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Finally, everyone’s being paid like a New York lawyer. Thanks to an informal wage freeze in the United States’ largest market, midlevels in other major cities caught up to the salaries of their New York counterparts this year, although they still lag behind in bonuses. New York offices of AmLaw 200 firms withheld raises for midlevels in 2008 after doling out pay hikes the previous two years — about $20,000 in 2006 and $15,000 in 2007. In early 2008 the New York offices of several firms, including Orrick Herrington & Sutcliffe; Wilmer Cutler Pickering Hale & Dorr; and Milbank Tweed Hadley & McCloy, announced they would maintain last year’s salary rates. Thirty-seven New York offices followed suit, according to data collected in Legal affiliate The American Lawyer’s annual midlevel survey, in which the magazine polled 7,259 third-, fourth- and fifth-year associates from 180 firms. Even though New York salaries were flat, the data shows healthy pay increases elsewhere, as non-New York medians caught up with those in New York – $185,000 for third-years, $210,000 for fourth-years and $230,000 for fifth-years. For midlevels outside New York, those are one-year increases of 9 percent, 11 percent and 10 percent, respectively. Nationally, median bonuses increased 17 percent for third-years, 21 percent for fourth-years and 14 percent for fifth-years. Still, bonuses made up less than a fifth of total midlevel compensation – 15.4 percent in our 2008 survey, compared to 14.6 percent a year ago. (The survey asked respondents for information about their 2007 bonuses, which typically are paid at year-end, and their 2008 salary.) In most markets, lockstep is alive and well. All but five of the participating firms in Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C., paid associates the same salary. Generally, associates earned the median for their class, a flat line in New York but an increase in the other five markets of $15,000 for third-years, $20,000 for fourth-years and $20,000 for fifth-years. In smaller markets, there was a bit more fluctuation among responding firms. While the salary data is notable for its uniformity within markets, bonuses fluctuate widely. New York is the only market where the lockstep clearly persists for bonuses – about $55,000 for third-year associates, $65,000 for fourth-years and $80,000 for fifth-years. Even in New York, outliers exist. Hughes Hubbard & Reed third-year midlevels reported a median bonus of $30,000, while Wachtell Lipton Rosen & Katz – the AmLaw 200′s most profitable firm – awarded bonuses that were more than triple the median, paying $175,000 to third-years, $190,000 to fourth-years and $215,000 to fifth-years. Wachtell’s salaries are higher than those at other New York firms, too. Outside New York, bonuses tended to be highest in Boston, Chicago, Los Angeles, San Francisco and Washington. There was a wider range of bonuses in those markets as well. In Los Angeles, for example, third-year bonuses ranged from $34,500 at O’Melveny & Myers to $60,000 at Kirkland & Ellis. Generally, the smallest bonuses were in Atlanta, Dallas, Houston and Philadelphia. Compensation breakouts for individual offices within markets is available at www.americanlawyer.com. In Dallas, third-year bonuses were usually in the four-figure neighborhood ($5,000 at Baker Botts and Fulbright & Jaworski; $9,000 at Haynes & Boone). But third-years at the Dallas office of New York’s Weil Gotshal & Manges received a median bonus of $45,000; Weil Gotshal’s median salary was higher than those at the native Texas firms, too. The outsize bonuses put Weil Gotshal’s pay in Dallas more in line with its pay in New York, said Mary Korby, a Dallas Weil partner who chairs the firm’s associate compensation committee. Kirkland & Ellis also appears to be compensating associates roughly equally across the country, even when that means paying higher bonuses than other firms in given markets. Kirkland’s median bonus of $93,000 for fifth-years in Chicago was more than double that of other Chicago firms, and its median bonus of $100,000 for fifth-years in Washington was the second-largest nationally, after Wachtell Lipton’s $215,000. Kirkland & Ellis’ generosity may be at least partially a defensive play. In 2008 several firms, including Proskauer Rose, Ropes & Gray and Baker & Daniels, moved into Chicago to try to wrangle private equity work away from Kirkland. Though all pay the same salaries, Chicago legal recruiter Kaye Hoppe said that these firms will have a tough time recruiting top midlevel talent away from Kirkland because of discrepancies in bonuses. Like the rest of the midlevel survey data, the paycheck report is a snapshot. As the economic downturn continues to deepen, the question is whether these enviable salary scales, supplemented by the occasional six-figure bonus, is the limit of what the market will bear or just another data point in an ever-expanding spiral. The answer to that is a year away, at least — and well out of the control of the average Am Law 200 midlevel.

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