In the ongoing chess game of associate salary raises, Texas firms seem to be waiting for someone else to make the first move.
A number of large firms around the country, including many with offices in Texas, have announced raises in the wake of Milbank, Tweed, Hadley & McCloy‘s move on June 4 to announce a $190,000 starting salary for first-year associates. A week later, Cravath, Swaine & Moore then matched the Milbank scale and agreed to pay more for midlevel and senior associates. But no large local firms have stepped ahead of the Lone Star State pack as of yet.
This coming weekend, partners at Houston-based litigation boutique Susman Godfrey are meeting in Seattle for a retreat where associate salaries will be a topic of discussion, said Neal Manne, a managing partner of the high-powered firm, which is known for paying big money to recruit young talent.
“If I were a betting man … discussion would not be about meeting the Milbank-Cravath scale. It’ll be about surpassing it,” Manne said last week.
Surpassing the new market rate for first-year salaries and the higher scale isn’t a reach for Susman Godfrey, which also has offices in Los Angeles, New York and Seattle. The firm has been paying its first years a starting salary of $190,000 since July 1, 2016, when the firm made that salary move in response to the $180,000 salary scale previously set by Cravath in 2016.
At that time two years ago, Vinson & Elkins was the first big, Texas-based firm to announce salary hikes for its associates in response to Cravath’s move, but many other large local firms also increased associate pay levels within the next few weeks—although not necessarily to the $180,000 first-year market level initially set by Cravath.
Vinson & Elkins has not yet made any announcements on the associate salary front. A number of other large firms in Texas are also not ready to announce anything.
“As with many firms we are reviewing the recent increase in associate compensation announced by several firms,“ said a statement from Baker Botts. “While we have not made a final decision we will, as we have in the past, remain competitive in terms of compensation packages.“
Managing partners of two Texas firms who were contacted about their firm’s plans for associate raises also weren’t ready to discuss the issue at all. One unnamed managing partner said he’d “rather duck” the issue right now.
Phil Appenzeller, CEO of Munsch Hardt Kopf & Harr, a regional firm with offices in Austin, Dallas and Houston that currently pays a $160,000 starting salary to first-year lawyers, said his firm constantly evaluates associate compensation and is cognizant of what competitors are doing.
“At this point, we aren’t planning to make a move,“ Appenzeller said. “I’m not saying that won’t change.“
Appenzeller added that Texas-based firms have to think about how clients will react to associate salary increases.
“Our clients understand that if we make those kind of moves, we have to make rates move, and I don’t think clients want to pay for it,” he said.