CLOC Survey Shows In-House Legal May Rethink Staffing After Associate Raises—Or Maybe Not
A recent survey from the Corporate Legal Operations Consortium took its members' temperature on associate pay. There was frustration expressed about the Milbank raises, but some indicated they'd be understanding—as long as the costs didn't land on the corporate legal balance sheet.
June 15, 2018 at 04:27 PM
3 minute read
Since an associate raise announcement from Milbank, Tweed, Hadley & McCloy set off a chain reaction of further pay increases across other law firms, some on the client side have expressed frustration with what one in-house ops director called the “tone deafness” of such moves.
According to a new Corporate Legal Operations Consortium survey, in-house legal leaders may soon start pushing back against the raises with more than just words. But the survey also provided some evidence that anger isn't necessarily universal, particularly if costs of giving raises aren't getting passed along to legal departments directly.
The streak of raises began June 4 when Milbank announced its associates would get across-the-board pay boosts, bringing first-year associates to a salary of $190,000 a year. Other large firms have matched these rates and Cravath, Swaine & Moore, has exceeded them. Even midsize firms are joining in.
The CLOC survey, which was distributed between June 6 and June 8, prompted responses from 71 members.
Some 72 percent of respondents said they would be more likely to move work in-house or to an alternative provider, if their own law firms mirrored the salary increases seen recently. Eighty-five percent of the respondents indicated that they believe that the salary hikes “will” or “may” impact which firms get their business.
CLOC also gathered written responses from members, who remain anonymous in the survey, about associate pay raises. Some responses were negative:
“The decision to raise first year salaries to $190K is further proof that some law firms missed the lesson in 2008,” one respondent said.
Jeffrey Franke, who has multiple roles at CLOC and serves as its general counsel, said he understands why those who responded think that $190,000 for a first-year associate is a high salary and that he believes legal departments will push back on having first-year associates work with them as a result of recent raises.
However, Franke cautioned that given the fact that CLOC has roughly 1,500 members, and didn't get a response on the survey from the vast majority of those professionals, the raises might not be as much of a hot-button topic as many believe.
He said that the amount of debt first-year lawyers carry is understood by others in the industry and that companies will “begrudgingly” accept the raises, as long as the costs are not passed on to them.
“As long as it does not change the rates I am charged, they are free to overpay whomever they like,” one survey respondent told CLOC.
Another noted, “In the San Francisco Bay Area where the cost of living is unbelievably high, this increase is likely warranted simply to allow younger attorneys to live a decent life.”
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