It used to be that salaries for first-year associates at large firms remained intact for the year. No more.
Increasing pressures to match the pay offered elsewhere have impelled some New Jersey firms to a midyear hike, a sampling of large New Jersey law offices shows. [ See chart.]
Day Pitney in Florham Park announced on July 27 it would increase first-year salaries to $135,000 in January 2008, a jump of $15,000.
“We did an assessment of what we thought we needed to do to provide comparable salaries in our markets to attract the top-quality associates. There’s no other science to it,” says managing partner Dennis LaFiura.
Lerner, David, Littenberg, Krumholz & Mentlik in Westfield decided on July 1 to boost first-year salaries by $10,000, to $140,000, starting in January.
Lerner, David’s pay level equals that of Lowenstein Sandler of Roseland as the highest among firms whose main office is in New Jersey. Lowenstein announced in June that first-year pay would increase to $140,000 in January, $15,000 above the level originally set earlier in the year.
Managing partner William Mentlik says this year’s multiple upward revisions would be unimaginable a few years ago. “It boggles my mind because, while there are very capable, bright young people coming out of law school, the reality is they don’t have any particularly useful skills,” he says.
Nevertheless, local firms have little choice but to try to keep pace with pay raises at national and regional ones.
Compensation for new associates at large firms has been surging this year, set off by a decision on Jan. 22 by New York’s Simpson, Thacher & Bartlett to increase its first-year salaries to $160,000. After the Simpson Thacher bombshell, many firms in New York and other large cities matched the $160,000 figure.
The spillover has hit New Jersey, too. Latham & Watkins of Los Angeles will pay the highest first-year salaries in New Jersey this fall, $160,000. The firm, which has an office in Newark, announced the increase on May 1, after it had previously set the salary at $145,000.
In April, Flaster/Greenberg of Cherry Hill announced it would pay first-year associates $130,000, up from the $120,000 previously decided upon.
And the increases aren’t over. The management committee at Wilentz, Goldman & Spitzer in Woodbridge will vote in the coming week on whether to boost first-year associate compensation. At present, the firm plans to pay $100,000 to first-year associates this fall, the second-lowest salary after Budd Larner of Short Hills, which is offering $95,000, of 26 firms surveyed.
Lerner, David, an intellectual property boutique, views its increase as a “market adjustment,” says Brady Peters, manager of attorney development. The decision coincided with a similar adjustment to the salaries of all associates in years one through nine, she says.
The increases were designed to head off competition from corporate legal departments. “The in-house packages are just incredible, with stock options and better work-life balance. We just weren’t competitive anymore,” Peters says.
At Day Pitney, current associates and counsel will likewise see “significant” raises as of Jan. 1, though the firm does not yet have a compensation scale for each level of seniority, according to a memo sent July 27 by the executive committee to all attorneys at the firm. Compensation will instead be decided on a merit basis.
Day Pitney – formed last year by a merger of Pitney Hardin with Day, Berry & Howard of Hartford, Conn. – has three tiers of first-year compensation, based on location. New associates in New York and Boston will earn $150,000 in January, up from $130,000 this fall. New associates in Stamford and Greenwich, Conn., will be paid the same as those in Florham Park – $120,000 in the fall, $135,000 in January. And new associates in Hartford, New Haven and West Hartford will jump from $100,000 this fall to $120,000 in January.
Among other firms based in New Jersey, Newark’s McCarter & English, Gibbons and Sills Cummis Epstein & Gross each will pay $125,000. Sills’ $2,000 signing bonus brings its first-year compensation to $127,000.
For Philadelphia firms with operations in New Jersey, $145,000 is a popular rate for first-year associates. Pepper Hamilton, with an office in Princeton, and Drinker Biddle, with an office in Florham Park, boosted pay by $20,000, while Dechert and Morgan Lewis & Bockius, both in Princeton, increased it by $10,000.
Pepper Hamilton executive partner Robert Heideck says the firm decided to raise its pay because that’s what other firms were doing.