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In a surprise move, Dechert this week announced that some first-year associates joining the firm this fall will be earning $125,000 per year — a $20,000 increase from last year. The new salary will go into effect on Jan. 1 for associates in Dechert’s Philadelphia and Princeton, N.J., offices. This flashback to boom-time economics contrasts sharply with some firms’ efforts to tighten their belts by laying off associates or support staff. One person familiar with the legal job market said that area firms had gone so far as to cut salaries in an effort to weather the washed-out economy. Dechert leadership said the move was made to bring Philadelphia and Princeton salaries into line with salaries paid by the firm nationally. “I think it’s just the position of the law firm,” Dechert chairman Barton J. Winokur said. “The situation we’re in is just that basically, we’re recruiting nationally and Philadelphia is for us a major source of talent and we just feel we need to start people in Philadelphia at the same level we’re starting them elsewhere.” The chairman of Morgan Lewis & Bockius, like Dechert a national firm with Philadelphia roots, expressed surprise at Dechert’s decision. “We’re certainly surprised by the [Dechert] decision because we haven’t heard of a suggestion in any city by any law firm that an increase in starting salaries is appropriate or desirable,” Morgan Lewis managing partner Howard L. Meyers said. “That being said, however, we have not decided about starting salaries for this year. … We’ve traditionally been at the top of the market here as a national firm. I’m sure that our senior management will consider the Dechert increase and other factors and make a decision in due course and communicate it appropriately.” Sources familiar with the region’s legal market speculated that Dechert’s motivation for bumping up first-year salaries might have been to clearly separate itself from other large firms in the area. “Dechert is doing very well right now, especially on the litigation side,” one source said. “They appear to have a lot of quality work right now, and they’re using this time to … really try and continue getting the best candidates and the best lawyers into their firm. “If they’re trying to achieve really taking over the mantle of being the best firm in Philadelphia and having the best attorneys working for their firm — if that’s their goal — it may be worth it to them.” Dechert also announced a new bonus compensation program that would affect associates firmwide. Winokur said bonuses would be more generous than in the past in an effort to increase recognition for associates and compete with firms in other major cities. “The idea in effect is to reflect merit even more than we have in the past, so those who are getting merit amounts will get increases over what they’ve had in the past,” he said. While one source said Morgan Lewis is likely to follow Dechert’s lead, whether other large firms in the city will respond is anybody’s guess. Paul Diamond, a partner at Philadelphia-based Obermayer Rebmann Maxwell & Hippel, said a ripple effect is inevitable. “Every other firm in town of any size is going to respond to this,” Diamond said. “They’re not all going to pay $125,000, but firms that think they’re competing for the same law school grads as Dechert will.” Diamond said the increases would, in effect, create a vacuum. “All the firms are going to be pulled up one way or another to fill the vacuum,” he said, “and to do this in the middle of a legal recession isn’t doing associates any favors. “In the end it is simply going to make the lives of associates intolerable.” According to data compiled by The Legal Intelligencer, Dechert has steadily increased the number of first-year associates hired over the last four years, rising from 26 in 1998 to 39 in 2001. Winokur said he wasn’t sure whether this trend would continue in 2002. “I think we have to see what we get,” he said. “You just don’t know until you see who is available. We’re going to hire the best people, and if we get a lot of the best people, we’ll hire as many or more. If we get less of the best people, we’ll hire less.” Winokur said first-year associates hired this fall would be brought in on at the current starting salary and receive the increase in January. Dechert’s move appears to defy recent bad news in the legal job market. Among the firms that recently thinned their ranks are Philadelphia-based Schnader Harrison Segal & Lewis, which cut three associates this year and handed pink slips to 30 members of its support staff in April, and Montgomery McCracken Walker & Rhoads, which eliminated 11 administrative positions that same month. Earlier this summer, Wolf, Block, Schorr and Solis-Cohen laid off seven associates, four in its Philadelphia main office, for what firm management said were economic and practice fit reasons. Similarly, in mid-July Reed Smith trimmed five corporate associates, two from Philadelphia, because of a stagnant corporate department. And in October 2001, Morgan Lewis handed walking papers to 50 associates, five of them from its Philadelphia main office. The layoffs came on the heels of a culling effort that resulted in nine Philadelphia associates leaving for performance reasons.

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