Associate Salaries-Money vs. Quality of Life

Associate Salaries-Money vs. Quality of Life

What’s more important to you – your salary or your social life? As income increases lead to rising billable hour requirements and less time for family, friends and fun, associates should take stock in what’s most important to them.
 
Associate base salaries seem to have stabilized; at least for the time being. After another round of increases in early 2006, associate base salaries at the largest New York firms and various other firms scattered around the country settled at $160,000. In a number of cities the cap appears to be $145,000. The $160,000 figure represents a $35,000 increase from the $125,000 top firms were paying just two years ago.
 
But, in October of last year, Cravath, Swaine & Moore upped the ante by announcing it was giving out special one-time bonuses to all associates in addition to the standard year-end bonus. This meant first year associates would receive a total compensation of $205,000. The total compensation for second years worked out $225,000, which exceeds the salary of Chief Justice John Roberts by $13,000.
 
Other firms quickly followed Cravath’s lead and there is some thought that the bonuses will eventually be integrated into base compensation.
 
Is it worth it?
These extraordinary gains in income have come at a price. Many of the top firms require a minimum of 2,000 billable hours to be eligible for bonuses and the reality for many associates at these firms is even higher. For some associates, working at a major firm is simply a temporary stop that will allow them to pay off their law school debts. They’re willing to put up with the workload for a few years until they are financially secure and then they move to smaller firms, corporations or related areas. For others, the grind is simply more than they were ready for and they simply move on. In spite of the increasing salaries and bonuses, many associates are questioning the worth of sacrificing any semblance of a private life outside the firm.
 
Not surprisingly, annual associate attrition at major firms is now running 20 percent and higher. There are multiple reasons for the high attrition, ranging from the diminishing chances of making full partner to the less than congenial working conditions at some firms. However, the biggest single factor seems to be the number of hours that associates are required to bill—not to mention the irony that comes with being a salaried employee who has to track time on a minute-by-minute basis.
 
Firms are acutely aware of the attrition issue. In addition to the costs associated with hiring and training new associates, partner salaries rest on the broad base of their associates. This is the primary reason that associate compensation continues to rise, even if that means slight reductions in partner compensation.
 
 
So what are the alternatives?
Given the high rates of attrition and general unhappiness among associates, firms are considering alternatives to the traditional billable hour/compensation plans. The most common solution is what may be called the more work or more life option. Those who want receive a higher salary may commit to working 2,000 billable hours or more. Those who want a little more “quality” time can opt for a smaller salary and a commitment of less billable hours, say 1,750 or 1,800. The reality is that they still may work the equivalent of 2,000 billable hours, but the pressure to make the quota is not as great.
 
Other firms are tinkering with the lock-step manner in which all associates at a given level are paid the same salary regardless of their contribution to the firm. These firms are basing salary increases on “merit,” such as billable hours, bringing new clients into the firm or other actions that contribute to the bottom line. These may seem like perfectly normal practices for corporations, but somewhat revolutionary for large law firms.
 
As pointed out six years ago in the ABA study, billable hours are driving many of the issues confronting the legal profession. The reality is that billable hours are not going to go away entirely. But you may take heart from a story related in The New York Times:
 
A harbinger of changing times might well be the brief filed by the hard-driving white-shoe firm of Weil Gotshal & Manges of New York, asking a judge to reschedule hearings set for Dec. 18, 19, 20 and 27 of last year.
 
“Those dates are smack in the middle of our children’s winter breaks, which are sometimes the only times to be with our children,” the lawyers wrote.
 
The judge moved the hearings.