As in the past, the vast majority of New Jersey homegrown law firms aren’t in a position to compete in the recent associate salary arms race pervading Big Law in New York and elsewhere, a race that seems to be more an object of curiosity for firm leaders in the Garden State rather than extra motivation to examine their own pay scales.
“I really think the firms we’re reading about are a relatively small group of firms serving a different type of client than we are,” said W. Raymond Felton, co-managing partner of 90-lawyer Greenbaum, Rowe, Smith & Davis in Iselin, where the starting salary has sat at $125,000 for several years.
“And by ‘we,’ I don’t mean just Greenbaum. I mean most law firms in New Jersey.”
There was one notable exception: Lowenstein Sandler recently increased starting salaries by $10,000 in all offices, bringing them to $170,000 in New Jersey, and to $190,000 in New York, California and Washington, D.C., offices, managing partner Gary Wingens confirmed.
The $190,000 figure matches Lowenstein with the arms race touched off only weeks ago by Milbank, Tweed, Hadley & McCloy, and since then numerous other firms have followed suit, or even topped Milbank.
Many more New Jersey-based firms, however, such as Greenbaum Rowe, have starting salaries in the $125,000 to $135,000 range, according to Law Journal data. And for some, it’s a moot point: several New Jersey firms hire newly minted attorneys only sparingly.
In the last several years, “I think we’ve had no more than a handful of first-years in the aggregate,” Felton said.
The “trend away from hiring brand-new graduates” is “unfortunate,” Felton said, because it continues to make job-hunting a difficult proposition for law graduates. “I don’t think we’ve rebounded from the last recession on that issue.”
During the recession, in fact, Greenbaum Rowe reduced starting salaries for prospective first-year hires to $115,000, only to return to $125,000 a few years later.
At 70-lawyer Brach Eichler of Roseland, the starting salary has been $105,000 in recent years, but “we haven’t hired anyone out of law school for some time,” managing partner John Fanburg said, noting that the firm typically fills its attorney ranks via lateral hires.
“It’s not that lockstep, but we do have a chart” based on graduation class, Fanburg said of the firm’s pay scale, noting that he and the firm’s managing director sign off on all offer letters. There’s something of a range at each level, to go along with business-generation bonuses, he said.
The competition, within New Jersey at least, isn’t exerting upward pressure on associate pay, according to Fanburg.
“I do lose lawyers if they want to go into New York. I don’t lose lawyers typically if they want to stay in New Jersey,” he said.
At Chiesa, Shahinian & Giantomasi of West Orange, associate salaries start at $132,000, and “it’s been a number of years since we’ve hired directly out of law school,” according to Daniel Schwartz, managing partner of the 135-lawyer firm.
The firm offers billable hour bonuses for each 25-hour block over 1,850 hours per year, as well as business-origination bonuses of 20 percent on collections, Schwartz noted. But the firm “can’t sustain a $190,000 starting salary,” he said.
“In many respects, it’s a different market,” and “you need to have billing rates that can support that,” said Schwartz, noting that Chiesa Shahinian’s associate billing rates range from $275 to $375 per hour, rates that a paralegal might charge in a larger firm, he said.
The trickle-down effect of the Big Law salary moves—triggering smaller firms not to match their Big Law counterparts but to nevertheless increase their starting salaries—seems to be less now than it has in eras past, according to Felton.
“I don’t think we’re seeing that same level of pressure again,” he said, again citing the issue of supply of and demand for new associates.
If Greenbaum Rowe does lose out on a potential hire, Felton added, it’s usually “a case of a specialty or niche [that's in demand] than a case of getting outbid.”
Lowenstein did participate in the 2016 Big Law associate salary race, matching that year’s high of $180,000 in New York and other markets, and raising its New Jersey starting salary to $160,000. McCarter & English of Newark soon after bumped its starting salary from $135,000 to $150,000 in all offices.
McCarter’s starting salary remains at $150,000, the firm confirmed.
Firms say they’re constantly evaluating pay and benefits, with an eye toward recruiting top talent, but there seem to be no signs of New Jersey firms closing the gap on, let alone matching, what some of their counterparts do.
“I’m jealous, first of all,” quipped Felton, after asked for his personal take on the Big Law salary race. “Every time this has happened, it’s mind-boggling, but I think it works itself out. … In terms of tolerance, I’m curious how the general counsel who hire those firms react. I assume they’re scrutinizing invoices.”
Fanburg said of the salary race: “It will continue as long as clients are willing to pay.”