because it’s too high (27%) or too low (30%). Only 43% of attorneys felt like their firm is getting compensation for first-year associates “just right.”

I was curious to see what each of these opinion groups, on average, estimated as the starting salary for first-years at their firms, and if they differed from the collective average of $139,945—and they did, significantly.

The attorneys who felt that first-year associates are making too much also estimated $179,000 to be the starting salary, on average, for those new lawyers at their firm. This was a $69,000 difference from the average estimate of respondents who felt that first-years at their firm aren’t being paid enough. (The significant difference in estimated averages could be explained by firm location or even the size of the firm, a data point I plan on following up with soon.)

The Factors Behind the Opinions

Respondents were also asked to indicate the reasons they felt the way they did about first-year associate compensation. Most of them cited wage competitiveness (58%), responsibilities & demands of the role (55%), and level of expertise or experience (51%). However, some considerations were more important than others, depending on whether lawyers felt first-years at their firm were overcompensated, undercompensated, or appropriately compensated.

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For example, let’s look at wage competitiveness. A majority of the attorneys who felt first-years at their firm were undercompensated (71%) cited wage competitiveness as a reason why they felt that way. But only about one-third of those who believed first-years were overcompensated said they considered it a factor.

As many employers continue to raise employee salaries in the current job market—legal and nonlegal alike— it makes sense that a majority of respondents who believe their firms’ first-year associates aren’t being compensated fairly are concerned that these wages are not competitive enough to attract, and subsequently retain, new attorney talent.

Somewhat surprisingly, cost of living was not a major consideration for attorneys when weighing in on the appropriateness of first-year associate salaries; only 36% of overall respondents selected it as a reason. Half of attorneys who found first-year compensation to be lacking said they factored cost of living into their opinions, and only 6% of those who found salaries excessive took it into consideration.

These numbers all appear rather low to me, based on my personal observations regarding the current cost of living in my own life as a fairly new attorney living in a highly populated city with a dense legal market. Cost-of-living increases brought on by this year’s high inflationary pressures should economically influence salary-setting processes more, especially when factoring in the amount of debt accumulated while in law school.

But perhaps, for survey respondents, cost-of-living increases and burdensome student loan debt aren’t top of mind anymore. After all, they have been in practice for about 18 years now, according to averages from the survey results. This more established career tenure could leave them without a frame of reference for current pressures new attorneys are facing.

One of the biggest points of consideration for attorneys who felt first-year salaries are exorbitant is the level of expertise or experience that new attorneys are bringing to the table. More than three-quarters of those respondents cited experience level as a factor in their opinion, while only 16% of those who felt associate pay was insufficient selected experience level as a reason why.

While I agree that level of experience naturally and rightfully plays a role in determining compensation levels in every industry, the legal industry should reconsider what experiences make up this threshold. As an attorney just three months past my first year in practice, navigating the job market as a new lawyer was extremely difficult. Many employers required applicants to have multiple years of experience as a practicing attorney under their belt, despite marketing positions as “entry level.” It was almost as if the five-plus years of experience I had in the legal industry disappeared after I was sworn in and I was starting from scratch—a sentiment perhaps those who went to law school after full careers can also relate to. Obtaining your law license shouldn’t restart your experience level; instead, employers in the legal industry should consider this experience, so long as it provided a relevant foundation for the vacant position.

Related content is available for free on ourIn Focus: Lawyer Well-Beingpage. Bloomberg Law subscribers can find related content on ourSurveys, Reports & Data Analysis, Legal Operations, and In Focus: Lawyer Developmentpages.

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