More top partners at Am Law 100 firms are bringing home $10 million a year, while the compensation gap between rainmakers and all others continues to widen as firms seek to cut costs, according to The American Lawyer’s latest look at law firm salaries.
The American Lawyer examined law firm salaries using in-house and external data coupled with dozens of interviews with legal recruiters, consultants and other experts. Among the key findings:
• The gap between the highest- and lowest-paid equity partners is growing at firms that are boosting rainmakers’ compensation.
• More senior-level lawyers are nonequity partners and counsels. As the opportunity to advance at many firms increasingly depends on the ability to keep clients and generate new ones, some management experts see the nonequity partner group as being among the most vulnerable in Big Law because many of them don’t have their own book of business.
• Associates’ base pay at the biggest offices of the biggest firms is about $160,000 and hasn’t budged since 2007, amounting to a decrease of 14.5 percent when adjusted for inflation. (This year many associates got big bonuses, though.)
• More law firms are using salaried staff attorneys and hourly contract lawyers frequently engaged by third-party agencies, often in back offices in lower-cost cities.
• Law firms increasingly are outsourcing administrative, clerical and technical support jobs to third-party providers and overseas support centers where wages are often much lower.
The American Lawyer’s study points to an equity partner class that is increasingly stratified, with a shrinking top tier that has grown its compensation disproportionately. According to some experts, the danger is that many law firms, fixated on short-term profits, are investing heavily in their ‘stars’ at the expense of a longer-term vision of creating a sustainable, multi-generational firm whose next cohort of leaders is in active development.
"We’re seeing huge pay disparities even among equity partners, which experts say is a problem especially if the pay formula isn’t transparent,” said Editor-in-Chief Kim Kleman. "Also, firms must attend to grooming the next generation of rainmakers even as they focus on today’s stars.”
The American Lawyer (americanlawyer.com) also released its roundup of the year’s most interesting lawsuits, many of which involved new technologies. The eight chosen cases saw laws, some of them decades, if not centuries, old applied to fact patterns that never existed when these laws arose. The cases selected include: Alice v. CLS Bank International, which dealt with computer software and when something is too abstract to be patented; American Broadcasting Companies v. Aereo which asked if a radical model for delivering broadcast television violated copyright law; and the Deepwater Horizon litigation, involving BP, and stemming from the explosion and spill that devastated the Gulf of Mexico.
ALM (alm.com) is a global leader in specialized industry news and information. Trusted reporting delivered through innovative technology is the hallmark of ALM’s award-winning media properties, which include Law.com (law.com), The American Lawyer, Corporate Counsel, The National Law Journal and The New York Law Journal. Headquartered in New York City with 16 offices worldwide, ALM brands have been serving their markets since 1843. ALM was named among Folio: Magazine’s Top Places to Work in Media in 2014.
ALM, The American Lawyer, Corporate Counsel, GlobeSt.com, Insight Conferences, Law.com, Law Journal Press, Law Technology News, LegalTech, The National Law Journal and Real Estate Forum are trademarks or registered trademarks of ALM Media Properties, LLC.