There’s nothing like another poll as to whether first year associates are paid too much to prompt yet another go around on this favorite issue of ours. Needless to say that there are some people who could not care less. I am not one of them. Neither are these people.
My response to this question is always: Too much relative to what? Certainly not in comparison to what people earn at private equity firms. And certainly not in comparison to the $250,000 figure (for New York first years) projected by a participant at the “Law Firm Leader’s Forum” held in San Francisco early this March. (Thanks to Bruce MacEwen, of “Adam Smith, Esq.”, who attended and reported this comment, as well as these other (un-attributed gems) from the lips of “Forum” attendees:
· "The only area in our firm which has absolutely zero budgetary constraints is recruiting."
· "Our "Chief Talent Officer" (CTO) is the second most highly-paid non-lawyer in our firm (after the COO/Executive Director) and the third most highly-paid reports to the CTO."
(Bruce has also written some excellent analysis on the economics of these raises, here and earlier here.)
And finally, when we consider the fact that, as a percentage of profits-per-partner, law firm salaries are at their lowest point in the past decade (measured at 11.7% of PEP, as compared to 14.3% of PEP in 1996) meaning, if the 1996 ratio can be used as a benchmark, that the first year salary of a AMLAW 100 tier associate in New York should not be $160,000 – but $195,000 instead - and probably more if we assume increases in the 2006 PEP numbers.
So are New York associates being paid too much? Plenty of people say “No”. And not just those underpaid associates.
