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In just a matter of hours Monday, the landscape of associate pay at Philadelphia’s large law firms shifted dramatically. Four firms announced they would move entry-level salaries to $115,000, while several others said they would consider whether to match in the coming months. Pepper Hamilton kicked off Monday’s festivities by announcing that it was moving from $107,000 to $115,000, effective Jan. 1. And after being informed by The Legal Intelligencer Monday about the changes at Pepper Hamilton, Ballard Spahr Andrews & Ingersoll — which only a week earlier moved from $107,000 to $110,000 — announced an increase to $115,000, effective in January. Reed Smith announced that it had decided to move from $110,000 to $115,000 in January in Philadelphia and Wilmington. Duane Morris also quickly joined in on the fun when Chairman Sheldon Bonovitz announced the firm would raise starting salaries to $115,000, effective Jan. 1. Previously, effective Sept. 1, Blank Rome had moved their entry-level salary from $110,000 to $115,000, joining Drinker Biddle & Reath — which has been at that number for over a year in addition to a $10,000 bonus for first-years. Firm managers at Wolf Block Schorr & Solis-Cohen, Schnader Harrison Segal & Lewis and Saul Ewing all said they would consider salary changes at their upcoming budget discussions. Pepper Hamilton executive partner Robert Heideck said that the decision from the associates committee was made late last week after discussing it for several weeks. “When Morgan Lewis [& Bockius] and Dechert moved to $125,000 a few years ago, we didn’t feel we needed to do anything because the rest of the market stayed at around $115,000,” Heideck said. “But we felt that the market was going to start shifting, so we wanted to be proactive and make a change to $115,000.” Heideck said most other associates will receive raises covered by the increase in entry-level salaries, while some senior associates might receive raises based on performance. Heideck said most other associates will receive raises. He said the only reason he hesitated was that some senior associates might receive merit-based raises as opposed to raises equal to those being given to entry-level associates. “I think the raises for the first several years will be very consistent,” Heideck said. Heideck added that the bonus program, which includes a combination of merit and billable hours components, will not be changed. He added that associates would not be asked to bill more hours to foot the bill, nor would the firm institute billing rate hikes to clients for the purpose of paying for the raises. “We set our billing rates according to the market,” Heideck said. “I would think this will come from [partner] profits. We’ll raise billing rates as we normally would.” The Pepper Hamilton raises affect the Philadelphia, Princeton, Great Valley, Wilmington and Pittsburgh offices. Heideck said that associates in the Washington, D.C., Detroit and Harrisburg offices will receive raises more suited for those markets. Ballard Spahr adjusted its starting wages on the fly Monday. Last week, the firm announced various changes to its associate compensation structure, including an increase in the starting salary in Philadelphia to $110,000. But Ballard Spahr professional personnel partner Geoffrey Kahn said that when the firm learned Monday that two of its Philadelphia competitors had joined Drinker Biddle at $115,000, it felt compelled to join them. “We just wanted to remain competitive in attracting the best talent,” Kahn said. Ballard Spahr Chairman Arthur Makadon said that the firm will not pay for the increases by making associates bill more hours or by jacking up billing rates. He said the money will come from increasing business development and partner profits. Kahn said the increase will be passed through to all associate classes — i.e., there will be no compression between classes. In addition, he said that plans announced last week to double the amount of money allocated to the associate bonus program will not be altered. He said that roughly half of the firm’s associates receive some kind of a bonus. Ballard Spahr associates qualify for the bonus program on merit but can receive additional money for business generation or billable hours worked. Both the Philadelphia and Wilmington offices will move their salaries from $107,000 to $115,000; Voorhees, N.J., will move from $102,000 to $110,000; and Washington, D.C., will move from $111,000 to $122,500. Like Ballard Spahr, Reed Smith had recently increased salaries in Philadelphia and Wilmington to $110,000 only to add another raise to $115,000 — effective Jan. 1 — in the past few days due to the changing competitive market. The firm will also offer a $5,000 bonus to first-years contingent on meeting a standard of 1,900 annual billable hours. Reed Smith Philadelphia hiring partner Tracy Frisch said the firm would also institute raises for all other associates, though not necessarily proportional to the entry-level ones. Duane Morris’ Bonovitz said more experienced associates will not necessarily receive proportional raises but that the entry-level increases will be factored into associate compensation for next year. Associates can earn between $5,000 to $25,000 in bonuses that are based on merit and billable hours. Bonovitz said that there will be no increase in billable hour requirements and no unusual increase in billing rates for clients to foot the bill for the raises. “The landscape changed, so we opted to move up,” Bonovitz said. “Even at $105,000, we would have been competitive [with firms that have higher starting salaries] because of our bonus plan. But you can’t be at $105,000 while your competition is at $115,000, especially during hiring season. You don’t want law students reading that, not to mention our own associates.” All of these firms could be joined at $115,000 by Wolf Block, Saul Ewing and Schnader Harrison, each of which said they would be holding budget discussions in the coming months and would make a decision on salaries by the beginning of next year. Cozen O’Connor just increased its starting salaries from $100,000 to $110,000 and its managing partner, Tad Decker, said the firm was comfortable at that number for the time being. Editor’s note: For a related story, see Sullivan Associates Get First Financial Boost in Two Years.

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