Lawyers who receive raises typically do so for various reasons, including outstanding performance, fulfilling firm expectations or becoming partners.
Cravath’s salary hike set a precedent that many firms have sought to match. However, salaries of lawyers working in government or judicial clerkship positions tend to remain steady during economic upswings.
The Number of Years You Have Been With the Firm
Younger attorneys tend to receive lower salaries than their more seasoned colleagues; as experience grows, however, salaries generally increase with experience and firm profitability – for instance if a firm wants to offer associates higher pay than they received last year, overall revenue must also increase significantly.
Lawyers typically receive bonuses based on their performance. According to a LinkedIn survey of in-house lawyers, bonuses usually account for at least 30% of their base pay.
Last year, Cravath set a precedent by increasing starting salaries for new associates at Big Law firms from $125,000 to $225,000; other firms then followed suit and raised starting salaries as well. Salaries for government, public interest and judicial positions typically remain stable during economic upswings while business-oriented law firms often see significant fluctuations.
The Number of Years You Have Been in Practice
Non-partner lawyers typically receive salary increases based on seniority and the firm’s budget, with an average lawyer earning over $100,000 annually excluding bonuses which vary based on seniority and operating standards of their firm.
Law firms face difficulty raising associate salaries unless their overall revenue and profits also increase at an equal pace. First-year Big Law associates typically experience raises of more than $20,000 annually; it’s rare for them to surpass six figures in annual earnings.
Other variables affecting lawyer compensation include practice area, experience level and reputation. For instance, New York University law school graduates employed by large law firms tend to earn over $160,000 annually while those securing judicial clerkships or government jobs tend to receive significantly lower paychecks.
The Number of Years You Have Been in a Position
As with most professions, lawyer salaries fall on a standard curve; however, unlike many jobs, law firm associate salaries exhibit what statisticians refer to as a double mode – this means that most associates earn less than both mean and median salaries.
Last year, several large New York firms such as Cravath, Sullivan & Cromwell increased first-year associate pay to over $180,000 following complaints from employees about stagnant pay and living costs in NYC.
Longer term, however, raising associate salaries may backfire if firms don’t pair them with incentives to drive associates to work harder. Otherwise, associates may become content with their current performance level and begin slipping down the scale. Law firms can circumvent this problem by rewarding top performers with qualitative bonuses or moving them to higher salary bands; this will encourage them to continue working hard while increasing the chance of receiving a raise.
The Number of Years You Have Been in a Firm
One reason lawyers receive raises is due to having held on for multiple years – this means they have gained plenty of experience and are prepared for new challenges.
Lawyers with more experience can become partners of their firm or establish their own practice – this represents a remarkable feat, and should be acknowledged with proper compensation for their hard work.
Law firms must consider both revenue and profit when making raise decisions, since it can be challenging to increase associate salaries by the required 2.6 to 4.7% annually if overall firm revenues don’t increase at a similar pace. As such, many firms are taking measures such as offering bonuses for top associates to retain them while keeping pay competitive and keeping associates happy.