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A fresh round of pay raises in January has brought associate starting salaries at most large firms’ New York offices to a new high of $160,000. So how are intellectual property specialty firms, with far more modest per-partner profits than their behemoth general practice counterparts, keeping up with the bidding war for associates? Well, they are doing just fine, thank you very much. New York’s 70-lawyer IP firm Frommer Lawrence & Haug has been paying its first-year associates $150,000 since July, when most large national general practice firms were still paying their first years $135,000, says partner Porter Fleming. “In our mind, they were playing catchup to us,” Fleming says. The 10-year-old firm, according to Fleming, has always tried to be ahead of the market by a few thousand dollars to send a message that it is looking for top candidates. “We compete now with hedge funds and investment banks on Wall Street, which just had record bonuses,” Fleming says. “To get the best people, you have to pay top dollar.” Chicago’s McDonnell Boehnen Hulbert & Berghoff also pays above market for associates, bumping its first year annual salary to $145,000 in early 2006. On January 1, the 58-lawyer firm again voted to increase its first-year associate pay to $150,000, effective February 5. Managing Partner Matthew Sampson says that similar adjustments were made for senior associates and nonequity partners. “One of our goals is to neutralize the money issue and not have that as a deciding factor,” in whether to choose to work for McDonnell Boehnen, Sampson says. The country’s two largest IP firms have actually upped the stakes. Three-hundred-lawyer Finnegan, Henderson, Farabow, Garrett & Dunner in Washington, D.C., and 400-lawyer Fish & Richardson in Boston not only matched the current market rate in New York, they also made the raise effective in all of their offices around the country, a move that even firms as big as 1,800-lawyer Latham & Watkins in Los Angeles have declined to do. Latham and other major California firms such as Gibson, Dunn & Crutcher, O’Melveny & Myers, and Morrison & Foerster boosted the salaries of their New York associates to $160,000. San Francisco’s Orrick Herrington & Sutcliffe raised its first-year associate salaries to $160,000 only in its New York and Washington, D.C., offices. DLA Piper, which has raised its New York associates’ salary to match the New York pay scale, has decided to pay its first-year patent litigators $160,000 no matter what office they are in.
‘Our associates tend to work several hundred hours less a year than if they were at a general practice firm.’

Steve Nataupsky Knobbe managing partner

California’s largest IP firms, Townsend and Townsend and Crew in San Francisco and Knobbe Martens Olson & Bear in Orange County, have matched the rate set by the state’s major firms. But unlike associates at their big-firm counterparts, say the two specialist firms, their associates get to have a life. “Our associates tend to work several hundred hours less a year than if they were at a general practice firm,” says Knobbe Managing Partner Steve Nataupsky. The average associate billing at Knobbe is 1,700 hours per year (1,850 per year at Townsend), while associates in large general practice firms are often required to bill over 2,000 hours. Moreover, the partnership track at Knobbe is only five years, according to Nataupsky. Historically, IP firms have been trend-setters in compensation, and for a while they paid better than the general practice firms in New York, according to veteran IP recruiter Katharine Patterson in San Francisco. The reason: IP firms that primarily focus on patent prosecution practice make a strong, steady and predictable income and some with low overhead pay at 40 percent of billings, Patterson explains. But pay is not the only reason why IP firms still attract most of the top law school graduates with advanced science and engineering degrees � despite stiff competition from general practice law firms and Wall Street. IP firms are the only ones that still provide intensive training in all important aspects of intellectual property law. “Big general practice firms may teach you litigation or transactional practice, but you will likely never get any prosecution experience,” Patterson says. Most general practice firms have ditched the less lucrative practice of filing patent applications and have focused on IP litigation and higher-margin counseling work. In fact, the recent market consolidation in the IP boutique market has resulted in fewer specialized patent firms. So for new graduates, it has become tougher than ever to get a job at a specialist firm like Knobbe or Finnegan, where associates can count on going through intensive training in all aspects of IP law. “IP firms have the pick of the litter these days,” says Patterson. The incoming associate class at New York’s Kenyon & Kenyon, for example, which recently raised its first-year associates pay to $160,000, includes graduates from Cornell Law School, New York University School of Law, and University of Michigan Law School. Six of the 15 associates have advanced science and/or engineering degrees. Finnegan’s new batch of associates were also culled from the top of first-tier law schools, such as Harvard Law School and Boalt Hall School of Law, according to Managing Partner Rich Racine. The firm hires around 30-�40 new associates every year, Racine says, and the pool of candidates continues to be impressive. In fact, as long as general practice firms refuse to fully train and cultivate their IP-�track associates, IP specialty firms will likely continue to have a leg up in the market. Xenia Kobylarz is a reporter with IP Law & Business, a Recorder affiliate based in New York.

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