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White & Case says it has increased the salary it pays the law firm’s first-year associates by $10,000, a move that is already forcing other area firms to rethink their compensation for beginner attorneys. The Miami office of New York-based White & Case last week said it also increased the pay of all associates, with first-year lawyers to make $115,000 a year, not including bonuses, up from $105,000. The increases took effect Jan. 1. Other major firms competing for legal talent are trying to keep pace, but White & Case continues to have the highest base salary among the major firms for new associates in Miami. The pay increase represents a resurgence of confidence among law firms in the market. A dramatic round of increases in 1999 and 2000, also sparked by White & Case, left many firms catching their breath in the succeeding years, though some started nudging beginner pay up again in 2003. Word of White & Case’s raises has other firms considering whether they need to do the same. “I will present it to our compensation committee. We always remain competitive,” said Ira Coleman, Miami managing partner and international management committee member for McDermott Will & Emery, a worldwide firm with 1,050 lawyers. “We don’t have a problem obtaining and retaining the best and the brightest,” he said. “It’s more about the culture of the place than $5,000 or $10,000, and it usually washes out in the bonus.” THE INCREASES Victor Alvarez, the executive partner of White & Case’s Miami office, said that after two years of holding off, business now warrants the raises. The office ranked No. 8 in the Review 15 last year, reporting revenue of $38.3 million for 2002, up more than 40 percent. Holland & Knight, with 1,250 lawyers worldwide, raised associate pay in Miami as of Jan. 1, starting with a boost of about $5,000 for first-year associates. The first-year associates at Holland now earn $105,000, plus a $5,000 signing bonus. The office, with 57 partners and 51 associates, expects to have three new associates starting this fall; three others have deferred starting because of clerkships. Greenberg Traurig, a 1,050-lawyer firm based in Miami, also increased associate pay. It plans to hire 10 rookies this year in Miami and Fort Lauderdale. The firm’s first-years will make a base salary of $105,000 (up from $97,500), plus a $5,000 bonus, plus up to $5,000 more at the discretion of Matt Gorson, the firm’s managing shareholder for the Southeast. “We have a history of raising [associate pay] every year,” he said. But many law firm executives say that salary numbers alone don’t give a full picture of compensation or of the advantages of working at one firm versus another. Holland’s Miami executive partner, Peter Prieto, noted that his firm holds out a greater likelihood for associates to become partners. The firm also appeals to recruits by encouraging associate involvement in civic and Florida Bar activities, he said. DIVERSIFIED FIRM While much of the country frets about a weak economy, for diversified firms such as White & Case, with many lawyers handling corporate restructurings, real estate and litigation work, business has been “truly remarkable,” Alvarez said. Firmwide, White & Case last year handled 125 transactions of over $100 million each, he said. The firm’s 85 Miami lawyers include 17 partners, six of counsel and 62 associates. The office plans to hire 10 first year associates, to start in September. Part of the success of the firm’s Miami office owes to the fact that much of the legal work handled by White & Case’s Miami lawyers involves corporations outside the region, he noted. Miami partner Thomas E. Lauria, for example, is co-head of the firm’s restructuring practice worldwide. Lauria is handling about 35 cases, none in Florida. The office also represents many Latin American clients. “We have an active practice locally and are looking to build our practice locally, but we’re very diversified,” the executive partner said. “When things are bad in one country, they may be good in three others. It tends to insulate you from downturns in regional or local economies.” Two Miami law firm executives, who asked not to be named, said that White & Case has to pay associates more than other firms because the firm is stingy with partnerships. The firm’s offices follow dictates from headquarters that allow only a small ratio of its attorneys to become partners. “White & Case has a mandated 75-15 attorney-partner ratio,” said one lawyer outside the firm. “There’s only one way you can get there and that’s by not making partners. They have a different model and they’re unique in this community in that regard.” In last year’s Review 15 rankings, White & Case reported that its Miami office had 14 partners out of 72 lawyers. “For equal amounts of money, why would you go somewhere you can’t become a partner?” said a local law firm executive who asked not to be named. “That’s why they have to pay a little bit more.” Alvarez disagreed. “First-year associates and law students are not really considering that factor when deciding among firms,” he said. The Miami office does have a high ratio of associates to partners, but that’s a decision made in Miami because the practice areas in which the office focuses work well that way, he said. He also noted that, while it takes eight to 10 years to become a partner at White & Case, the lawyer generally becomes an equity partner at that point. By contrast, other firms have various tiers of partnership, in which associates first must become non-equity partners as a step toward becoming full, equity partners. BILLABLES Associates work grueling schedules to make that kind of pay rate possible for the firms. At Morgan Lewis, for example, associates are expected to generate 1,975 billable hours of work a year. But the firm’s Miami managing partner, Mark Zelek, notes that many firms require 2,000 hours or more. Philadelphia-based Morgan Lewis, with 1,200 lawyers worldwide, has 26 associates in Miami, out of 35 lawyers in the office. The first-year associates earn a $100,000 base salary, plus a minimum bonus of $10,000 if they meet certain goals, and an additional $5,000 for outstanding work. They’re also eligible for an additional discretionary bonus, Zelek said. At another of Miami’s top-paying law offices, Bilzin Sumberg Baena Price & Axelrod, managing partner John Sumberg said that business has indeed been strong in the Miami legal market this year, but that doesn’t mean that rookie pay will rise. “Everybody didn’t jump last time,” he said, referring to the pay surge by a few big firms in 2000. Like Sumberg, many law firm executives think twice at the prospect of raising pay for first-year lawyers — and even summer interns who aren’t lawyers yet. One executive, who asked not to be named, said he was “flabbergasted” at how quickly law firms forget that high salaries can strain a firm, and at associates’ “sense of entitlement.” Thomas A. Snow, president and chief executive of Tampa-based Carlton Fields, a statewide firm with more than 200 lawyers, made news a year ago when the firm substantially increased pay in Miami and West Palm Beach despite a struggling economy. He said the “cold, hard reality” is that associates have to put in 1,875 to 1,900 billable hours to make such wages possible. “By no means do we consider ourselves a lifestyle or quality-of-life firm,” he said. And while the firm hadn’t planned any additional raises at the moment, he said, the White & Case decision does have ramifications that competing firms can’t ignore. “I’d be foolish to say there’s no impact,” Snow said. One major impact is that clients are unlikely to accept attorney fee increases, particularly if they think they’re paying more for less-qualified professionals, said Bowman Brown, chairman of Miami-based Shutts & Bowen, a 150-lawyer firm. To firms that keep raising pay rates, he said, “More power to them if they can manage it.”

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