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Should this year’s incoming first-year associates be paid more than their counterparts last year, when salaries at some firms rose an incredible 25 percent? No, say most Georgia legal employers. And that’s their final answer. Of the 56 private firms and public interest employers surveyed in Atlanta and other cities around the state, 35 are keeping first-year pay the same. Among private firms, where 32 of 46 didn’t raise pay, lawyers attribute static salaries to the economic slump and diminished competition for fresh talent, especially in corporate and technology practices. Among the 18 private firms surveyed in both 1999 and 2000, 15 raised salaries. Of the 11 firms surveyed in both 1998 and 1999, 10 raised salaries; the 11th raised its signing bonus but kept base pay the same. Though 71 percent of the private firms surveyed this year didn’t raise pay, most of the 29 percent that did either had below-market salaries in 2000 or had recession-resistant practice areas such as litigation, insurance defense or intellectual property. Most notable among the firms that boosted pay are two IP boutiques whose increases hark back to the associate glory days of 2000. Thomas, Kayden, Horstemeyer & Risley raised starting salaries 26 percent, from $90,000 to $113,500. Needle & Rosenberg offers a 16 percent increase, from $95,000 to $110,000. Both firms also offer bonuses. Thomas Kayden hiring partner Daniel R. McClure says the higher salary is a response to the IP market, which continues to burgeon in spite of the tech downturn. Also, says McClure, he heard about Finnegan, Henderson, Farabow, Garrett & Dunner and other IP firms offering $125,000 to first-year associates, and knew his firm needed to raise pay to compete. “We still have to turn work away,” McClure says. Many of Thomas Kayden’s clients have increased their patent budgets by 25 to 30 percent, he adds. William H. Needle of IP boutique Needle & Rosenberg says his firm increased salaries as planned in 2001. “We’re still confident of weathering any storm,” he explains. PRIVATE FIRMS MAINTAIN RATE Intellectual property firms aside, 70 percent of the state’s private firms kept pay the same. Salaries did not increase at 10 of the Daily Report Dozen, an annual ranking of Atlanta’s richest firms. But one of those, Kilpatrick Stockton, eliminated its hours-based bonus system. Until last year, associates got a percentage of their base salary for reaching 2,000 billable hours in one year, and another percentage of their base salary for 2,200 billables. For work done last year, associates got a $5,000 bonus for reaching 2,000 plus a discretionary bonus. This year, however, the firm kept and increased only the discretionary bonus plan. Evelyn H. Coats, Kilpatrick’s deputy managing partner for attorney resources, says the maximum payout for discretionary bonuses — which recognize associate contributions to pro bono work, professional development and special projects — has increased from 20 percent of base salary to 25 percent. Coats says the bonus plan wasn’t restructured to decrease compensation costs. Though Coats says she doesn’t know how much the firm will pay in bonuses this year, she says that between 1999 and 2000, when Kilpatrick began phasing out hours-based incentives, it increased the overall amount paid in associate bonuses by 29 percent. Two Daily Report Dozen firms made slight adjustments in pay this year, apparently to match market rates. While their counterparts raised first-year salaries to $100,000 in spring or summer of 2000, Troutman Sanders waited until January 2001 for their $100,000 first-year salaries to take effect; Long Aldridge & Norman last year gave first-years a “gift” bonus of $10,000 plus a $90,000 starting salary. This year, the firm will pay its eight first-years $100,000 to start. Larry E. Gramlich, Troutman Sanders’ hiring partner, says the firm will respond to salary changes in the Atlanta market. But currently, he says, he doesn’t anticipate any upward or downward adjustments to first-year salaries in 2001. PAY STEADY Like most of the Daily Report Dozen firms, 10 other firms in the $100,000 club held pay steady. One of them is South Carolina-based Nelson Mullins Riley & Scarborough. Kenneth L. Millwood, managing partner of the firm’s Atlanta office, says his firm’s pay will remain at $100,000 with a $5,000 signing bonus because right now, there’s no competitive reason to change. The firm doesn’t have the flow of initial public offerings it had two years ago, but like many big firms, Nelson Mullins has a variety of practice areas, some of which flourish despite — or because of — an economic downturn, according to Millwood. He says the firm still is looking for associates in litigation, bankruptcy, intellectual property and biotechnology. “There’s been no discussion of any adverse effect on hiring, salaries — other than keeping them even — bonuses, promotion, any of the other things,” he says. Though labor and employment boutiques are somewhat insulated from economic downturns, managing partners say they won’t raise wages because competition doesn’t demand it. “We don’t have the huge run-ups, you know, when people are going crazy and buying things, but we don’t have the same turn-downs either,” says C. Lash Harrison of Ford & Harrison. “It’s a steady business, really, usually a little more active during bad times than good times. We’re very busy right now, so we assume that times are not good.” Those joining Ford & Harrison this fall will earn $85,000 plus various bonuses, the exact same package offered to last year’s entering class. “Salaries are dictated more by competition than by the economy,” says Harrison. “If the economy is bad and competition still dictates that we need to make a [salary] change to attract the kind of folks we want to attract, then we’ll be forced to do that.” At Fisher & Phillips, first-year pay still is $85,000 with a $2,000 signing bonus. But the firm upped its usual entry-level hiring from six or eight lawyers firmwide to 14, says Roger K. Quillen, the firm’s managing partner. Though the economy has businesses and employees concerned, says Quillen, his firm needed to hire because in labor and employment practice, uncertain economic times and layoffs mean more work. “I think that we felt that the substantial salary increase a year ago was in response to market pressures that we felt very strongly at that time, and we felt the salary levels we established in response to those pressures were high,” he says. Martha C. Perrin, executive partner at Ogletree, Deakins, Nash, Smoak & Stewart, says her firm typically tries to match pay at firms such as Sutherland Asbill & Brennan and Troutman. But last year, she says, Ogletree management thought associate salaries elsewhere were getting too high. The firm went to $90,000 then, and for 2001 that’s where it will stay, she says. ECONOMIC INFLUENCE Only a few firms say they’re making changes because of the economy, and at Morris, Manning & Martin and Kritzer & Levick, none of those changes involve compensation. Morris Manning is known for its work in one of the sectors hit hardest by the economic downturn — technology. But managing partner Robert E. Saudek says he’s not cutting pay; it will remain the same, and the cap on discretionary merit bonuses will rise. At his firm, Saudek says, economic effects are limited to the redeployment of one or two new recruits from slower practice areas to busier ones. Most new lawyers will go to the departments they wanted, he says. Kritzer & Levick also is adjusting entry-level hiring. Chief Operating Officer Jack M. Martin says his firm realized that it was paying $100,000 for first-year lawyers with a substantial training curve, while third-years who might start at $110,000 actually gave the firm and its clients more for their money. Though the firm usually has small summer classes — last year’s contained only two students because salaries were so high, he says — this year, the firm won’t seek any first-year lawyers. Martin says this is by no means the end of entry-level hiring. But for fall 2001, anyway, he says, “We don’t plan on going on-campus at all.”

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