N.J. Salaries Near Flat as Firms Pick Up N.Y. Laterals

New Jersey firms that raised starting salaries to keep pace with New York no longer have to do so, as recession-battered New York firms are providing a runoff of trained lawyers ready to be scooped up. Perhaps that's why starting salaries at New Jersey's largest firms stayed flat from 2002 to 2003. The glut has even led one major firm to cancel this year's summer program -- laterals will be its next hires.

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New Jersey firms that raised starting salaries to keep pace with New York no longer have to do so, as recession-battered New York firms are providing a runoff of trained lawyers ready to be scooped up. “The New York market is very tight, so we’re getting the benefit of that,” says Glenn Clark, managing partner at Riker, Danzig, Scherer, Hyland & Peretti in Morristown, noting the upswing in lateral applicants. “They’ve either been laid off or told to start looking. We’re seeing people taking very substantial pay cuts.” That’s perhaps why starting associates’ salaries at 18 of New Jersey’s largest firms stayed virtually flat from 2002 to 2003, while entry-level hiring at those firms fell by 16 percent. “Every day I get a stack of 30 r�sum�s on my desk and a lot of them are from New York,” says Mark Berman, hiring partner at Newark’s Gibbons, Del Deo, Dolan, Griffinger & Vecchione. “We’ve been flooded with talented people.” The influx of would-be laterals into the job market has even prompted Gibbons Del Deo to cancel this year’s summer program. Seven first-year associates will come on this fall, all former summer clerks, but the next hires will be laterals, says Berman. Other managers say they’re cutting back on first-year hires because a third- or fourth-year associate produces more work and requires less supervision. “Unless you have the kind of practice where you can afford to bill significant training dollars into the equation, it’s almost like you’re writing off the first year,” Steven Picco, managing partner for Reed Smith in New Jersey, says of first-year associates. “It’s too expensive to train them.” He says Reed Smith has refocused its summer program, using it exclusively to recruit minority lawyers. While the high costs of hiring, training and retaining new associates have long augured well for laterals as an alternative, the idea grew more popular after the dramatic escalation of salaries for first-year associates in 2000 and 2001, says Jerry Nash, deputy director of the National Association for Law Placement. “This phenomenon did not take hold widely, but there were instances where specific firms were saying it’s not a good business model for us, we can’t afford to take on, at such great cost, those that are not paying off. It makes sense in some ways, in that these people are going to hit the ground running and generate revenue more quickly,” Nash says. Counterarguments focus on whether a firm’s culture is diluted by so many lateral hires, Nash says. In addition, some types of elementary work are better suited to low-level associates, and clients may balk at paying a fifth-year associate to do it. The debate over relative merits of entry-level hiring and lateral hiring was somewhat moot during the economic expansion of a few years ago, says Nash. “Back in the boom times, attorneys that were floating themselves on the lateral market were getting snatched up so quickly. It’s not as difficult now to find qualified laterals,” he says. Reed Smith’s Picco says the market forces that drove up salaries for first-year attorneys a few years ago have been reversed. Although none of the large firms surveyed in New Jersey cut first-year pay, the average increase this year was 2.4 percent, nearly the same as last year’s 2.3 percent but much less than the 6.8 percent in 2001. “I think there’s more downward pressure than upward pressure on salaries right now. Our firm growth has been excellent but when you look at the economy as a whole, you’ve got to see a fairly flat economy,” says Picco. Job applicants appear to be less concerned than before about salary, says Edward Deutsch, managing partner at McElroy, Deutsch & Mulvaney in Morristown. The matter of “how people are treated” at a given firm is rising in importance to applicants, who search for such information from friends and the Internet, Deutsch says. “I think the days of people chasing the dollar is over — they’re chasing the career,” says Deutsch. “They’re also saying maybe it takes me longer to pay my bills, but I want to look at a firm that’s stable.” That’s good news for Deutsch’s firm, whose starting salary of $85,000 is $5,000 to $10,000 less than most of the others surveyed, though first-year lawyers are eligible for bonuses based on performance and productivity. McElroy Deutsch has bucked the state’s hiring trend this year, with a freshman class of nine, compared with six last year. LAW SCHOOLS ADAPT At Rutgers Law School-Newark, officials are acutely aware of the hiring slowdown. “We’re finding a lot of very strong candidates are still looking,” says Frances Bouchoux, associate dean for admissions and career services. “We encourage them to be open-minded. We’re saying, you may have wanted to get to a top firm — you will be able to get there, but sometimes you will have to go to a small firm first. I think we’ve prepared them for it not to be an easy matter to get the job of their dreams.” Students completing summer associate programs who are offered a job after graduation are accepting that offer promptly this year, where the past practice has often been to wait to see if better offers materialize, Bouchoux says. “What that does is it makes the whole market a little less fluid, because there are fewer opportunities for other people who may have wanted to explore those firms,” Bouchoux says. Graduating students at Rutgers Law School-Camden are also feeling the effects of a general slowdown in hiring, says Mary Beth Daisey, director of career services. “They’re finding things, they’re just finding them later and they’re not finding their ideal jobs.” On top of reduced hiring by private firms, the attorney general’s office, which has sometimes been a major source of jobs for Rutgers-Camden graduates, is doing very little hiring this year, she says. The state is evaluating each attorney opening individually and hiring selectively, says Chuck Davis, spokesman for the attorney general’s office. High-priority openings include litigators and those who will work with the Division of Youth and Family Services, Davis says. Students at Seton Hall University School of Law are having to work harder than usual to find a job this year, but job-placement statistics will ultimately look about the same as most other years, predicts Debra King, assistant dean for career services. King says the reduction in job offers by large firms has been balanced by steady hiring by smaller ones. This year the law school augmented its main job fair in the fall with a spring event focusing on opportunities with small firms and internships. “It’s not a banner year but I don’t think it will be anybody’s worse year,” says King. “There’s a certain level of student concern and panic. They think they’ll never get a job, but it doesn’t, in fact, hold up that way.” Related chart: First-Year-Associate Compensation at Large N.J. Firms

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