Salaries of law firm associates got a healthy boost Monday when Milbank, Tweed, Hadley & McCloy LLP announced that it will increase pay by $10,000 for lawyers in their first three years, and $15,000 after that.
The starting salary for associates will be $190,000, up from the current $180,000, which was set two years ago after years of stagnation.
The increase is due to greater competition for talent, Scott A. Edelman, Milbank’s chair, told Bloomberg Law.
“There hasn’t been an increase in a couple of years, and it was about time to visit the associate compensation since the industry is doing well,” he said in an interview. Traditionally, other big law firms have wound up matching the highest salary for first-year associates.
Competition for legal talent has grown particularly fierce when it comes to the kind of complex, high-end transactions that Milbank specializes in, Edelman said.
“We have some really talented people here and the kind of work they do is really complex, so we need the very best,” he said.
New Pay Scheme
The increases, announced to the firm’s approximately 500 associates Monday, take effect on July 1. Under the new pay scheme, associates in their first, second, and third years will see a $10,000 pay bump. Associates in their fourth through eighth years will have an additional $15,000 in their paychecks, meaning salaries will range up to $330,000.
Summer associates will also be paid on the basis of the new salary scale.
Stephen Gillers, a professor at New York University Law School, agreed that the pay raise indicated increased competition for high-performing lawyers.
“It is a sign that competition among the top 50 law firms for the top 10 percent of JDs from the top 10 law schools is tightening, coupled with the fact that the decreasing costs of support personnel as a result of technology make higher first year salaries affordable,” he said, in an email.
Firm Doing Well
Edelman noted that Milbank was doing well, noting that it “has been busy all year. It’s really across the board.”
Milbank, which ranks No. 40 among the American Lawyer’s ranking of the 100 largest law firms, reported $916,538,000 in gross revenues last year, up about seven percent. It was the fifth straight year of growth for the 690-lawyer firm. There are 145 equity partners and profits for each were just under $3.5 million.
“Our litigation practice is very busy. We’re doing a lot of class action defense in the insurance area and the securities area and the mutual fund area. Our restructuring practice continues to be at the forefront nationally with a lot of creditor committee and debtor side representations,” he noted.
He also said: “Our project finance practice has been very busy with infrastructure work on a cross-border basis particularly in Latin America. London is very strong with the new capital markets and financial restructuring teams we have added this year which have been the subject of articles.”
The competition over associate salaries took off in 2016 when Cravath, Swaine & Moore added $20,000 to first-year associate pay, raising it to $180,000. Milbank and others quickly followed.
In the ensuing two years, Edelman noted that the cost of living has increased.
“We want to signal that we’re willing to pay for the best, and we think after two years, an additional increase is appropriate.”
We have an associate development program at Harvard, he said, “and this is in keeping with our image and our message that we want the best.”
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