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BigLaw associates are still tipsy over recent news that many of the hallowed BigLaw firms (including Cravath, which has led the charge) bumped first year associate pay to $180,000. But in these uncertain economic times, it's understandable that some parties might have some misgivings about this development.
Take Bank of America's reaction, for example: "Don't expect us to fund your expensive new associates."
$180,000, the New Normal?
BigLaw headlines have been abuzz for several weeks now with news that some of the nation's most recognized top law firms have been competing with each other with regards to associate compensation. Setting the example was the New York law firm Cravath Swaine & Moore, which announced plans to bump first-year associate pay all the way to $180,000 annually starting July 1, this year.
Not to be outdone, other firms followed Cravath's lead and matched Cravath's offerings. According to the ABA Journal, sixteen other law firms have echoed pioneering Cravath's new compensation regime. These names include Silicon Valley's Cooley and the Chicago powerhouse Winston & Strawn.
Who's Gonna Pay for This?
One can only surmise that the nation's best (most expensive) law firms are adopting this strategy because they see a short-term advantage for doing so. Associates look to compensation numbers when making their decisions. If Cravath takes the initiative to hike first-year salaries, all associates ceteris paribus apply to Cravath. Subsequently, the firm gets the pick of the litter.
But who ultimately pays for this talent search? The clients, of course. No matter -- just hike up the fees, right?
It's Your Dime, Not Ours, Says BofA
Bank of America's General Counsel David Leitch doesn't like this one bit. The ABA Journal reports that he has informed some of these salary hiking firms that his company does not intend to help them "absorb" the costs of attracting new talent. If the BigLaw firms don't play ball and outside counsel is hired at smaller but equally eager firms, it could mean that this new normal is short-lived.