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In an effort to dissuade associates from fleeing to New York City for bigger paychecks, New Jersey’s largest firm, McCarter & English, last week announced salary increases of up to 33 percent for senior associates. The new pay scales at the 241-lawyer Newark, N.J., firm take effect next year with the first-year associates earning as much as $116,250 and senior associates with at least eight years’ experience garnering up to $172,500 — including merit bonuses. The announcement shows how concerned McCarter & English is about defections, particularly among veterans. The firm is offering the largest pay hikes to its senior associates “in whom it has already invested time, money and training,” says Andrew Berry, chairman of the executive committee. “We want our more experienced associates to know that we appreciate them.” In the past year, five of those lawyers have headed to more fertile pastures across the Hudson, supposedly for the money, although one returned because he didn’t like the longer work hours, Berry says. The incoming fall 2001 class of associates will earn a base salary of $95,000 with up to $21,250 in potential bonuses. First-year associates this year will earn $80,000 per year with a $5,000 bonus, a package that made McCarter the fifth-highest-paying firm in the state for freshmen lawyers starting this year. Base pay for senior associates will be $140,000 with up to $32,500 in bonuses available. Senior associates now earn $106,000, with the same bonus potential, Berry says. Before this year, the firm did not offer bonuses at all but established the two programs this year to sweeten the pot. However, a fraction of the associates will earn the highest pay levels, Berry says, since its two merit bonus programs will reward only the extraordinary talent. Under one plan, attorneys must bill at least 1,900 hours to qualify and receive a recommendation from their practice group. The second plan has no billing minimum but is reserved for superstars and is entirely discretionary. Senior partners at some other large New Jersey firms say McCarter & English’s new pay structure isn’t all that dramatic. Max Crane, a partner with neighboring Sills Cummis Radin Tischman Epstein & Gross, says that his firm has experienced associates who will earn more than $190,000 this year. The firm’s 2000 class of associates will earn a base pay that is $2,000 higher than McCarter’s. “The best midlevel and senior associates at Sills Cummis will make as much, if not more, than those numbers,” says Crane, although he would not specify how much his senior associates earn. “[McCarter's] numbers are consistent; they’re not out of line or even extra special.” Stewart Michaels, co-owner of Topaz Attorney Search in West Orange, N.J., says that McCarter’s salary increases are slightly more than the going rates for large New Jersey firms, which typically pay senior associates at least $125,000 in base salary. But national firms that have offices in the state offer about $150,000, Michaels says, and these may be more of a threat than New York firms. Compared with McCarter’s anticipated salary package, Lowenstein Sandler recruiting partner Joseph LeVow Steinberg insists that his firm is still “competitive.” Steinberg won’t say what senior associates earn, but he says first-year associates are currently tied with Morristown, N.J.’s Porzio, Bromberg & Newman as the highest paid in the state. Their classes of 2000 will earn $85,000. Steinberg observes that at McCarter, the first-year associates eligible for the highest earnings won’t see those bonuses until at least two years from now. By then, many of the other firms may have caught up. Lowenstein Sandler plans to pay its first-year associates a minimum of $90,000 next year, Steinberg says. But none of these firms will be in the ballpark with some of the top New York City firms, which pay first-year associates as much as $160,000. Berry concedes that, too. “We know that even with those increases, any one of our best and brightest could get a good deal more money in New York — and not have a life.” At Porzio, Bromberg managing partner D. Jeffrey Campbell says the firm will take the McCarter information under consideration in determining salary ranges for next year. However, he warns that raising salaries too high could result in more billable hour requirements for attorneys, higher rates for clients, and job insecurity when the economy weakens. Berry says that McCarter & English has not raised rates to clients this year but would not rule out rate increases for next year to offset some of the salary expenses. But considering what clients pay to New York firms, Berry says they would still be getting a bargain for their money. For example, Berry says a seven-year McCarter & English associate working on a case would bill at $200 an hour, while an equally experienced attorney at a Manhattan firm would bill at more than $300 per hour. “We don’t expect to pass the full economic consequence of this on to our clients,” Berry says.

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