Starting salaries continue slide as big firm opportunities dry up

The erosion of new associate hiring at law firms has resulted in a dramatic three-year decline in starting salaries for recent law graduates.

Research by NALP, formerly the National Association for Law Placement, found that average starting salaries for members of the class of 2011 holding full-time jobs fell by 6.5 percent compared with the previous class, to $78,653 from $84,111. The median reported salary dropped by 5 percent, to $60,000 from $63,000.

The median starting salary has dropped by 17 percent since 2009, according to NALP, and the average salary has decreased by 16 percent.

NALP has been doling out dismal job news since 2009, when the reverberations from the financial crisis and recession began to ripple through the legal hiring arena. But this year’s steep salary decline took NALP officials by surprise.

“This drop in salaries, while expected, is surprising in scope,” said executive director James Leipold. “Nearly all of the drop can be attributed to the continued erosion of private practice opportunities at the largest firms.”

In June, NALP released its latest graduate hiring report, which showed that only 85.6 percent of the class of 2011 had found jobs within nine months and only 66 percent were in jobs that required bar passage. A subsequent examination of American Bar Association jobs data showed that only 55 percent were in full-time legal jobs.

The most significant finding of NALP’s hiring survey was that the percentage of recent graduates in law firm jobs dipped below 50 percent for the first time in the 38 years that the organization has been tracking employment. The biggest drop-off in hiring was at the largest law firms, which tend to pay the highest salaries. NALP’s new salary statistics reflect the constriction of law firm jobs that pay new associates $160,000 a year.

The growing trend toward staff attorney jobs and other lower-paying lawyer tracks is contributing to the falling average for law firm salaries, the statistics suggest.

New associates at law firms reported a median salary of $85,000, down from $104,000 during the previous year — an 18 percent decline. The median law firm salary was $130,000 in 2009. NALP has adjusted its salary figures to account for the fact that graduates in high-paying jobs at large law firms tend to report their salaries in higher numbers than those in lower paying, small law firms.

“Although some firms have lowered their starting salaries, and we are starting to see a measurable impact from lower paying non-partnership track lawyer jobs at large law firms, aggregate starting salaries have fallen over the last two years because graduates found fewer jobs with the highest-paying large law firms and many more jobs with lower-paying small law firms,” Leipold said.

In a somewhat cruel irony, the data reflect better than ever what new lawyers actually earn. For years, starting salaries have followed two main tracks: They either clustered around $160,000 — the going rate at many large law firms — or in the $45,000 to $65,000 range, reflecting most other legal jobs. That divide rendered the median and average salaries somewhat misleading, since relatively few new lawyers actually earned salaries between those two clusters. For the class of 2011, there were fewer high-paying jobs to skew the average. Nearly a quarter of the graduates — 23 percent — earned salaries within $5,000 of this year’s median, according to NALP.

While the news was grim on the law firm salary front, it was better in other legal sectors. The median salary for government law jobs remained stable at $52,000, while median public-interest law salaries rose from $43,000 in 2010 to $45,000.

Contact Karen Sloan at [email protected].