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The appalling increase in starting salaries for first-year associates at major big-city law firms-now up to $160,000-makes in-house general counsel want to shout out the window like the frustrated anchorman in the movie Network: “I’m mad as hell, and I’m not going to take it anymore!” Well, it’s time to stop complaining and do something about it. If you don’t, the ripple effect will cost you dearly. An increasing number of law firms in all the major legal markets, from Los Angeles to Chicago and New York, have increased first-year associate salaries from an already high $135,000 to $160,000. The immediate effect was to then raise second-year associates from $145,000 to $170,000. Those pay hikes will ripple throughout the ranks since most firms give corresponding increases all the way up the associate chain. How will these law firms pay for these increases? They won’t just absorb them. Take them out of partner profits? Doubtful. The answer, of course, is to raise the associates’ billing rates. And thus, the salary increases get passed on to clients with no added value to show for it. At DuPont, the hidden cost of cumulative rate increases by our firms and suppliers could run as high as $4-5 million per year. It strikes me as outrageous that some of these firms use value to corporate clients as an excuse for their overbilling. One firm (not on DuPont’s preferred provider list) justified the salary increase by claiming that it had “a long-standing commitment to providing our clients with high-quality service from top-tier lawyers.” My first reaction to that comment is that if it takes a $10,000 increase to attract or retain first-year associates, the law firm must have little else going for it. What about the firm’s culture, client base, and work environment? Do these intangibles mean nothing? Also, what do “first-year associates” have to do with “high-quality service from top-tier lawyers”? That’s an oxymoron. I’ve been in-house at DuPont for 30 years, and I can’t remember a time when so little attention was paid to clients’ needs by law firms when it comes to costs. I’m pleased to find one influential firm managing partner who sees these pay hikes for what they are, vis à vis their impact on clients. James Sandman, managing partner of Arnold & Porter and president of the Bar Association of the District of Columbia, writes in his bar letter, “From the President” (The Washington Lawyer, March 2007): “And what of the clients? It’s disingenuous to suggest that they won’t end up being charged for higher associate salaries. Although the cost of a salary increase may not be passed along in immediate rate hikes, it will be eventually. There is no increased value to accompany the higher rates, particularly not for inexperienced lawyers.” Sandman argues that “first-year associate rates-which in some big firms were more than $265 an hour before the latest salary increases-may be reaching a point of such disconnection from intrinsic value that the client market will reject them.” I say now is the time to reject them. There are many ways to mitigate the impact of the increases. Here are some you can use:
 

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