Simpson Thacher & Bartlett has raised associate base salaries, with first-years now set to earn $160,000 before bonus.

The New York firm’s move, announced internally yesterday, comes less than a year after an earlier round of salary increases boosted first-year salaries in the city to $145,000 from the $125,000 that had been standard for several years prior.

Philip T. Ruegger, the chairman of Simpson Thacher’s executive committee, said in an interview yesterday that the firm had made its decision in light of the firm’s strong overall performance in the past year.

“We’re happy to pay our associates a little more because of that,” said Mr. Ruegger. “We have great people and we just want to show that we appreciate them. We want to keep them here and happy.”

Mr. Ruegger said the decision to increase salaries would not impact year-end bonuses, which he said would be separately determined later in the year. Last month, Simpson and other major firms announced bonuses starting at $30,000 for first-years.

Likewise, Simpson Thacher’s salary increase is almost certain to be matched by other law firms. In the past, those other firms might chiefly have been elite New York firms like Sullivan & Cromwell or Davis Polk & Wardwell. But the many out-of-town firms that have expanded into the New York market in recent years have shown a willingness to match the latest salary moves, at least at the junior levels.

Indeed, Simpson Thacher’s move could be calculated to ensure New York remains the top market in terms of associate pay. In recent weeks, a number of firms had also raised California first-year salaries to $145,000 from $135,000.

Firms feel enormous pressure to match each other in junior associate pay because they are all trying to compete for the same pool of top law school students. Salary scales diverge more at senior levels, and a smaller number of firms will seek to match Simpson Thacher’s new top salary for senior associates of $290,000.

Top corporate firms like Simpson have had significant issues with retention of mid-level and senior associates who are often attractive hires for investment banks and other financial firms that pay even more.

Simpson Thacher’s salary increase will surprise many in the legal community because it comes so soon after the new $145,000 standard was set. That increase was first announced by Sullivan & Cromwell last February. At that time, the starting salary had been $125,000 in New York for over five years.

But the $125,000 salary also came at the end of a flurry of late ’90s pay increases, largely driven by competition from West Coast technology-focused firms.

- Anthony Lin can be reached at alin@alm.com