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Call it the salary war that was not. When San Francisco-based Brobeck, Phleger & Harrison announced in January that it had boosted its first-year associate salary to $135,000, an increase of $10,000, the predictable curiosity arose among big firm associates in New York: When will New York firms match? After all, when California firms led by Menlo Park-based Gunderson Dettmer Stough Villeneuve Franklin & Hachigian raised starting salaries to $125,000 last winter, firms in New York — which has long worn the mantle of the nation’s highest-paying legal market — quickly followed suit. But with the economy now struggling and firms’ flow of business slowing, this time around has been a different story. Almost two months after Brobeck’s announcement, the higher first-year rate has spread only to a handful of California- and Boston-based firms. And the reaction from New York firms has been total silence. One partner at a top New York firm said that even if the economic picture was still rosy, it would have been difficult to justify raises after the salary increases and large bonus payments of the last year. But given that some firms are now laying off associates, he said, “I can’t imagine there being an increase at the present time.” Even in California, the response to Brobeck’s move, which also raised salaries in other associate classes by $10,000, has been far from unanimous. Silicon Valley-based Gray Cary Ware & Freidenrich; the San Francisco Bay Area offices of Seattle-based Perkins Coie; and Pillsbury Winthrop, the product of the recent merger of San Francisco’s Pillsbury, Madison & Sutro and New York’s Winthrop, Stimson, Putnam & Roberts, quickly matched Brobeck. But other leading firms, such as San Francisco’s Cooley Godward and Palo Alto’s Wilson Sonsini Goodrich & Rosati, opted to stand pat. In Boston, Hale and Dorr and Goodwin Procter & Hoar increased first-year pay to $135,000 in late January. Both of those firms, like Brobeck and Pillsbury Winthrop, have New York offices where first-year associates will receive the bumped-up rate. But New York-based firms, which only recently concluded a round of year-end bonus decisions in which many first-years received guaranteed bonuses of $40,000, may well be suffering from a case of compensation fatigue. Jon Lindsey, managing partner of the New York office of the legal search firm Major, Hagen & Africa, said that for that reason, he would be surprised to see the $135,000 starting salary catch on with New York firms any time soon. “Everyone sort of looked at each other after the last round of bonuses and said, ‘What have we done?’ ” he explained. “ There’s very little appetite at this point to compound that.” DOT-COM DOWNTURN In addition, with dot-com job prospects dwindling and the lateral attorney market relatively static because of the economy, options for associates with wanderlust have shrunk considerably. And firms may have come to the realization that money was a fairly ineffective means of stemming attrition. “Associates may leave for other reasons,” Lindsey said. “But I don’t think firms feel that they’re losing a lot of top people because of the money.” There is also a belief among the leading New York firms that their system of compensation, with a $125,000 salary (except for Skadden, Arps, Slate, Meagher & Flom, which pays $140,000) and bonuses that are often guaranteed, is a better deal than the hours-based bonus systems that California firms tend to offer. One partner at a large New York firm said that the $135,000 figure is irrelevant: because of the nature of the bonuses, associates in New York see more money on their W-2 forms than do their West Coast counterparts. Of course, skeptical associates rightly note that the bonus figures New York firms paid this year may vanish into thin air if the economic slowdown continues. And head-to-head compensation comparisons also fail to account for the higher cost of living in New York. Robert Joffe, the presiding partner at Cravath, Swaine & Moore, long the pacesetter among New York firms on matters of associate pay, said that his firm had no intention of raising its salaries for now. But he said that Cravath, and presumably by extension the other Manhattan firms that have traditionally followed its lead, will always be at the top of the scale in terms of total remuneration. “We don’t find it necessary to match every jig and jog of the market,” he said. “Our intention is to, at the end of the day, be a compensation leader but a leader on total compensation.”

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