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After five months of careful consideration, Philadelphia-based Drinker Biddle & Reath has decided to change its salary and bonus structure for first-year associates in an attempt to match the $125,000 starting salaries of Dechert and Morgan, Lewis & Bockius. Drinker Biddle will raise starting salaries to $115,000, from $105,000, with a guaranteed $10,000 bonus. The total $20,000 increase, which is a belated response to the Dechert and Morgan Lewis pay hikes of this past Labor Day, will not take effect until September of this year and do not include the firm’s Princeton and Florham Park offices, both in New Jersey, which will offer first-years $110,000. Drinker Biddle Chairman James Sweet said that the firm took so long to debate whether to institute the raises because it was not working off the same financial platform as Dechert and Morgan Lewis. Dechert and Morgan Lewis can support their raises with profits per partner ($765,000 and $740,000, respectively, for 2001) that are almost double every other Philadelphia-based firm’s. Drinker Biddle’s profits per partner for that same year were $415,000, though Sweet said that that number should increase to between $450,000 and $500,000. “You think that the most logical thing for us to have done would be to match back then so it would have been in place during the fall recruiting season,” Sweet said. “But we never do anything quickly, and we don’t have the profitability of Morgan or Dechert so we had to take some time to figure out whether this was the best thing for the firm. “In the end, though, we want to have a national litigation practice. And if you want to attract the best and the brightest you have to pay top dollar. I wouldn’t say we had to do it, but if you want to be considered a premier firm, you have to compete with associate compensation. But I wouldn’t say that was the driving force behind the ultimate decision. We just felt that we had a record year [in 2002], and we want to reward our associates for their hard work.” Sweet said the firm did not see any need to issue the raises immediately. Being that the firm just completed its fiscal year 2002, Sweet said Drinker Biddle associates will soon be receiving year-end bonuses and “they already are compensated well, so with our economic profile, I don’t think we needed to do it now.” Sweet said the firm will offer second-year associates annual salaries starting at $117,500, with bonus opportunities that are based on two separate billable hour thresholds. He declined to say what those thresholds were. For more senior associates, Sweet said the firm would offer raises “competitive up the ranks” with what Dechert and Morgan Lewis did, though he wouldn’t guarantee that there wouldn’t be any salary compression. As for how the firm would pay for the across the board raises, Sweet said that it will come from a combination of partner profits, increased productivity and billing rate increases. He said associates will not be asked to increase their billable hour standards to foot the bill. A quick scan of other large firm managers yielded sometimes surprising results and sometimes elicited relative silence. Blank Rome managing partner Fred Blume and Wolf, Block, Schorr and Solis-Cohen Chairman Mark Alderman both declined to comment because they had just heard the news and needed time to evaluate it. Duane Morris Chairman Sheldon Bonovitz said that his firm would “certainly react to it in the marketplace” but declined to say what that response would be. Cozen O’Connor managing partner Tad Decker said his firm had and has no plans to raise associates salaries to the $125,000 level but that could change “down the road” if all or most of the other large Philadelphia firms decide to join Morgan Lewis, Dechert and Drinker Biddle. “Even though we had a good year, the economy is not doing any better and I can’t see us passing on any portion of [salary raises] to our clients,” Decker said. The most emphatic ‘no’ came from within the walls of Ballard Spahr Andrews & Ingersoll, where Chairman Arthur Makadon said the firm would not be raising its starting salaries. “We just finished putting together the best recruiting class in the city, including the two firms that paid $125,000,” Makadon said. “I think all of the people we got had offers on the table from Morgan or Dechert. In a perverse way, I actually think it put us at a competitive advantage. I think we need to give law students and associates more credit. I said this before and I’ll say it again, ‘You better be selling something other than money.’”

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