5 Things You Need To Know If Your Biglaw Firm Hasn't Matched Milbank's New Compensation Scale
What *does* the new associate compensation scale mean for Biglaw?
Earlier this week, Milbank stunned Biglaw watchers and laid on a new compensation scale for associates (as well as generous, if predictable, year-end bonuses). So, now that some of the shock has worn off, what can we expect from the market? Thus far, no firm has matched Milbank. While it seems inevitable that at least some firms will make a compensation move, there are a lot of factors at play.
1- It’s not over until the fat lady (DPW/Cravath) sings
Milbank is great for getting the ball rolling on raises, but they aren’t always the final word. Historically, Davis Polk and/or Cravath have come over the top of the Milbank standard — even if just for a few classes, like those challenging-to-retain senior associates. And there are rumors swirling that something similar might happen again. Firms that have the capital to stay at the top of compensation heap are undoubtedly considering all these potential permutations and what their tolerance is for keeping up with the Milbanks of the world.
2- Read the fine print
Just because it seems like a match of the industry standard, it doesn’t mean it is. Watch out for some common stipulations a firm might want to put on the shiny new $225k price tag. For example, matching the base salary for first-year associates doesn’t necessarily mean every class will get a match. Some firms might tack the raises onto increased billable targets, or office attendance. So watch out for what the raises really mean for you.
3- Impact on hiring
We already know that first-year associate hiring is down this year. It’s entirely likely that (some) firms will be increasing judiciousness when extending those offers to law students, because the reality is $225,000 is a lot to spend on someone who doesn’t know how to save a Word document.
(Yes, that’s probably still true even though the raises can be seen as cost of living adjustments.)
4- Don’t freak out until January
It might take a minute for firms to match the new standard. Milbank very much surprised the market with these raises — typically we start seeing the matches on the same day at the first mover, but it’s been three days without a single response. The industry was caught flat-footed, and they need time to call partner meetings and agree to the new scale. The new compensation scale doesn’t go into effect until January, so firms have some time to match. (And even if they take longer, firms that are truly interested in matching the market scale will make the new salaries retroactive to Jan. 1.)
5- Welcome back to the MoneyLaw tier
These raises come at a weird time for the industry. Not every Am Law 100 firm finds itself in the same position as Milbank. Some firms are doing layoffs, and even more are predicted. That means we may see stratification in Biglaw between those who can afford to pay top of market, and those who cannot. This phenomenon was first predicted in 2016, when Cravath moved the market to $180,000. Then pretty much all of the Biglaw firms were able to meet the new scale, but we’re not so optimistic this time around. So which firms will move to the “MoneyLaw” level, i.e., the top tier of compensation leaders (as boutiques have repeatedly proven, being able to run with the big kids isn’t just a matter of size)? Only time will tell.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.
