Ratcheting up market pressure on associate pay, Milbank Tweed Hadley & McCloy has announced that it will increase its associate salaries across the board by $10,000-$15,000.

Under the changes, effective as of 1 July, associates in their first, second and third years will see an increase of $10,000, meaning starting salaries at Milbank will be $190,000 (£143,000).

Associates in their fourth through to eighth years will receive $15,000 more, meaning eighth-year compensation will be set at $330,000 (£248,000). Here are the new salaries for all classes:

• 1st year  — $190,000 (£143,000)
• 2nd year — $200,000 (£150,000)
• 3rd year  — $220,000 (£165,000)
• 4th year — $250,000 (£188,000)
• 5th year — $275,000 (£207,000)
• 6th year — $295,000 (£222,000)
• 7th year — $315,000 (£237,000)
• 8th year — $330,000 (£248,000)

Summer associate salaries will also increase, pro rata, under the same scale as first-year associates. The firm announced no plans to broadly change counsel compensation, as Milbank sets compensation for counsel lawyers on an individual basis.

The firm announced the raises to its associates on Monday (4 June).

In an interview, Milbank chairman Scott Edelman said, "What we're trying to do is set fair, market-leading compensation for our associates. We're not in a race with other firms but at the same time, we thought this was an appropriate time for an increase and we want our associates to know how much they are valued."

He said the firm wanted to recognise associates' contribution to Milbank's success and its ability to handle high-stakes, complex work. "Our people are our greatest assets. We've been working hard, we've been very busy," he said. "We're committed to offering compensation at the top of the market."

Milbank's 2017 financial results marked its fifth straight year of solid growth. The 690-lawyer firm saw its profits per equity partner rise nearly 11% to $3.46m (£2.6m), while revenue rose 7.1% to $916.54m (£688m). Revenue per lawyer increased 3% to $1.33m (£1m).

Cravath Swaine & Moore last set the industry standard for associate compensation in 2016, boosting starting pay by $20,000 to $180,000 (£135,000). Milbank and many other firms immediately matched.

"Two years have now gone by, and there is cost-of-living increases and inflation," Edelman said. "We want to signal to the market that we do want the best, and we're willing to pay for the best, and we think after two years, an additional increase is appropriate."

"We try to lead the market in terms of associate development and training," Edelman said, noting the firm's Milbank@Harvard training programme. "We didn't see the need to wait for somebody else to make an increase that we think is appropriate."

"If we didn't do this at some point" soon, another firm would, he said.

When asked whether he expected the increases to put a dent in partner profits, Edelman said: "Any time you raise the cost of your expenses, it's going to have an effect on your profits." He declined to quantify the increase in expenses the firm will absorb, but Milbank has about 500 associates, so firmwide raises would be likely to translate to an immediate overhead increase in the mid-seven-figure range.

Edelman said the change would not have "a material effect on firm finances", adding that he didn't expect partner capital contributions to change.

Milbank's move comes as law firms are competing hard to attract and retain talented associates – a crucial element in building a large firm's profits and the next generation of lawyers. Just last week, Weil Gotshal & Manges told associates it will shorten the path to partnership by two years in order to retain more talented associates.

Edelman said Milbank's associate pay raises were not influenced by an external event and the firm had been considering the salary increases for months.

"The market for the best and the brightest," he said, "is extremely competitive. There are lots of law firms out there, and we're all competing for some really talented people."