Once again, the top New York law firms are leapfrogging each other to recruit talent by raising salary offers for first-year associates. The latest bump-up has attracted a lot of attention in legal circles, and raised some questions as well. For example: Will California firms follow? And what about the New York offices of California-based firms? Some of them are expected to come up with the extra cash — particularly the ones that consider themselves competitors with top firms either nationally or in New York.
After Simpson Thacher & Bartlett raised salaries for first-years to $160,000, with corresponding raises for other associates, “the lemmings have emerged from their burrows,” as the Wall Street Journal’s Law Blog put it. Sullivan & Cromwell, Paul Weiss Rifkind Wharton & Garrison, Cleary Gottlieb and Cadwalader, Wickersham & Taft all announced Tuesday that they would match Simpson Thacher. The Above the Law blog has published a memo from Cleary Gottlieb showing salaries that range up to $280,000 for “class of 1999″ associates.
According to The Recorder, many observers expect California firms to follow suit — quickly. The better-performing ones will have little choice, said Peter Zeughauser, a Newport Beach, Calif.-based consultant. But, “some of the underperforming firms won’t be able to match because they can’t do that and be competitive with profits per partner at the same time,” he told The Recorder.
In some previous rounds of salary competition, California firms have gone with a two-tiered system, paying associates more in New York than in California. But most observers seem to think that will not happen this time, as the competition is just too fierce.