Pay soars for new hires at corporate law firms
Huge gap between private and legal aid lawyers
By TAMMY JOYNER
The Atlanta Journal-Constitution
Published on: 03/25/07
For some, law school is looking pretty good right about now.
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Starting pay at many Atlanta corporate law firms has soared in the past two months. In some cases, the pay hikes are putting newly-minted lawyers' base pay miles ahead of their more public service-minded peers and Gov. Sonny Perdue and the state's top attorney.
Since January, when Troutman & Sanders ignited metro Atlanta's pay war, more than a dozen Atlanta law firms have raised salaries for first-year attorneys from $115,000 to $130,000.
Heavyweights King & Spalding and Alston & Bird followed Troutman's lead. The list has since grown to include Kilpatrick Stockton, McKenna Long & Aldridge, Morris, Manning & Martin and others.
Hunton & Williams trumped the pack recently by sweetening the pot for its newbie associates to $145,000. That's more than Georgia attorney general Thurbert Baker or Gov. Sonny Perdue make.
Atlanta's largesse is part of a national trend that began in New York and has worked its way to law firms in California, Miami, Chicago, Houston and other major cities.
Competition for top law school grads and healthy balance sheets has helped push pay up on the corporate side of the legal profession nationally. Meanwhile, many of their first-year peers in the public sector — legal aid services, for instance — would be ecstatic to start their careers at $50,000.
Salaries at the largest Atlanta law firms generally hovered at $75,000 in the late 1990s. They rose to about $100,000 in 2000.
"Salaries were pretty flat during the strong parts of the economy," said Bob Saudek, managing partner with Morris, Manning & Martin in Atlanta. "They were poised to go up when the recession hit in 2002. The recession did impact law firms a lot. All of a sudden, it was more of a buyer's market for law firms.
"Law firms weren't hiring as fast in 2002 to 2004. There wasn't the pressure to move salaries up."
Atlanta salaries remained fairly stagnant until late 2005, when they went to $115,000. Then earlier this year, they jumped to $130,000.
The pay increases come at a time when the legal profession nationwide is enjoying immense business and profits. The legal industry enjoyed healthy revenue growth in the first half of last year, due largely to rate increases and a rise in demand, measured in the form of gross hours, according to a study by wealth manager Citigroup Private Bank.
As a result, productivity has picked up as attorneys put in more hours.
This summer, many of the nation's top law firms plan to bring in more summer hires. And many law schools are reporting greater hiring for first-year associates, many of whom will join law firms in the fall.
Law firms compete for hires, raise the ante
Salaries historically go up every few years, but this time the competition has intensified.
"They're competing for a small group of talented associates," said Roy Sobelson, associate dean of the Georgia State University College of Law. "Once one does it, anyone else who wants to keep up has to do the same."
The first-year associates aren't the only ones enjoying more money. Increases have spread in ladderstep to other associates in the firm, experts say.
"When you have an increase in the base, it works its way through the entire associates ranks," said Ben Johnson III, managing partner at Alston & Bird, where about 40 new associates will start this fall.
Competition has become so steep that some top-drawer law firms nationally are awarding $200,000 signing bonuses to those who've clerked for the U.S. Supreme Court.
Those bonuses are on top of the $145,000 to $160,000 starting pay and equate to what Chief Justice John Roberts earns in a year. Roberts criticized the inadequacy of judicial salaries in a report to Congress earlier this year.
"It's a sign of just how out of whack the cost of legal services are in relation to the value of services provided," said Susan Hackett, general counsel for the Association of Corporate Counsel in Washington, D.C., a bar assocation for in-house counsel in private sector companies. "Do we really think someone who just graduated from law school and has very little practical experience has the same level of legal acumen as someone who is an associate justice of the Supreme Court of the United States?"
Paying for those salaries
Hackett noted that a lot of first-year associates in large firms tend to "focus on mundane, routine tasks" such as document discovery, contract review and other research.
"These are all tasks you can hire a non-law firm vendor to fulfill at a fraction of the cost," she said.
Consequently, Hackett added, newly minted attorneys will pay a heavy price for the heftier paychecks.
"Associates have to drum up work. They're never going to see a free Saturday or Sunday," she said. "The partners in the firm aren't going to take the money out of their own pockets, but out of the associates' hides. They're going to make the associates bill more hours to pay for their keep."
Alston & Bird's Johnson disagrees.
"There's no expectation necessarily that anybody will work more hours because you're paying them more money," he said. "That may or may not be the case. How many hours people work depends on how much work you've got."
Huge pay gap for legal aid lawyers
The latest wave of pay hikes points to another issue. Most of these increases are going to associates in corporate firms. Those in the public sector, such as district attorneys' and legal aid offices, aren't seeing much of the bounty.
A study released last November by the Chicago Bar Foundation and Illinois Coalition for Equal Justice found that four in 10 legal aid lawyers plan to leave their jobs due to low pay and high law school debt.
Median starting salary for an attorney at a civil legal services group is $36,000. An attorney with 11-15 years of legal aid experience makes about $55,000, according to the NALP, the Association for Legal Career Professionals.
Then consider: The average debt of new law school grads has skyrocketed. Many graduates are entering the job market with six-figure debt. Loans that used to take 10 years to pay off are now being extended to 30 years, according to Dina Merrell, associate director of the Chicago Bar Foundation and co-author of the study.
The debt may in fact justify the generous salaries.
"With debts to pay, lots of students are happy to take the jobs," said Emory University law professor Charles Shanor.