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LOS ANGELES � After two days of watching New York, the first California-based firms made their moves Wednesday, charting two separate paths for associate compensation. Los Angeles-based Quinn Emanuel Urquhart Oliver & Hedges moved to the higher New York scale in all of its offices. But O’Melveny & Myers, while saying it would match in New York, will pay its California first-years $145,000. That’s still a raise, though not nearly as big as the one New Yorkers are getting. At Morrison & Foerster, which is matching in New York, California starting pay will remain $135,000, at least for now. “I don’t think most [California-based firms] will follow Quinn,” predicted Ronald Beard, a legal consultant with the Newport Beach-based Zeughauser Group. “I think most of them will go to $145.” Beard contends that the markets in New York and California are too divergent to merit the same salary bump, but he noted there can be exceptions like Quinn, which is “up there with the other elite New York firms.” At Quinn, which reported profits per partner of almost $2.5 million in 2006, partner William Urquhart would agree: “We had a string of phenomenal years financially and the associates are a large part of our financial success.” He said the firm chose to raise pay across the board because it wants to foster unity. “It’s the same reason we don’t track profitability by office � we think it’s potentially divisive,” Urquhart said. But Brian Brooks, O’Melveny’s talent development partner, said his firm didn’t want to create artificial cost pressures in the California market. New York has always been on a different pay scale, he said. “As near as we can tell, the group of our peer firms � national firms not based in New York � recognize that distinction,” Brooks said. That’s not to say O’Melveny is committed to maintaining a distinction, should the market prove otherwise, Brooks said. “We’ll pay whatever the market requires,” he said. Most California-based big firms are paying fourth-years $175,000 and seventh-years $215,000. The new O’Melveny California scale puts fourth-years at $190,000 and seventh-years at $240,000. In New York, the new scale � adopted Wednesday by Skadden, Arps, Slate, Meagher & Flom and others � has fourth-years at $210,000 and seventh-years at $265,000. “Associates have expressed gratitude that we didn’t delay the move � a handful of our largest California competitors haven’t reacted as nimbly,” Brooks said. Although MoFo matched in New York on Wednesday, firm Chairman Keith Wetmore said it would wait until there was more movement to announce new associate salaries in California. It’s possible that the coasts will continue at different salary scales, he said, adding “there are generally higher billing rates in New York.” But many New York firms are raising pay across all offices, and Skadden, for example, has more than 200 lawyers in California. Orrick, Herrington & Sutcliffe Chairman Ralph Baxter Jr. said that how firms respond will determine their standing in an ever more segmented legal marketplace. “This is a significant market development,” said Baxter, who had not announced any moves as of late Wednesday. “We are aimed unequivocally at the high-end.” The quick follow to Simpson Thacher & Bartlett’s raise, which was announced Monday, is an indicator that no one wants to lose coveted associates, said Gloria Noh Cannon, a Los Angeles-based recruiter with BCG Attorney Search. “They want to prevent lateral movement that is at such a high pitch at this time of year,” Cannon said. Beard attributed the recent salary moves to the supply and demand of associates. “In the last several years nearly every Am Law firm has grown,” he said. “Law schools have not.” One California associate, who asked not to be identified by name, said he’s eager to see other California-based firms bump salaries � if not to the New York scale, then at least close to it. “Associates all around are absolutely fed up with California-based firms trailing so far behind the New York market, especially since for so long we became accustomed to a parity between New York and L.A. salaries,” said the Pillsbury Winthrop Shaw Pittman associate. “At my firm the associates are waiting with bated breath.” Meanwhile, the California associates at Quinn Emanuel were celebrating on Wednesday morning. Urquhart said that when he entered the firm’s downtown Los Angeles office, he was greeted with broad smiles from four second-year associates sitting at the firm’s coffee bar. “I said, ‘You four sure look happy,’” Urquhart recalled. “They said, “We’re just thinking about how we’re going to spend our extra money.’”

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