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Will Associate Salary Bump Widen the Gulf Between Have and Have-Nots?

June 13, 2016, 8:34 PM

One might not think that there is any downside to a pay bump. But for law students and recent graduates, a raise from $160,000 to $180,000 for first-year associates has become a source for concern over whether the hikes will create a new tier of elite law firms where entry positions are harder to secure.

Cravath, Swaine & Moore announced last Monday that it would raise starting salaries by $20,000, from $160,000 to $180,000, and also increase salaries for junior and senior associates. Since then, at least 38 other law firms have announced that they would match , including Weil, Gotshal & Manges, Latham & Watkins and Sidley Austin.

“There seems to be a growing divide between big law positions and other jobs that are available to students their first year out,” said one law student who declined to speak publicly. “Of my friends who did not obtain a summer associate position, the news is slightly disheartening because it makes jobs at big law firms seem even more unobtainable.”

One summer associate who starts full-time at a large law firm this fall said that the raises could give elite law firm leaders justification to work associates around the clock, even more than they already do.

The sources declined to speak publicly out of fear their employment prospects could be affected if they spoke publicly.

Despite the concerns, Carter Phillips, the chair of Sidley, said it’s still business as usual at his firm, although he didn’t rule out the possibility that other firms would change their treatment of associates in light of the raises.

“I don’t see Sidley changing its hours expectations of associates because of this increase in salary. I also don’t think this increase will affect Sidley’s willingness to make permanent offers. I expect us to use the same standards this summer that we used last year. It is, however, possible that it will affect other firms’ decisions. It is also possible that next summer there will be fewer offers and acceptances by large law firms, but if so, I think it will have to do more with a perceived softness in demand for legal services by large law firms and not because of an incremental increase in associate compensation.”

It was difficult to get a handle on other firms. Allen Parker, presiding partner of Cravath — the firm that first raised its associate salary raises last Monday — did not respond to requests for comment about how the raises might affect the workplace for junior lawyers. And leaders at other firms such as Fenwick & West, Cooley, and Morrison & Foerster, did not make themselves available for comment about the associate concerns.

Debbie Epstein Henry, a legal consultant, said that millennials working at large law firms would often rather trade money for time.

“With this increase in salary, that notion is not going to be there,” said Henry. “I’m not sure if anyone has asked the question, ‘What do associates want?’”

Some law firms have held back, making the decision to not match the $180,000 salaries.

The prestigious Washington, D.C.-based law firm Covington & Burling said in an internal memo (and leaked to Above the Law) that “this increase in New York salaries does not reflect the prevailing market in Washington or other cities outside New York.”

Of the firms that haven’t announced one way or the other, associates are noticing.

“Associates at all the firms are talking about the firms that have not yet announced a salary increase,” said one associate at such a firm. “Are they slow to move, or is this an actual widening of the gap?”

From Above the Law , below is the list of law firms that have matched the Cravath scale:

Cravath

Hueston Hennigan

Milbank Tweed

Paul Weiss

Cahill Gordon

Irell & Manella

Weil Gotshal

Cleary Gottlieb

Simpson Thacher

Holwell Shuster

Debevoise & Plimpton

Quinn Emanuel

Winston & Strawn

Skadden Arps

Sullivan & Cromwell

Kirkland & Ellis

Freshfields

Cooley

Davis Polk

Keker & Van Nest

Greenberg Gross

Willkie Farr

Gunderson Dettmer

Vinson & Elkins

Latham & Watkins

Clifford Chance

Sidley Austin

Munger Tolles

Proskauer Rose

O’Melveny & Myers

McKool Smith

Fenwick & West

Yetter Coleman

Desmarais

Brown Rudnick

Susman Godfrey

White & Case

Shearman & Sterling

Baker Botts

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