STATE OF MARKET 1.800.973.1177PAGE 1 continued on backAs a recruiting firm, we talk to both partnersand associates at firms in every major legalmarketplace on a daily basis. These conversa-tions often concern why a lawyer is dissatis-fied with their current firm, or what kind oflawyer a firm seeks to hire. We have discov-ered that the salary increases that have takenplace over the past several years have actuallyhad the effect of straining professional rela-tionships between partners and associatesand also between partners. In the end, themore that money becomes the dominatingfactor defining the relationships among attor-neys, the more the profession becomes like abusiness and less like, well, a profession.Since late 2000, the results of the salary warsthat occurred in the legal marketplace shouldhave become quite noticeable. One of ourlegal recruiters, who has been recruiting forover 20 years, recently told the story of howjust 15 years ago firms in Los Angeles wouldalmost never fire an associate. This samerecruiter actually received a phone call froma major Los Angeles law firm telling him theywould pay him $20,000 if he could recruit awayone of their attorneys and place that attorneyin another firm (where he would also earn afee). While this may sound drastic, the thoughtof this firm forcing the same attorney out, orfiring the attorney, was not something the firmwould do. Lawyers at this firm simply did notdo that sort of thing.Today the legal landscape has changed sig-nificantly. Law firms have no problem firingassociates or partners. In fact, the relation-ship between associates and partners, as wellas among partners, has become more definedby economic concerns, it seems, than thingslike collegiality or functioning as a group thatsupports one another in all respects. This wasnot always the case. The explosive growth offirms like the now-defunct Brobeck Phleger &Harrison in 1999 and 2000, for example, waslargely fueled by the acquisition of mercenarypartners who all grouped together becauseBrobeck could pay them the most money.Money was the defining characteristic of theserelationships. When the firm could no longerafford to pay explosive salaries to partners,one of San Francisco’s oldest and most presti-gious law firms simply collapsed.Similarly, while most attorneys are in lawschool, they are most concerned about work-ing at the highest paying firms. The thoughtof going to a firm where the salaries might below but the atmosphere and collegiality better,is something that many law students mightsimply laugh at. The best attorneys, in theirminds, are the attorneys who make the mostmoney. The issue with all of this is that thesesame associates are often placing themselvesin a dynamic where they become fungible andcan lose their jobs at a moment’s notice.This article will explore the division betweenpartners and associates from three angles.First, we will discuss the complaints we haveheard from and about today’s young associ-ates. Second, we will discuss the impact thisdivide has had on the legal marketplace.Third, we will suggest how to handle dynam-ics at the interview stage, and how to positionyour self as a lawyer who can contribute to amore collegial environment.In 1999, the associate salary wars began toaffect most major legal markets. Althoughthese raises came as good news to many as-sociates, the long-term effect has been mixed.Certainly, we have not heard any lawyer tellus that having more money is bad. However, insome firms, there has been a backlash againstthose who enjoyed the salary increases,making life more difficult for some young as-sociates. The dynamics are fairly simple. Manyfirms raised associate salaries to competewith other firms. Not all firms who raisedtheir compensation did so willingly, and wehave spoken with some partners at law firmswho felt railroaded into the decision to raisethose salaries. It’s not hard to imagine why:an increase in associate salaries may meanless compensation to the firm’s partners. Al-though every firm that raised associate sala-ries handled the expense in different ways, themore difficulty a firm had internally in makingthe adjustments, the more likely the salaryissue created or magnified a division betweenassociates and the owners of the firm.Associates are Getting Richer. What’s theProblem?Ultimately, it’s not important to decide themerits of who is right or wrong. What is im-portant is to understand these conflicts, andto minimize the discord.The complaint we hear most often from part-ners is that junior associates have a sense ofentitlement to both top compensation and anappropriate quality of life offered by a reducedworkload. This may be because many currentpartners began as associates working longerhours for less money. At some firms, the per-ception is that associates simply do not workthe kind of hours, on average, that associ-ates worked 10 or 15 years ago. This may ormay not be true, depending on the firm or theindividual. What is true is that the attentionto ‘quality of life’ among associates at largefirms is relatively new. The fact that manyassociates started using the term quality oflife at the same time the Greedy Associatesboards popped up is a difficult coincidence forthe management at some firms. We certainlySalary Wars and Associate Hiring[by BCG Attorney Search]The employment outlook for the upcoming year: so-so.
STATE OF MARKET 1.800.973.1177PAGE 2 continuedsuggest that attorneys remain aware of thedifferences between firms’ lifestyle, com-pensation, or prestige, but an associate whofrequently compares his or her firm to otherfirms may create the perception of beingungrateful for the opportunities “at home.” Todemand that one’s firm pay a top salary whilepushing quality of life issues, such as reason-able hours, may appear inconsistent.Many associates do not understand why thepartners at their firm are so unreceptive totalking about compensation and quality of life,when the associates are often the top billers,and generate significant income for the firm.“If I work big firm hours, I should get paidbig firm salary,” is one of the complaints weheard from a lawyer working at a mid-sizedWashington, D.C. firm. Younger associateswant the management of their firm to realizethat the marketplace isn’t the same as it waswhen the partners graduated from law school.Indeed, the demographic of young lawyershas changed considerably, and the shifts inthe economy in the past decade have beenunprecedented.There is no right or wrong side to these argu-ments, but this division eventually must beresolved because it causes unnecessary strainon workplace relationships. We recommendthat attorneys try to put themselves in eachother’s shoes. Remember that partners areowners of the firm. They have the responsibil-ity for keeping business with the firm, andincreasing associate salaries did seriouslyaffect the bottom line at many firms. On theother hand, partners need to realize that wellqualified associates are necessary to any goodpractice, and keeping those associates byensuring that they are well respected, valuedand paid should remain an on-going concern.How the Salary Increases Affected the Mar-ketplaceThe short-term effect of the salary wars was,obviously, to put more money into the pocketsof associates. For virtually every firm, the nexteffect was more subtle: hourly billable ratesfor associates were raised in some cases,while some firms decided to take the moneyout of the partners’ share of the pie. Somefirms raised associate salaries without a peep,while others did so only after being directlypetitioned by their associates. Associatesbegan ranking firms in their city by how muchand how quickly salaries went up.We are certainly not suggesting that all firmsreacted the same in regards to salary increas-es. On the contrary, each firm handled thesalary increases (or in some cases, ignoredthem) in its own way. However, there weretrends that emerged as the firms reacted tothe salary wars. In the best circumstances,firms were happy to raise salaries to controltheir attrition rate and to reward their associ-ates. Some firms, however, took a harder line,and required more from their associates inexchange for more money, such as increasingbillable hour requirements.Several problems emerged. One was com-pression of salaries. So, while a first year gota raise and started making perhaps $125,000,often an 8th year associate in the samedepartment got only a small raise or no raiseat all. Obviously, there is great potential forresentment in such a case.As the economy regains a more certain foot-ing, what can associates and partners takeaway from the lessons of the past three years?In the same way that the economic slowdownof the early 90’s affected the hiring (and fir-ing!) practices of firms, the latest recessionwill be a learning tool for both law firms andlawyers alike.For some associates, the lesson learned wasthat following the money is not necessarily agood long-term strategy. Several of the firmswho lead the pack in terms of raising associ-ate salaries, and who consistently outmatchedstarting salaries, have had some of the mostdramatic lay-offs. For a handful of lawyers,the lure of 5 or 10 thousand more dollars peryear was enough to convince them to changefirms, only to be looking at a mass layoff18 months later. Therefore, we believe thatthe single most important lesson learned isthat salary distinctions of several thousanddollars should not be the principal reasonfor changing jobs. Although there is certainlyprestige in being associated with the highestpaying firm in your area, top compensationdoes not insure long term stability, or even jobsatisfaction.When a firm’s dialogue turns entirely tobillable hours and base salary, everyoneinvolved is missing the bigger picture of whatassociates and partners have to offer to eachother. It would surprise you how frequentlywe hear from lawyers that they want to lookfor new opportunities - and how infrequentlywe hear that a lawyer wants to find a new jobto make more money. Although it’s easy toget caught up in money issues, we do not findthat making the most money on the block iswhat defines success or satisfaction for theoverwhelming majority of lawyers.On the law firm side, we believe that the sal-ary wars and the recession that followed werea lesson for firms that information about thequality of their relationship with associatescan quickly be widely spread. The Internethas the capability of disseminating privatefirm information to virtually every other younglawyer in a matter of seconds. In some cases,internal memos to associates regarding salaryincreases were immediately posted to theInternet.Law firms and the lawyers within them willcontinue to make adjustments with respectto the salary raises, the economy, and theirongoing client demands. Going forward, webelieve that it’s important that each firm re-view the effects that the salary wars have hadon internal relations, and seek to address anydivide that may have occurred.I’m on the Market for a New Job. What doesthat Mean to Me?
STATE OF MARKET 1.800.973.1177PAGE 3In some instances, we’ve been approachedby lawyers who are interested in opportuni-ties with a new firm because of the tensionwithin their own. In many instances though,lawyers who are unhappy with the dividebetween associates and partners should lookfor solutions within their own firm. There havebeen significant changes in compensation andhiring over the past several years, and it maytake many firms some time to work out theissues that arise from the associate salaries,as well as from the depressed economy. Inthe event that a lawyer has made a decision tomove, he or she should keep in mind that howthey are perceived at the interview has beenaffected by these difficulties.The single most important way to overcomewhatever remaining tension may exist is tobe enthusiastic. The “what’s in it for me?”attitude, which may have worked two yearsago, is generally unacceptable in this hiringclimate. Interviewing for a position should bea dialogue about what contributions the inter-viewing lawyer can make to the firm, and notsimply what he or she can take out.On the law firm side, it’s important to notethat many lawyers’ agendas have changed.Stability and profitability is an increasing con-cern for lawyers, and an interviewing attorneyshould provide enough information for aninterviewing lawyer to understand the firm’senvironment. Firms who believe they mayhave gotten a bad reputation throughout thesalary wars should work to correct this.ConclusionsMany associates have changed their focusfrom associate raises to lay-offs, bonuses,and workload, given the recent downturnin the economy. However, it is important toremember that the associate salary boomof the late 1990’s may still have an effect oninter-firm relationships, and how partners andassociates view each other as a whole. Wherethose tensions exist, lawyers should be awareof how they view each other and themselves inthe sometimes strained relationships withinthe firm and the firm’s economy. If there isany good to be found in the recent recession,it may be that it provided a little perspectiveon how we view each other, and how lawyersdefine security and success within a firm.