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Fox Rothschild is putting its proverbial foot down when it comes to associate salaries. The firm said yesterday that it wouldn’t increase first-year associate salaries for the incoming September class. The new associates will continue to be paid at $125,000, firm Administrative Partner Mark L. Silow said. This announcement comes as firms across the country are still bumping up starting salaries. “We said to ourselves that there are financial implications to raising associate salaries and there was no appetite for our partners to absorb it,” he said. “No firm is asking their partners to absorb increases in associate salaries; they’re asking their clients.” When salaries go up, so do the billable hour and billing rate requirements of first- and second-year associates, he said. Aside from not wanting to pass the cost onto the client, Silow said Fox Rothschild didn’t want to put a greater burden on the associate, who would have to work significantly harder and sacrifice training time to pay for that increase. The result of the salary increases over the past few years for several firms has been “tremendous compression” in pay for senior associates, he said. Fox Rothschild would rather spend the money it saves on salaries on the third- to seventh-year associates, who are more productive, he said. Fox Rothschild’s decision comes at the end of two straight years of salary increases at several of the state’s largest firms. Many of the firms have already raised salaries this year, with some retroactive to January or February and others set to take place in September. The general salary range among large Philadelphia firms will be between $125,000 and $145,000 by September. Pepper Hamilton will increase its starting salary by $20,000, to $145,000 come September. By next month, it will be the fourth Philadelphia firm to reach that mark. Dechert and Morgan Lewis are already at $145,000 in Philadelphia, and Drinker Biddle & Reath will be there shortly. Several other firms have moved from the $125,000 standard in 2006 to $135,000 for 2007 starting salaries. Schnader Harrison Segal & Lewis, Saul Ewing, Hangley Aronchick Segal & Pudlin, Ballard Spahr Andrews & Ingersoll, Wolf Block Schorr & Solis-Cohen, Duane Morris, Blank Rome and DLA Piper will have all moved to $135,000 in Philadelphia. Flaster Greenberg has moved to $130,000. David Antzis, managing partner of Saul Ewing, said his firm won’t be raising associates’ billable rates when it moves up to $135,000 on Sept.1, so the cost will have to come out of the partners’ profits. It’s hard to tell whether Fox Rothschild’s move signifies a slowdown in the salary increases, Antzis said. If the economy slows it may naturally happen, but firms will continue to look at this issue as long as there is a competition for talent, he said. Fox Rothschild isn’t alone when it comes to stopping the dominoes from falling. Cozen O’Connor had said earlier this year that it had no intention of increasing associate salaries. “We think our starting-level salaries are exactly where they should be,” Cozen O’Connor Chairman Stephen A. Cozen said previously. “We also think, to a certain extent, [raising salaries] is a disservice to our clients.” Firm President and CEO Tad Decker said the firm is still at $125,000 and there is nothing in the works to immediately change that. He said firms have to stay competitive, but have to look out for clients too. Decker said clients care about the total cost they will have to pay at the end of the day and they expect firms to manage that cost. When asked whether the legal industry may be seeing a slowdown in the salary increases, Decker joked that he thought that was the case when he left the firm four years ago to go into government. Fox Rothschild’s decision to keep salaries at the status quo didn’t come without some perks for associates, Silow said. “We just didn’t say, �Sorry, no more money,’” he said. The firm revamped its associate compensation practices in general to include an enhanced bonus pool for billable hour requirements and it will continue the bonuses for client origination. Silow said the firm has also enhanced its retention bonus pool in which associates are paid bonuses after their third and fifth year. Fox Rothschild wants to let its attorneys know, Silow said, that it is a place where they have the chance to make partner and can make a career within the firm once they do. GCs Won’t Take It Anymore Altman Weil put a survey out in May of 38 of the 200 largest law departments in the United States. Of those law firm clients, not a single one had been contacted by one of their law firms about what the salary increases might mean for them, according to the survey. In response, 83.8 percent of clients said they thought their law firms should have contacted them to discuss associate salary increases. While 15.8 percent of clients chalked the increases up to the “cost of doing business with law firms,” 57.9 percent characterized the latest round of starting associate salaries as “outrageous,” the survey said. A small number of companies � 13.2 percent � reported changing their policies with respect to allowing law firms to utilize first- and second-year associates on their matters.

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