The course we’re on is pretty clear. Sometime next year a New York or Bay Area firm will raise associate salaries again. They’ll do so in an effort to stem associate attrition. In New York, the attrition will be because associates have been burning out; in the Bay Area, it will be because of competition from the start-up world. That we would have another salary increase so soon after the last is not a surprise—multi-step salary increases seem to be what Big Law does. The scary part? They’re a reliable predictor of recession, (see Figure 1).
If the past is a guide then once the salary changes by the early movers have stabilized, Big Law will copy the move unvaryingly nationwide. We should head this off for two reasons. First, another salary increase would be damaging to the profession. It fosters heightened discord with clients and strengthens their resolve to continue taking work away from Big Law. It’s not good for firms, partly because they’ll fall back on the instinctive response of raising rates, which is counter to their long-term health; partly because it disinclines firms to invest in innovation and technology. It’s not even good for associates: it raises the expectations of their billed hours which is not conducive to their long-term participation in the profession; through pressuring profitability, it leans against their prospects for achieving partnership.
