They say money can’t buy happiness. But it might help.

Associates in their third, fourth and fifth years at Am Law 200 firms are happier with their compensation than they were a year ago, according to our annual Midlevel Associates Survey. That’s not surprising, given that first-year salaries at many firms have reached $180,000.

And associates generally continued to report high levels of satisfaction with their jobs. They gave their firms an average composite score of 4.26 on a scale of one to five, compared to 4.23 in 2016. (Last year, the average composite score had increased by a more dramatic amount, from 4.14 to 4.23.)

Yet in certain key aspects of firm life—namely management openness and the opportunity to do satisfying work—associates reported little or no improvement from last year. The average score for satisfying work, while high at 4.34, showed a dip from 4.39 in 2016, holding back the average overall score for associate satisfaction.

It’s not that their work isn’t stimulating. In all three years, midlevels’ average scores increased for getting interesting work, assignments equal to their experience level, and exposure to challenging work, major cases and their areas of interest. In each of those areas, the average score was between 4.2 and 4.5.

Credit: ALM

But when asked why they might consider leaving their current firm, more than a quarter of midlevels said it would be for more fulfilling work. Respondents also cited compensation, geographic change and not making partner as factors that could motivate them to leave; overall, work-life balance was the most popular reason, with more than half choosing that option.

More associate dissatisfaction surfaced beyond the numbers, in open-ended responses. Numerous associates wrote that their firms could do better at providing opportunities for women and minority lawyers.

“You’ve only promoted men this year. We notice,” wrote one third-year from Shearman & Sterling. (“Shearman & Sterling is absolutely committed to fostering a culture that supports and promotes diversity,” a firm spokesman responded in a statement.)

A lack of women and diverse partners “demonstrates difficulty in recruiting persons of color, and a difficulty in retaining women at all but very junior levels,” a third-year at Irell & Manella wrote. “I do know that the firm is working very hard on both of these issues. It is just a slow process, and I am confident the firm is critically examining its current model to find out why and how these hiring and promoting biases exist.” (In a statement, a spokeswoman for Irell said the majority of its partner and counsel promotions since 2010 have been women and minorities, including 40 percent women.)

The greatest increase in associate satisfaction came in the area of benefits and compensation, with respondents giving firms an average score of 4.29, up from an average of 4.17 last year. Average salaries were $198,913 for third-years, $216,482 for fourth-years and $238,984 for fifth-years—an increase of 10-11 percent year-over-year at each level.

Bonuses did not show the same growth. In fact, the average fourth-year bonus dropped by $118 to $43,227. The average third-year bonus was $24,160, and the average fifth-year bonus was $55,798.

As it happens, the top-ranked firm, Cozen O’Connor, which garnered an average overall score of 4.864 from 16 respondents, didn’t outpace other firms in associate pay. Philadelphia-rooted Cozen O’Connor had the lowest score for benefits and compensation among the top five firms. Although the firm gave raises to associates in 2016, it did not match the $180,000 standard for first-years. “The fact that we didn’t do that didn’t hold back their views of the value of our firm,” says managing partner Vince McGuinness. He notes that associates haven’t shied away from saying they should be at the top of the market, but adds, “they understand that we are conservatively managed.”

Instead, Cozen O’Connor excelled in areas that were a struggle for many other firms. It had a perfect score of 5 for management openness, up from 4.92 last year, while the average score across all firms was nearly flat year-over-year, at 4.02. And Cozen O’Connor scored well above average with regard to communication about paths to partnership: 4.8, compared to an average of about 3.69 among all firms.

Mindy Herczfeld, the firm’s chief legal talent officer, says that management regularly meets with associates and provides opportunities to ask about the firm’s finances. “It is a firm that is truly invested in the future of the firm and the firm’s associates,” says third-year associate Sandra Hill. (Survey respondents were anonymous unless they consented to being interviewed, as Hill did.)

Paul Hastings was in the top spot last year, but dropped to fourth place in the rankings this year. Others in the top five were O’Melveny & Myers, holding steady at second place; Gibson, Dunn & Crutcher at third; and Orrick, Herrington & Sutcliffe at fifth.

Several firms made big moves, rising 50 or more places in the rankings. Schulte Roth & Zabel took seventh place, up from 78th last year. Respondents at Schulte Roth said the firm gives high-level work to associates and it compensates well. The firm got the highest average score for benefits and compensation, at 4.875, and it got a 4.8 for interesting work.

“The learning opportunities afforded to associates at SRZ, which occur while navigating our clients through a wide variety of technical and complex matters, far surpassed my expectations,” one fourth-year associate wrote in the survey.

Other firms improving by more than 50 places were Sullivan & Worcester, Steptoe & Johnson, Dechert, Kramer Levin Naftalis & Frankel and Cahill Gordon Reindel.

Several firms dropped in the rankings by more than 40 places. They included Faegre Baker Daniels, which ranked 94th; Pepper Hamilton at 85th place; Fox Rothschild at 81st place and Shearman & Sterling at 69th place. Two of these firms—Faegre Baker and Pepper Hamilton—had experienced a major climb in the rankings last year.

In their open-ended comments about those four firms, associates said pay could be improved. Faegre Baker and Fox Rothschild associates said work-life balance needs improvement, and at Pepper Hamilton, a few associates said the firm is lacking in management transparency.

Workload and Billing

Average billable hours for midlevels—at 2,005 hours for third-years, 2,024 for fourth-years and 2,039 for fifth-years—didn’t change much from last year. Nonbillable hours, however, increased by 5 percent for third- and fourth-year associates to 313 and 341. Fifth-year associates, in contrast, had 9 percent fewer nonbillable hours on average, clocking in at 318.

Credit: ALM

Associates’ average billing rates increased noticeably, by 5 percent for fourth-years and 7 percent for third- and fifth-years. Average rates were $642, $666, and $714 for third-, fourth-, and fifth-years, respectively.

In their open-ended responses, more than 200 associates said they would recommend that their firm abolish, decrease or otherwise change the billable hours requirement. Some even said they would take a pay cut if working fewer hours were accepted.

“Getting to the 2,000 billable hour goal is extremely tricky. Outside factors, like the general market, have a huge sway in whether or not such goal can be reached,” a fifth-year at Winston & Strawn wrote.

About three-quarters of midlevels said their work load was manageable, but not too light. Only about 17 percent of third-years, 18 percent of fourth-years, and 16 percent of fifth-years said their work load was too heavy.

Culture and Openness

Scores for certain areas of firm culture—already fairly high—edged upward. The average family friendliness scores for third-, fourth- and fifth-years were between 4 and 4.1, a small improvement from 2016. Scores for dedication to diversity hovered around 4.1 on average, barely changing from 2016.

“Many law firms are attempting to catch up to the broader community when it comes to diversity,” wrote a fourth-year at Sidley Austin in Chicago in an open-ended response. “[We need] to make sure we are getting results and that these initiatives are evolving to meet the needs of the lawyers and staff, and to assist the firm in matching what is happening in the larger business community and most importantly internally at our clients.”

Average scores for practice group management and firm management were also between 4 and 4.1. Firms did better in partner collegiality and associate collegiality, with average scores around 4.35 and 4.5 respectively.

Career Path Uncertainty

Many midlevels are unsure about their future. In a question asking whether they believe themselves on the partnership track, respondents were given a new option this year: “not sure.” Thirty-three percent of third-years, 26.1 percent of fourth-years and 22.7 percent of fifth-years chose that option.

Credit: ALM

Meanwhile, firms seem to be underperforming when it comes to communication about the path to partnership. That’s the only category where the average score, at 3.69, was less than 4.00, showing just a slight improvement from 2016.

Associates were more sure about their short-term plans. Asked if they expected to stay in their current job for two years, midlevels responded with average scores of 4.18 for third-years, 4.08 for fourth-years and 4.11 for fifth-years.

Still, only about 6 percent of respondents said they would not consider leaving their current firm for any reason.

About the Survey

The Midlevel Associates Survey is conducted by ALM Intelligence on behalf of The American Lawyer. Am Law 200 and Global 100 firms were invited to participate in the survey. This year, we received responses from 5,346 midlevel associates, and ranked 102 firms.

Associates rated their firms on a five-point scale, with 1 being the lowest possible score (very dissatisfied) and 5 the highest (very satisfied).

A firm’s national score is the average of 12 questions on the survey that measure satisfaction in the following areas: interest and satisfaction levels of work; benefits and compensation; relations between associates and partners; training and guidance; management openness about firm strategies and partnership chances; the firm’s attitude toward pro bono work; its billable hours policy; and the likelihood of the associate being at the firm in two years.

A firm can choose which offices take part, so the number of eligible midlevels does not always reflect the size of midlevel classes firmwide.

To receive a place on our city ranking, a firm must have at least five completed surveys in its office in that city. The same 12 questions are calculated for individual cities or markets to determine branch scores and rankings. The survey is anonymous and confidential.