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Two firms are making news with how to handle soaring associate salaries. Nixon Peabody determined that when the recruiting gets tough, the laggers give raises. Last week, the Boston-based firm announced that it had bumped pay for associates in its D.C. office. First-years will now be making the market standard of $160,000. “When New York firms raise, that doesn’t have an impact on us,” says Laurin Mills, managing partner of Nixon Peabody’s D.C. office. “It’s the firms in Washington, our competitors, that put the pressure on us to make a move.” The firm stood at $145,000 for first-years before the raise. But that move is costly, especially for a firm like Nixon Peabody, which has profits per partner of only $585,000, according to this year’s American Lawyer 100. The firm’s revenue per lawyer is $650,000. Industry consultants frequently warn that any firm with profits per partner at $1 million or less struggles with the $160,000 starting pay grade — which is where McDermott Will & Emery comes in. Already paying associates in every office $160,000, McDermott plans to create a new tier of attorneys — basically permanent contract associates — to handle remedial tasks at discount billing rates. This year the firm’s profits per partner in the AmLaw 100 were $1.4 million. The firm says the contract associates will be expected to bill between 30 and 40 hours a week and be paid roughly 25 percent less than first-year associates. They will get mundane jobs like document review. Which in turn could free associates on track for partnership to work on more interesting matters. McDermott is planning to start with a pilot group of about 15 lawyers sometime in the next year.
Nathan Carlile can be contacted at [email protected]. Kellie Schmitt is a reporter for The Recorder , a sister ALM publication.

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