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A good number of New Jersey’s largest law firms are holding the line on health insurance premiums passed on to their employees, bucking the tide among employers in general in the state. It’s become a choice carrot in attracting and retaining employees, especially among large firms that can negotiate the best rates. Employers’ health insurance costs increased an average of 15 percent in 2002 and 13 percent in 2003 and are expected to rise by double digits again this year, according to the New Jersey Business & Industry Association in Trenton. In addition, 72 percent of the state’s employers have responded by having employees pay higher premiums, deductibles or co-payments. But a Law Journal sampling shows the largest N.J. law firms resisting that temptation and maintaining the premium share they footed the year before. � At the high end of the generosity scale, DeCotiis, FitzPatrick, Cole & Wisler of Teaneck pays 100 percent of its employees’ premiums, as it did last year. � McCarter & English of Newark and Riker, Danzig, Scherer, Hyland & Perretti of Morristown each pick up 80 percent. � Wilentz, Goldman & Spitzer in Woodbridge: 70 to 80 percent. � Wolff & Samson in West Orange: 70 percent. � Greenbaum, Rowe, Smith, Ravin, Davis & Himmel in Woodbridge: 50 to 60 percent. � Norris, McLaughlin & Marcus in Bridgewater: 80 percent for employees taking single coverage and 57 percent for those taking family coverage. Says DeCotiis FitzPatrick partner Michael Cole, “We really debated this issue internally over the past year and decided that paying for their health care is one benefit we want to maintain. It’s just too important of an offering for employees.” To be sure, firms have not kept their employees’ costs flat. Although the percentages of premiums paid have remained the same, employees pay more because the firms’ base premiums have increased. In addition, some firms have increased employees’ co-payments, such as at Norris McLaughlin, where the co-pay has gone to $25 from $20. However, there’s a strong sense that medical insurance is a lure that gives large firms an edge in competing for talent. “The larger firms are often in a position to deal with employee benefits in a way that small firms cannot,” says Wolff & Samson managing partner David Samson. While smaller employers in New Jersey are subject to differing levels of community rating for group insurance, the larger firms’ greater buying clout gives them the edge in premium costs. For example, the New Jersey Business and Industry Association report on insurance premium costs notes, “The smallest companies continue to pay the highest.” Two large law firms reported increases in their insurance costs in the past year that are well below the 13 percent state average reported by the business association: Norris McLaughlin at 9 percent, and Wolff & Samson at 4 percent to 5 percent. Another advantage for large firms is that they can offer employees a greater selection of insurance plans. “In today’s market, choice is a key issue, particularly for higher-income people like lawyers,” says Michael Mulqueen, a benefits consultant with the Mount Laurel office of Fleet Insurance Services, whose clients include Fox Rothschild of Lawrenceville. “Restrictive managed care plans are not desirable since experienced lawyers want to be able to go to whatever doctor they choose.” STAYING FLEXIBLE How long can law firms hold the line on premium percentage increases? Stuart Michaels, a principal with the consulting firm Topaz Attorney Search in West Orange, says larger firms typically pay at least 50 percent of their employees’ premiums, but he expects that amount to drop to zero at some firms in the next few years. “Unfortunately, the costs of running a business are getting greater and greater, and firms will have to do what they have to do to survive,” Michaels says.One approach firms may adopt is the use of flexible spending accounts and health management accounts that allow employees to set aside pretax income in savings for medical purposes. The vast majority of large firms responding to the Law Journal‘s inquiries say they offer FSA programs. Connie Sprayberry, payroll benefits coordinator at Norris McLaughlin, says that after getting hit with a 9 percent rate increase from its health insurer this year, her firm is considering instituting a healthcare savings account program for its employees. “With the way things are in health care today, we know that we very well may have to try something new,” she says. BONUSES FOR BILLABLES In an unrelated employment benefits trend, larger firms in the state appear headed toward making new compensation arrangements for associates. Several firms contacted for this article are offering bonuses when associates reach a certain number of billable hours. “This is a trend for larger firms,” says Michaels. “Firms used to compete [for associates] on base salary, but now they’re being more realistic and basing it on performance.” He says that a typical scenario may be to pay 10 percent of base salary bonus to associates who exceed 2,000 billable hours in a year. The bonus schemes would conceivably guard against losing good associates and help attract new ones. DeCotiis FitzPatrick, which gets most of its associates as lateral hires, is among those offering the bonuses. “It’s a good program because it recognizes outstanding contribution,” Cole says. “The lawyers seem to appreciate it, since the vast majority of them reach the hourly bonus level.” Suzanne Homel, director of office administration and personnel for Fox Rothschild, says her firm’s bonus program “is real important because associates want to know they have the availability to get that money.” Cole says the programs are not necessarily only for large firms. “If the bonuses are tied to a lawyer’s contribution to the firm, all firms should be able to offer them because they are for people adding to the bottom line.”

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