Hit or Miss: The Associate Salary Hike, One Year Later

When the legal industry looks back at its history, 
June 6, 2016, may register as just another day in law firm decision-making. Or, it could be the day dozens of firms' futures changed for the worse, irreparably.

On that day about one year ago, the streamlined, esteemed and exceedingly rich Wall Street firm Cravath, Swaine & Moore announced raises for its associates, effective July 1, 2016. First-year and second-year associates would get $20,000 more than before, taking home salaries of $180,000 and $190,000, respectively. Third- and fourth-year associates would see their annual paychecks grow by $25,000, while fifth- and sixth-year associates got a $30,000 bump. Seventh- and eighth-year associates—years after these debt-laden lawyers won the legal industry's equivalents of golden tickets after they graduated from law schools at the height of the Great Recession—would make $300,000 and $315,000, respectively, before bonuses—a $35,000 increase for them.

Cravath was still smarting from a high-profile lateral loss. Partner Scott Barshay, a celebrity in the New York transactions world who'd worked on deals worth almost $300 billion in 2015 alone, had moved to a competitor, Paul, Weiss, Rifkind, Wharton & Garrison, in April. Yet Cravath was half way through a year of astonishing profitability, ultimately growing its profits by 18 percent, to $4.195 million in 2016.