At the end of last week, it looked like the salary increase contagion was being contained. A firewall appeared to be emerging at around the 40th most profitable firm. This week, four firms from the 60th to 80th profitability tier—Monger Tolles, Morgan Lewis, Baker McKenzie, and Brown Rudnick—announced they’d match the elite firms’ salary moves, breaching the firewall, see Figure. The move is ill-conceived, a baffling act of leadership, and a risk to the long-term health of middle-profitability firms.

Middle Law (firms ranked about 40 to 120 by profits per equity partner, PPP) has a well-recounted strategy problem: by continuously raising prices, these firms have driven clients to take more and more work in house. The requisite firm response is to contain costs so as not to exacerbate their weakened economic competitiveness relative to in-house counsel. Increasing associate salaries disavows this reality; doing so at this point of the business cycle disavows rationality.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]