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Associates with at least two big Texas firms -- Haynes and Boone and Fulbright & Jaworski -- are learning firsthand what a pay freeze means.
And associates with at least three other firms don't know where they stand. Spokeswomen at Locke Lord Bissell & Liddell and Akin Gump Strauss Hauer & Feld, as well as a partner in Strasburger & Price, report their firms currently are looking at associate salaries.
At Haynes and Boone, managing partner Terry Conner says his 508-lawyer Dallas-based firm has decided, for now, not to give associates salary raises based on seniority, as management usually does this time of year.
"We won't have a class bump in January," says Conner. He plans to meet with all 226 associates at the firm in February to discuss Haynes and Boone's financial performance, objectives and compensation issues.
Conner emphasizes that the salary increases are not off the table forever. They might happen later this year, he says. But he says current market conditions, specifically the flagging demand for associates in this economy, led management to hold off on lockstep raises. "You don't have a concern that other firms are going to pick off our associates this year," says Conner.
He says he intends to follow market conditions closely and react quickly if they change. The base salary for first-year associates in Texas still is $160,000 at Haynes and Boone, Conner says.
Most senior associates at the firm earn $210,000 in base pay. He doesn't remember Haynes and Boone instituting a salary freeze in any of the past five years. Indeed, he says, the more common occurrence during the good times of the past decade has been a class bump in associate salaries in January, and another raise in the middle of the year. The raises at issue here are not a big move in firms' associate salary scales such as the one in 2007 that led to first-year associates making $160,000 base at some big Texas firms.
At Houston-based Fulbright & Jaworski, the firm's 437 associates won't be going out on a spending spree with their pay raises over the next few weeks. Firm spokesman Darrin Schlegel confirms in a Wednesday e-mail that management has put a firmwide associate salary freeze in place.
"We are paying close attention to the challenging global economic environment facing us all and taking precautionary steps to preserve our firm's financial strength, while remaining sensitive to our clients' needs. As part of that effort, we have informed our associates that compensation for 2008 will remain in effect through the first quarter of 2009. We will consider whether to increase associate compensation in April. No decision has yet been made with regard to any change in the associate bonus program for 2009. As we come off one of the best financial years in our firm's 90-year history, we believe our diversified practice, industry experience and global presence will continue to serve us well during these difficult times," Schlegel writes.
Fulbright had 41 first-year associates in Texas in 2008 who were paid a starting salary of $160,000, as were the firm's Texas first-year associates in 2007.
At other firms, management hasn't yet made a final decision on the pay question. Julie Gilbert, chief communications and marketing officer for 683-lawyer Locke Lord Bissell & Liddell, says associate raises are "still under discussion." The Dallas-based firm has 285 associates. "Raises normally go into effect on Feb. 1. We are still evaluating it, and until Feb. 1, they are still at the 2008 level," Gilbert says.
Partner Carol Glendenning, chairwoman of the policy committee at 185-lawyer Strasburger & Price, says the committee will decide on associate raises later this month. She says the policy committee normally looks at associate compensation during January, and any raises awarded to associates at the Dallas-based firm typically are retroactive to Jan. 1. "It's still on the table," Glendenning says of pay raises at the firm, which has 45 associates.
At Dallas-based Akin Gump Strauss Hauer & Feld, Kristen White, communications manager, says, "The firm hasn't made a decision."
SOME, NOT ALL
Some firms aren't changing their plans just because the economic picture has darkened nationwide.
At 822-lawyer Baker Botts in Houston, spokesman Mike Cinelli says the lockstep pay increase, or class bump, took place at the beginning of the year. James B. "Jamie" Smith Jr., managing director of San Antonio's Cox Smith Matthews, says the 134-lawyer firm "increased salaries in the ordinary course" effective Jan. 1. "We have not frozen anything," Smith says about the salaries of the firm's 52 associates. Keith Fullenweider, a partner in Vinson & Elkins in Houston, says the 768-lawyer firm has given the usual new year class bumps in base salaries. The firm has 555 lawyers in Texas.
At Dallas-based Munsch Hardt Kopf & Harr, Chairman and Chief Executive Officer Glenn Callison says, "We have not frozen associates' salaries. We did provide increases." Callison says the 100-lawyer firm is not lockstep, but many associates received a raise of about 2 percent for 2009 based on merit.
"Overall, looking at the bonuses that we paid and the salary increases ... our associate compensation actually increased as a percentage of our overall revenues," he says. "We feel like that was a strong statement that we are still interested in rewarding those associates who are working hard."
At other firms, the traditional time for associate raises is not in January. Thompson, Coe, Cousins & Irons' Jack Cleaveland Jr., chairman of the firm's management committee, says the 107-lawyer firm has "no plans for doing any salary freezes" for the firm's 34 associates. The Dallas-based firm, however, gives salary increases to its associates in September, he says.
Similarly, Larry Daniel, managing partner of the Dallas office of Hunton & Williams, says the firm's fiscal year ends March 31 and associate salary increases usually occur in May. He says the firm hasn't made any decisions about what to do for its 59 associates in Texas.
Texas Lawyer sought comment for this article from the 25 largest firms in Texas as listed on "The Texas 100" poster published April 28, 2008, and 11 did not return telephone calls.
Stacy Humphries, a principal in the Houston office of MS Legal Search, says she hasn't heard much griping or thoughts of job-jumping from associates at the firms where freezes are in place or being considered. "I think associates are sophisticated enough to know that the choice may have been between a salary freeze versus job cuts," she says.