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In a move that could start a domino effect in the large firm community, Philadelphia-based Cozen O’Connor has bumped up its first-year associate salaries for the first time in five years. The firm has jacked its starting wage from $100,000 to $110,000 and also eliminated lock-step raises for associates in their fourth year and above and replaced them with a merit-based structure. Two midsize firms also have announced recent pay hikes, while a handful of large firms said they are considering whether they will follow suit. Three large firms in Philadelphia have salaries above $110,000 — Dechert, Morgan Lewis & Bockius, and Drinker Biddle & Reath. Dechert and Morgan Lewis raised salaries from $105,000 to $125,000 shortly after Labor Day 2002. But unlike two years prior, when other firms matched the big two when they moved from $75,000 to $105,000, none of the other large firms made an attempt to join that lofty salary perch save for Drinker Biddle. Drinker Biddle raised starting salaries to $115,000 with a guaranteed $10,000 bonus that is removed after the first year. Second-year associates at Drinker Biddle make $117,500, while Morgan Lewis and Dechert increase pay over the $125,000 threshold. Outside of the large firms, intellectual property boutique Woodcock Washburn pays its entry-level associates $125,000. As for Cozen O’Connor, managing partner Tad Decker said the firm made the decision in order to combat a perception among prospective recruits that it was behind its competitors in terms of starting salaries. “I think law students tend to just look at salary and not bonus,” Decker said. “If they had considered both and looked at total compensation, they would have found that we were competitive with everyone else except for Morgan and Dechert. So we think this move will help us with recruiting top people, because perception is reality in that world.” Decker said the firm management talked to its associate committee and director of associate development Deidre Mullen before announcing the change a few weeks back. The change will take place when the first-years arrive next month. Second- and third-year associates will receive proportional raises. As for Cozen O’Connor associates in their fourth year and above, they will be subject to merit raises starting in January. Those raises will be based on quality and quantity of work as well as firm citizenship. The firm credits associates for up to 50 hours of pro bono work toward their billable requirements. Decker said adopting merit-based raises means that a fifth-year associate could conceivably make more than a sixth- or seventh-year associate. “We want to reward our better performers,” Decker said. “We already do it with bonuses, which will continue. And now we’ll do it with salaries.” Decker said the criteria for annual bonuses could get tougher. While Decker said the basic plan would be the same, firm management will take a more careful look at associate performance. “If an associate’s performance is just OK, then they might not get $5,000,” Decker said. “They might just get $2,000 or $3,000. But if they are a good or great performer, then they will get a sizable bonus.” In the case of the firm’s starting salaries, perception did equal reality, as Cozen O’Connor’s $100,000 was the lowest among the large firm competitors. Cozen O’Connor’s move brings it even with Blank Rome, which in February quietly announced that it would be raising salaries from $105,000 to $110,000, effective in September. Reed Smith also moved up to $110,000 this year. Ballard Spahr Andrews & Ingersoll, Pepper Hamilton and Wolf Block Schorr & Solis-Cohen are currently at $107,000, while Duane Morris, Montgomery McCracken Walker & Rhoads, Saul Ewing, Schnader Harrison Segal & Lewis, Hangley Aronchick Segal & Pudlin and Buchanan Ingersoll still pay $105,000. The latter group of firms is now joined by Stradley Ronon Stevens & Young and Dilworth Paxson, both of which decided to move to $105,000. Dilworth Paxson was at $100,000, while Stradley Ronon was at $102,000. Both firms said they moved up to become more competitive in the marketplace. When contacted about Cozen O’Connor’s salary increase, at least two large firms, Ballard Spahr and Saul Ewing, said they were in the process of discussing what to do with their starting salaries. According to latest reports, Fox Rothschild lists its starting salary as $100,000 while Obermayer Rebmann Maxwell & Hippel pays $95,000.

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