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Call it the salary increase that nobody wanted. The partners didn’t want it because the raises would be coming out of their pockets. The clients didn’t want it because they knew that they would end up paying for it. And, lo and behold, the associates didn’t want it, as evidenced by the reactions over the last two months of associates at national firms with offices in metropolitan Washington. While nobody minds the additional $25,000 to $40,000 going into his or her pocket because of the spike in associate salary pay, associates see very well the implications of the compensation increase and the resulting complications to their future. Not only will they obviously have to work harder, but they see their partnership chances diminished, their job security lessened, and their exit strategies more difficult. The most strident opinions came from senior associates, who fear that the raises come at a very direct cost to their status at the firm. One obvious issue is partnership. One sixth-year associate at the D.C. office of an East Coast firm said he was “sort of ambivalent [about the raises]. As a senior-level associate, they were making a lot of money off of me and continue to, but everyone knows that partners make a lot of money off of their senior people. The worry comes in that it might make partnership chances harder because you are going to need more business to justify making you partner.” Indeed, the increase in associate salaries has necessarily raised the low end of the partnership compensation figures at many firms. Given the fact that firms tend to lose money on junior partners who aren’t developing business, this fear is certainly justified. At the same time, associates are even more jaded about quality-of-life issues within law firms, certainly an important concern before the salary increase. Another sixth-year associate at a large local firm said he was “happy to earn the extra money, but if it was up to me I’d earn less money and work fewer hours.” Many midlevel and senior associates say that their number one reason for leaving law firms before the increase was the pressure to bill hours. The increased compensation and the not-so-veiled reaction from law firm managers has only ratcheted up that pressure. Most of the associates interviewed for this article were positive about firms that set up a two-tier compensation structure, based on billable-hour commitments. “I think that the firms that gave you the option of billing different hours are more realistic because they let you choose your lifestyle beforehand,” said one junior associate. “The bonus thing is bogus, because the extra hours that you have to work … don’t amount to the same value per hour.” Still, associates at firms that offer two separate salary scales face a Hobson’s choice: either sign on for the increased workload, making balancing work and family life even harder, or signal to the powers-that-be that you aren’t willing to do “whatever it takes” to make partner. No matter what the firms do to give assurance that choosing the lower hours threshold won’t affect partnership chances, the perception for many is that such a choice may be harmful to the associate’s future career. One junior associate thinks that the “choice” option is a misnomer: “No one is going to choose the 1,800 billables because [associates] know that they’re going to bill 2,000 anyway. If you look at the average billables for midlevel associates, people are already doing 2,000 hours. Firms are just too busy now anyway, so the people who are going to do 1,800 … are just at a firm to get by.” Those who sign on for the higher billable threshold are concerned about what will happen if they do not cover their 2,000-hour requirement — and often it’s out of their control. They can’t dictate how much they’re going to do, since the partners are the ones who assign the work. The worst-case scenario is when the associates happen to be in a practice group that’s not doing well. If this is the situation, these associates are going to be the first ones to suffer. According to a sixth-year associate at the D.C. office of a Southwestern firm, “It’s nice to make more money, but it comes at a price. They are going to be less lenient with periods of slowdown, and when there is a turndown in the economy, there’s going to be an intolerance of unproductiveness.” An interesting byproduct of the boost in salaries for new lawyers is the contempt that many senior associates have for their more junior colleagues. As one senior associate put it, first- and second-years “can’t do anything and don’t know anything. If you go to one of these greedy associates Web sites, it’s pathetic the whining that goes on. The junior people are all caught up in the euphoria of the big salaries, but they should be less concerned about how much they make and concentrate on the type of training and expertise they are going to get.” Indeed, because of all the data that indicate firms don’t make money on first- and second-year associates, the more senior associates were surprised that firms didn’t try to tailor increases to reward those who were really valuable to the firm. “I’m less tolerant of the first- and second-year associates,” said one senior associate. “There’s still compression [at the more senior associate salary level] and [new associates] are still not worth their salaries … [but they] don’t realize how worthless they are. They are all walking around thinking that they are a valuable commodity, but when the economy turns down, they will be out in the front holding a pencil cup.” Another senior associate, echoing what’s been written in various publications, said, “If I ran the zoo, I wouldn’t hire any first- or second-year attorneys, but [instead] concentrate on hiring laterals. First- and second-year lawyers are a cost center and a real drag on firm revenues. The reason that firms that don’t hire laterals is that they’re caught up in hiring from the best schools regardless of whether [the new associates] can produce good, quality work.” However, many junior lawyers aren’t thrilled about these increases either. A second-year associate at a Southwestern firm said, “I think that first- and second- associates are grossly overpaid… . We’re not profitable until well into our third year, but it certainly wasn’t the D.C. associates that started this salary war.” This associate called this raise another example of the “golden handcuff” theory: “The intent that the learning curve is steeper than the pay curve. They pay you too much, they give you golden handcuffs, and then they catch you in the ensuing years. I’m way overpaid for what I do at the firm now, but they underpay the senior associates. I can see how the senior associates are mad, but I never asked for a pay raise, and I was surprised when I got it. I’m just happy that I have a job.” The increased compensation paid to associates doesn’t seem to have dampened the enthusiasm for in-house job options, but the increases have complicated the matter. One senior associate approached about an in-house job option frankly stated that he thought he was overpaid, and went to great pains to explain what his compensation was in 1999 — rather than 2000 — knowing that he would have to take a pay cut to go in-house. And with good reason. Despite the publicity about lawyers taking huge pay cuts to go to dot-com companies, in-house counsel, in our experience, have always been wary about extending offers that contain significant pay cuts, and that caution is continuing. Instead, they are looking at even more junior lawyers than they have in the past, or are avoiding law firms altogether as a source of new people, targeting instead other in-house lawyers or even government attorneys. Of course, if the stock market continues to go down, some of these in-house jobs will cease to exist. So while some student loans are getting paid off a little quicker, the great salary increase of 2000 is being met with little cheer. A little Silicon Valley firm — Gunderson Dettmer Stough Villanueve Franklin & Hachigian — has played chicken with the rest of Law Firm America and has gotten its name on the map. Law firm chairmen are figuring out ways to pay for the increases, and to stay competitive. But the associates, to quote Bob Dylan, feel, even more than before, that they’re only “a pawn in their game.” Stephen Nelson and Stacey Levy are legal search consultants with The McCormick Group Inc., an executive search consulting firm in Arlington. Nelson is a former Legal Times reporter and managing editor.

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