Archive for the ‘Salaries’ Category

More money for the same job is always good. Or is it?

On June 6, 2016, Cravath, Swaine & Moore, one of the most venerable law firms in the country and the “Big” in BigLaw, announced that it was raising first year associate salaries to $180,000 a year, while at the more senior end, eighth-year associates would now earn $315,000. Cravath’s move didn’t just raise the salaries at one white-shoe New York firm; it set off a new round of salary matches in the BigLaw jungle akin to baboons flaunting the size of their rear ends.

If you are a BigLaw associate (or current law student angling for a BigLaw job), I’m betting you are feeling excited. You may be calling it a boss move. I call it catching BigLaw fever.

I once caught BigLaw fever too. It was 1999. I was a 1L at Michigan Law School. I had vague notions that lawyers made a good living. But that money became a tangible number, imprinted in my head so vividly that I could practically smell the new ink of freshly-pressed greenbacks, when Gunderson Dettmer raised first year starting salaries to $125,000.

It was a bomb that rocked the BigLaw world. For the first time, a firm outside of New York had set the salary trend. At the time, BigLaw was paying its entry-level associates $95,000 a year, already a handsome sum for law students accustomed to student loans and take-out pizza. A 30% raise was real money. The day news broke of Gunderson’s announcement, a throng of 2Ls and 3Ls ran through the halls of the law school high fiving each other in jubilation. That was the day that I caught BigLaw fever.

Back in 1999, I probably told friends that the salary raise was awesome. (We only used the term “boss” to describe, well, our actual bosses.) But you get my point: despite the time gap between us, your feelings in 2016 are probably identical to my feelings back in 1999. BigLaw hasn’t changed. Seventeen years later, you are just the next generation of cicadas emerging into the BigLaw life cycle.

So from one old cicada to the young cicadas out there, before you swarm to BigLaw and hum-whistle to the tune of your $180,000 starting salary, let me give you some advice: BigLaw salary raises will impact you in ways you may not anticipate or appreciate.

Bah, humbug, you say, or whatever it is that Millennials say these days.

We’ll pay off our student loans faster, buy a Tesla, use the money to travel the world. Why wouldn’t a salary raise for the same job be great?

Because it won’t be the same job.

Let me explain. I worked at BigLaw. During my tenure, my firm raised associate salaries from $125,000 to $135,000 and then, on March 1, 2006, to $145,000.

In April, just over a month after first year salaries were raised to $145,000, I received an office visit from the managing partner.

“I’ve been reviewing the timesheets from last month,” he growled, “and your hours were low.”

Was this some kind of belated April Fools joke? I scanned the partner’s visage, searching for a semblance of a smile.

Nothing. He was dead serious.

“The firm has a new policy,” he informed me. “Every month, your billables need to reach at least 180 hours. If they don’t, I come talk to you about it.

“So,” he said, looking at me evenly, “do we need to find you more work?”

When I had first arrived at the firm, it did not have an official billable requirement. After the salary hike, it became blatant: 2,160+ hours each year. Worse, according to the partner, an associate could not bill, on average, 180 hours a month; it was a minimum requirement. The fact that I billed almost 70 hours over that minimum in January provided me no shelter in March. Like the annoying cell phone bills I received each month, no carryover minutes were permitted.

The consequences were staggering. Since an associate could hardly stop working or change deadlines once he hit 180 hours for the month, he would often be billing 190, 200, or even more in order to target 180+ on a consistent basis. And then there were those months where 300+ hours were unavoidable. Translation of the partner-speak: my 2,500+ billable hours last year were no longer exemplary, or even notable. Those hours were expected.

Did we truly believe that the partners were going to take a hit to their own draws in order to pay associates more money? It didn’t appear to be mere coincidence that, in conjunction with a salary raise, there was a corresponding raise in billable hour expectations.

But the raise in billable hours is more of a consequence of a raise in salaries, not its driving force. So why does BigLaw voluntarily drive up salaries against a partnership’s obvious self-interest?

There are the usual suspects. Firms do it to sustain the BigLaw reputation, to ensure they get the crème-de-la-crème of new attorneys, to weed out competitor firms who can’t keep up. Those are all legitimate reasons, and they may in fact help BigLaw justify (or at least rationalize) the sky-high rates that they charge their Fortune 500 clients.

Still, it doesn’t make complete sense. Being the first mover gives a firm bragging rights, I suppose, but when the rest of BigLaw matches, any distinction that would assist in recruiting evaporates. Now all of BigLaw is stuck with a higher associate tab, with nothing to show for it.

So I submit to you another reason. One that law firms don’t really talk about, and that BigLaw certainly won’t admit to.

BigLaw doesn’t pay you more because you are special. BigLaw pays you more to ensure that you are not special.

BigLaw pays you enough so that partners can demand your time at any hour of the day or night.

BigLaw pays you to say yes when a partner staffs you on an urgent project at 5 p.m. on a Friday.

BigLaw pays you not to be offended when a partner takes credit for your stellar work, or throws you under the bus if a client is upset about anything.

In short, BigLaw pays you to put up and shut up, to do whatever the firm wants whenever it wants. BigLaw raises salaries to ensure that you are paid enough to be completely fungible, so that if you ever decide that time, respect, autonomy and other intangibles are more important than making top dollar, there will always be droves of associates eagerly waiting to replace you.

Let me say it again. You are getting a raise to ensure that you are not special.

If I were still a BigLaw associate, instead of celebrating a salary raise, I’d ask for a reduction in billable hours or some common courtesies. But BigLaw won’t do that. BigLaw would rather show you more money. And if you are a current associate or considering BigLaw as a career track, you should think hard about why that’s the case.






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