Legal Industry News
September 21, 2012
Median First-Year Big-Law Associate Salary Slumps to $145,000 in 2012, a Median Last Seen in 2007
Recent research from the National Association for Law Placement, Inc.® (NALP®) reveals that, although first-year associate salaries of $160,000 are still widespread at large law firms of more than 700 lawyers — especially in large markets — that figure no longer represents the prevailing salary, resulting in a median for this group of firms as a whole of $145,000, a median figure last seen in 2007.
In the intervening years at least half the first-year salaries in firms of this size were reported at $160,000, with the proportion reaching a high of nearly two-thirds in 2009, confirming the characterization of 2009 as the recent high point for large firm salaries, NALP’s 2012 Associate Salary Survey report stated.
$160,000 Still the Norm at Largest Firms, Though Prevalence Erodes
To be sure, in many markets, including Chicago, Los Angeles, New York, and Washington, DC, first-year salaries of $160,000 are still the norm at the largest firms, though they are not as widespread as they were just a few years ago. For example, according to the report, in 2009, about 90% of offices in firms of more than 700 lawyers in Los Angeles and Washington, DC reported a first-year salary of $160,000; in 2012 only about two-thirds did so. Overall in firms of more than 700 lawyers salaries of $160,000 accounted for 46% of reported first-year salaries, compared with 54% in 2011, 58% in 2010, and 65% in 2009.
In firms of 251-700 in Chicago, Los Angeles, and Washington DC, although some firms still pay first-year associates $160,000, most do not, resulting in medians in the $135,000-145,000 range. The median in San Francisco for firms of 251 or more lawyers remains at $145,000 having reached $160,000 only in 2009. Only in New York is the $160,000 starting salary still dominant, with 75% of firms with 251 or more lawyers paying that amount and 87% of firms with 701 or more lawyers reporting that as the first-year associate salary.
Overall Median Rises Slightly
NALP’s 2012 Associate Salary Survey reports that the overall median first-year salary at firms of all sizes was $125,000, up from $115,000 in 2011. Medians ranged from $70,750 in firms of 2-25 lawyers to $125,000 in firms of 501-700 lawyers, and $145,000 in firms of 251-500 lawyers and in firms of more than 700 lawyers. The median at firms of 251-500 lawyers had been at $125,000 from 2009 to 2011, while that at firms of 501-700 lawyers edged up from $120,000, reflecting relatively more reporting of salaries of $125,000 in 2012 compared with 2011.
“Compared to the period of 2006 through 2009, when associate salaries were rising year on year at a steady clip, in the period since the recession hit the legal industry we have seen associate salaries remain more or less static,” noted James Leipold, NALP’s Executive Director. “Among the largest firms, there has been a measurable backing away from $160,000 as a starting salary, though that level of compensation is still dominant in New York and a few other markets. Associate salaries at smaller firms have shown very modest movement, both upward and downward, over the last three years. We would not expect to see much widespread upward movement in associate salaries until the demand for legal services in North America picks up considerably from where we are today,” he concluded.
Anticipated Median Salary for Incoming Associates at Largest Firms Also Falls
NALP explained that information reported by firms concerning their anticipated base pay for incoming Class of 2012 associates, lawyers who will start work this fall, suggests that while $160,000 will remain the most common starting salary in firms of more than 700 lawyers, it will continue to be the starting salary for less than half of these firms, resulting in a median of $145,000 for these firms, compared with the $160,000 anticipated salary that was reported last year for the Class of 2011. Anticipated base salaries for other size firms remained relatively steady, except in firms of 251-500 lawyers where the median anticipated base salary for incoming associates rose to $135,000 compared to about $125,000 for 2011, NALP’s report added.
Impact of Levels-Based Salaries Apparent in Reported Data
In recent years, a number of firms have moved to a compensation system in which associates move through levels, with compensation decisions within each level primarily based on skills mastered rather than on class year. Firms using a levels-based system typically have three, or sometimes four, levels. In 2012, the median level of compensation within the first level was $133,000 in firms of 251 or more lawyers, NALP found.
The median in the second level of compensation was $143,500, and $164,500 in the third level. The reporting of salaries by level rather than class year is new enough that historic comparisons are not relevant or even necessarily available.
Data Represent Broad-Based Reporting
According to NALP, a total of 570 law offices responded to NALP’s 2012 Associate Salary Survey by providing salary information as of April 1, 2012. With almost 10% of respondents representing firms of 50 or fewer lawyers and 54% representing firms of more than 500 lawyers, the report sheds valuable light on the breadth of salary differentials among law firms of varying sizes at the national level.
As expected, each year of associate experience brings several thousand dollars in increased compensation: median salaries for eighth-year associates ranged from $95,000 in small firms to about $211,000 in the largest firms, with a median for all reporting firms of $169,100.
The 2012 Associate Salary Survey also gathered information on salaries for intellectual property (IP) lawyers, salary levels for staff attorneys and law clerks, and information on the prevalence and size of bonuses for prior judicial clerks. Information on salaries for intellectual property attorneys was more limited, and in large part reported by firms of more than 250 lawyers. The information reported suggests that, compared with firms of this size as a whole, those with IP lawyers may pay an entry-level salary of $160,000 somewhat more often. When IP salaries at the largest firms are compared with those of the largest firms as a whole, the median is $160,000 instead of $145,000 and is $30,000-40,000 higher among senior associates. Also, not all firms with IP lawyers have a differentiated salary scale for IP lawyers.
Founded in 1971, NALP is dedicated to continuously improving career counseling and planning, recruitment and retention, and the professional development of law students, lawyers, and its members.
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