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Let the match game begin. Philadelphia’s Morgan, Lewis & Bockius did not take long to respond to the late August announcement that Dechert would be raising first-year associate salaries from $105,000 to $125,000. Firm management fired out a memo to associates on Wednesday announcing that, effective Jan. 1, Morgan Lewis would also be raising its first-year salaries to $125,000. Michael Kelly, the firm’s managing partner for personnel issues, said Morgan Lewis’ four-person management committee — led by firm chairman Fran Milone — quickly evaluated its own associate salary structure after learning of the Dechert move. “I’ve been at the firm for 28 years, and we’ve always been able to recruit the top-of-the-market law student who wants to practice in Philadelphia, and our clients expect us to have that top-of-the-market talent,” Kelly said. “Being competitive in recruiting is synonymous with what you pay.” Kelly said Morgan Lewis management had not begun to determine what its associate salary structure would be for the upcoming year. But that all changed after the recent Dechert announcement. “Let’s just say that I wasn’t thinking about this [the last week of August],” Kelly said. “But it didn’t take much thinking on our part. We consulted with our partners and decided that this was the best course of action.” Unlike Dechert, which said one of its main reasons for upping salaries was to attract top law students who might not otherwise consider Philadelphia as a professional destination, Kelly said Morgan Lewis simply wants to assure itself of attracting the best law students who are set on practicing in the area. He said he had read and heard commentary from those who believe it is unnecessary to pay entry-level associates $125,000 in a market like Philadelphia. “Reasonable people can come to different conclusions on this,” Kelly said. “We’re committed to recruiting the top law school talent available, and this can be a high-cost business. We are not recruiting solely based on money, but there does come a time when you have to put your money where your mouth is. That’s not to say I wish we couldn’t pay less [than $125,000]. But these are the challenges you face when you run a law firm like this. And I’d rather have the challenges and the people than not have the challenges and not have the people.” Kelly said Morgan Lewis management has not decided what the exact pay structure will be for associates in their second year and up. He said they will definitely receive increases, but the firm has until January to finalize those plans. As for how the firm will foot the bill for the increases — a bill that could amount to anywhere between $3 million and $5 million if the firm offers the same percentage raises for all of its Philadelphia associates — Kelly said the short-term answer could come from partner profits. Long-term, though, the firm will have to also evaluate billing rate increases, but Kelly was careful to say that clients will have something to say about what the market will bear. He added that associates will not be asked to bill more hours to pay for their new wages. Most industry observers felt that Morgan Lewis would have to match Dechert, and that its profits per partner ($740,000, compared to Dechert’s $765,000) would not make that chore terribly taxing — although the firm was forced to lay off 50 associates last fall, including eight in Philadelphia. What many lawyers and consultants say they are waiting for is what firms such as Philadelphia’s Ballard Spahr Andrews & Ingersoll; Blank Rome Comisky & McCauley; Cozen O’Connor; Drinker Biddle & Reath; Duane Morris; and Pepper Hamilton will do. Most of the managers at those firms seemed reluctant to join the fray, though some indicated that they would respond if the market changed drastically.

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