The wave of associate pay raises that originated in New York six weeks ago has hit Atlanta, but firms have been slower to capitulate than during the last salary tsunami two years ago.

The city's two largest firms, King & Spalding and Alston & Bird, have matched the New York pay scale initiated by Milbank, Tweed, Hadley & McCloy—with commensurate increases in Atlanta.

Eversheds Sutherland is also matching, the firm's co-CEO, Mark Wasserman, confirmed to the Daily Report on Tuesday. The increases were effective July 1.

The New York scale boosts starting pay by $10,000 to $190,000, with eighth-year associates now making $340,000.

The Atlanta raises also feature a $10,000 boost, bringing starting pay to $165,000, while eighth-year pay rises $25,000 to $265,000. That's a big bump to the existing Atlanta scale of $155,000 to $240,000 that took effect at big firms two years ago, after another national round of pay raises hiked starting pay by $20,000. The 2016 raises were the first across-the-board raises since 2007.

Paul Hastings has matched the $190,000 scale for all its offices, including Atlanta, a spokesperson for the firm confirmed, also effective July 1.

Jones Day, which has a large Atlanta office, also matched the $190,000 scale, according to Above the Law. The firm did not respond to a request for confirmation.

A King & Spalding spokesperson said the firm had no comment on the latest raises, but a source within the firm confirmed the new $165,000 pay scale for its Atlanta and Charlotte offices. King & Spalding will match the $190,000 scale in New York, Washington, Chicago, Texas and California.

Alston & Bird, where raises were first reported by Above the Law, did not respond to several requests for confirmation.

Delayed Response

The latest associate pay hikes, initiated by Milbank on June 4, took the legal industry by surprise. The 2016 raises were more anticipated, since they were the first in nine years and big firms' fortunes had improved with the economy.

“No one was prepared for this recent wave of increases,” said Atlanta legal recruiter Shannan Rahman, a managing director at The Partners Group. “There was no demand for it. People were pretty satisfied after the last round of increases two years ago.”

“It's surprising to see how many firms have matched,” she added.

It was a decision that Eversheds Sutherland's U.S. branch did not make lightly, Wasserman said via email from Europe, adding that the firm “spent a great deal of time” analyzing the market changes in salary against its primary goal of providing top quality work and service to clients.

Staying competitive for the best talent was the deciding factor, Wasserman wrote: “Although we believe there is a great deal more to hiring and retaining our top talent than compensation, including interesting work, a collegial environment, early client responsibility and extensive professional development, we are also very aware of our markets and want to ensure that we remain competitive in order to retain and hire that top talent.”

Eversheds Sutherland is matching the $190,000 scale for its New York, Washington and Texas offices, with the Atlanta scale now starting at $165,000. Bonus ranges also match the market in those cities, Wasserman said.

Other large firms in Atlanta are still assessing the situation.

Kilpatrick Townsend & Stockton “continues to evaluate the issue but has not increased its associate compensation,” according to a statement from a spokesperson.

Troutman Sanders did not respond to a query.

As with past rounds of salary increases, firms must weigh staying competitive for talent with keeping their clients happy—and there can be unforeseen consequences to across-the-board hikes in associate pay.

One potential issue, Rahman said, is that senior associates receiving $25,000 pay bumps can end up making more than junior partners who may have their own business. “Long-term, it does not seem sustainable,” she said.

She predicted that firms increasing salaries for partnership-track associates will also increase their use of staff attorneys on client matters—a trend, she noted, that became more pronounced after the 2016 pay wave.

“If they use a staff attorney, the billable rate is less, and a lot of those attorneys have a lot of experience,” Rahman said. It's a way for firms to try and finesse the situation, she added, so they can “compete with those silk-stocking firms for talent and keep their clients happy.”

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