Factors Impacting Associate Salaries
Various factors affect the salary of a law firm associate. The geographic location of the law firm is one of the most important. For example, a mid-level associate in New York City will generally make approximately $30,000 more than a mid-level associate in Charlotte, North Carolina. This is because the cost of living in New York is significantly higher than in Charlotte. In addition to geography, there is regional variation in salaries. For example, salaries for mid-level associates in Southern California are within about $5,000 to $10,000 of the average mid-level salary.
The size and prestige of a law firm also affects the associate’s salary. Small firms, as a general rule, pay less than large firms. This is not to say the salary for a large firm associate will automatically be large. The median, or midrange, salary for large firm associates is $200,000. Most large firms pay their first year associates $165,000 to $190,000. However, there are firms outside of this range. In 2019, the Cravath, Swaine & Moore LLP salary scale published on Above the Law, for example, pays first year associates $180,000 and first year associates with JD / MBA degrees $190,000. The highest segment of the market offers first year associates $190,000 base salary. Breaking the salary increase out as it applies to Manhattan firms shows it works out to $17,000 the first year, and $28,000 by the fifth year. Generally mid-sized firms offer salaries in the $150,000 to $165,000 range for first year associates.
Law school pedigree also plays a role. Firms recruit law students from the "top" schools like Harvard, Stanford and Yale, and are less likely to recruit from schools like Hofstra or Stetson, which in 2019 were ranked 40th and 101st respectively. The ranking of a law school can help an associate get hired and may also affect his or her starting salary. For example, at Harvard in the 1950’s, the average starting salary in private practice for a graduate was about $50,000 on a par with "senator’s aides and university administrators." In 2019, the average starting salary is more like $190,000. With a few exceptions, the top schools tend to pay the most whereas Tier 2 schools provide the lowest salaries .
Another factor affecting salary is the firm’s practice area specialization. For example, associates that work in antitrust law during their clerkships tend to be paid less than associates from firms that specialize in intellectual property matters. One reason for this is that there are fewer antitrust law firms, and consequently there are a relatively small number of antitrust lawyers in the market. This legal supply and demand mismatch impacts salaries.
Other factors that can affect salaries include talent level and work ethic. Generally, law firms want to hire associates who attended top schools, have great grades in law school, and have done well in their courses. Firms also look for associates who are people oriented, who work well with others and who have good oral and written communication skills. Whenever possible, firms prefer to share the salary increase equally among associates. However, some firms will in certain circumstances, such as following a large firm merger, increase the salaries of its highest performing associates in order to keep them from leaving. The firm’s internal framework can also impact salaries. Firms that adopt a lockstep system pay associates based on seniority. Conversely, in a merit compensation system, performance is taken into consideration.
There are a number of other salary trends affecting associates that have been in place for some time. These include higher salaries at private firms and a reversal of a trend for salaries to fall from peak. 2019 is expected to be the first year that salaries will not decrease from the previous year. To the contrary, in 2017, the median compensation for law firm associates rose above 2016 levels, and the trend is expected to continue in 2019 and 2020. The Association of Corporate Counsel also reported that starting salaries increased by 6% in 2019 for in-house attorneys. The increase was driven by a need for qualified lawyers capable of navigating complex legal matters and emerging technologies.
As always, regardless of what the prevailing salary might be, the more a prospective associate understands about salary dynamics, the better able he or she will be to negotiate a desirable salary.
Average Salary by Firm Size
The average salary for associates working in small law firms differs from that of those working in larger firms. A 2013 survey conducted by Robert Half Legal stated that associates in smaller firms earn an average of $61,000 a year. This is substantially less than the $66,000 average reported for associates working in medium-sized firms across the U.S. Those in larger firms were reported to earn $82,750 a year on average. Firms employing 1 to 10 attorneys generally offer a base salary of $55,000 to $67,750, while firms with 11 to 25 and those with 26 to 50 employees typically offer base salaries of $62,000 and $96,500 respectively.
Despite the salary variations, firms operating with 51 to 100 and 101 to 200 attorneys compensate their associates similarly. The average salary range in these firms is $91,000 to $165,000. Overall, the lowest average associate salaries are found at firms with 1 to 10 members, with the highest salaries offered at larger firms.
Regional Differences in Salary
Geographic considerations can have a major impact on starting salaries. While the prestige of the hiring firm is most closely correlated with associate starting salary, location is a close second. For example, in 2023, Chicago region law firm associates earned an average of $194,000 while those in Los Angeles region firms made $201,000. In Seattle region’s law firms, associates averaged $190,000.
And yet, in recent years, New York region law firm associates have earned an average salary of $202,000. This trend points to the fact that, in 2023, regional law firm associates earn an average salary of $181,000. Smaller cities generally have lower salaries with drastically more affordable rents. For example, Columbus region law firm associates earn an average of only $139,000.
Similarly, Austin, Texas associates make only $138,000 and Nashville region associates earn an average salary of just $153,000. In these cities, the standard of living is markedly lower than in the mega regions of New York and L.A., which explains the discrepancy. And yet, rental rates in Philadelphia in 2023 are nearly as bad as the Big Apple, which makes this city’s slightly lower average salary of $185,000 less attractive.
Rents in Chicago have increased to the point where rent gauges by apartment-rent ranges are comparable to both New York and Los Angeles. Of all of the truly big cities in the United States, only San Francisco region law firm associates enjoy a higher average salary of $215,000 and an exceptionally high price range of $3100-$4100 a month in rent.
Boston is a city where the average rent is nearly comparable to New York, yet the average associate salary of just $164,000 is considerably lower than in New York. In the Bay area, a law firm associate’s annual salary is considerably impacted by their city’s downtown location. The North Bay, East Bay and South Bay are all home to some of the largest law firms. In the Bay Area region as a whole, associates earn an average of $184,000, which is more than acceptable given the Bay Area’s high rents.
Not surprisingly, it’s the small cities that are most affordable. With a low salary of $138,000 and a rent of just $1300- $2300, Cleveland is one of the most affordable legal destinations in the nation. Columbus, Ohio offers GTA associates an average salary of $139,000 and affordable rents of $1200-$2400 a month.
For law student job seekers, it’s pretty clear that salary isn’t everything. Associated with higher costs, cities with a high standard of living expect you to have a firm grasp on the intricacies involved in the Big City rule of law. If you’re looking for higher pay, you’ll need to develop the skills and knowledge that are sought after in the most populous cities. If you haven’t yet secured post-graduation employment as a law firm associate, you can look forward to an overload of challenges that will mold your character while serving as a major boost to your resume.
On the other hand, if you’re seeking employment with a smaller firm, then you’re likely to land a more stress-free position, you will earn a lower salary and you will need to work extra hours to meet your client quotas.
Practice Area Influence on Salary
As any attorney knows there are a variety of factors that go into considerations of salary. Law firm associate salaries are no different and can be affected by the practice area of a specific law firm. While this is not an overall determinant of salary a larger firm with large billable hours and a corporate based clientele will typically pay their associates considerably more than a firm whose primary clientele is family based and more local work.
Firms with significant business, large companies with multiple locations or large transaction oriented clients tend to pay more than those firms with smaller regional businesses as their clientele. The main reason for this is due to the amount of work that these firms take on and the amount of time that their associates are expected to put in. A large corporate firm whose clientele spans coast to coast is going to demand a more intensive work schedule from its associates due to the simple fact they must have work product to present to their clients prior to the occurrence of major events in their business plan. If a firm has international clients that are of a similar ilk and level of business stature the associates who are responsible for those files similarly have a much higher bar to meet in terms of work performance and output.
This type of salary disparity is apparent when you compare the highest paying corporations in the country with the lowest paying. The big law firms of New York City or Los Angeles and Chicago are at the bottom of the scale while firms that focus primarily on criminal law, family law and local based businesses see considerably less compensation as a result of the lower demand for a broader range of work in their practice areas as they might garner from transactional work.
Typical Associate Salary Progression
In mid-size and large law firms, associate attorneys typically experience a structured salary progression as their seniority increases. In addition to the annual base salary, associates may also be eligible for bonuses – which can substantially impact their total compensation.
For a first-year associate at a mid-size firm in the San Diego area, the typical salary is currently around $90,000. The second-year salary generally sees an increase to approximately $105,000, and there is usually a slight bump to around $120,000 for third-year associates. Upon reaching the fourth year, when many associates are considering making partner, the salary can rise significantly to as much as $144,000.
If the associate remains a non-equity partner for one year, the salary is often approximately $174,000 . However, yearly raises can vary, with many associates receiving incremental increases each year after that signifying seniority.
In larger law firms, the starting salary for first-year associates is often around $155,000, which rises to only $183,000 for a first-year non-equity partner. For second-year associates, the pay gets even closer to six figures, as they receive $170,000. By the time they reach their third year, their salary will typically be $190,000. If they continue on that trajectory, fourth-year attorneys earn $215,000. For associates who are not yet partners, pay typically increases by $10,000 each year.
Associates generally receive raises in the fall, many times being announced around the same time that summer associates are confirmed as full-time employees.
Benefits and Bonuses at Law Firms
Completing the lucrative base compensation package offered to associates working in law firms are bonuses, which remain a matter of some mystery. Almost all everything gets reported and discussed, except how bonuses are determined and exactly how much they are. Bonuses, which are paid beyond the base salary, can be substantial, and the criteria for payment of these bonuses remain a closely guarded secret. In many circumstances, the firm will reference a general performance metric, but few details are provided.
Bigger firms seem to offer larger bonuses. This may be an incentive for an associate to consider changing firms for a larger bonus opportunity. Bonuses, while quite prevalent, are not uniformly available at all law firms. Usually, bonuses are awarded regardless of whether overtime hours were worked, but certain firms have been known to have a requirement that overtime hours have been worked. Bonuses are generally discretionary but tend to remain the deliverable in a tighter economy because base salaries remain fixed.
The infrastructure supporting a compliance with a law firm’s base salary policies is relatively robust, but the same can’t be said of the policies governing bonuses. The precise distribution of bonuses is typically kept confidential. Exact figures are only known by a select group of people, usually management committee members. As a result, it is virtually impossible to determine the actual average bonus offered by a firm. It is also hard to determine the extent and adequacy of the firm’s performance metrics. If the firm’s compensation and bonus policies seem too secretive or arbitrary, that is not a good sign and that should be a strong reason to pass on the opportunity to work at that firm.
Salary Negotiation Strategies
Engaging in salary negotiations, regardless of the desired percentage salary increase, is one of the most important tools in your arsenal during the lateral process. But for many people, the thought of salary negotiations can be intimidating, especially if you feel that you are asking for too much or in some cases, if you think you are asking the firm to take more from you, such as a lower bonus and a higher base salary. However, dedicated research and preparation can eliminate much of the anxiety associated with negotiating and can help to ensure that you receive an offer that you are excited to accept.
It is important to be aware of trends related to associate salaries. The National Association for Law Placement (NALP) provides timely information on associate compensation in its annual Associate Salary Survey, which breaks down average first-year associate salaries by city, geographic area, and practice area. The publication also provides general information applicable to all non-first year associates. As always, do not hesitate to contact us directly to discuss compensation-related issues prior to your offer.
When negotiating compensation, you should do your homework beforehand. Find out what peer firms in the target market are offering and speak to other lateral recruits that have already landed at firms in those markets. In addition, you should talk to lateral recruiters that focus on the relevant practice area and market, your law school career services office, colleagues from law school, and any attorneys you know at your target firms. If you have been recruited to join a boutique, the attorneys at the firm may be more familiar with the compensation and billable requirements of the firms to which you will be interviewing. No need to keep the detective work a secret; simply let each person you speak with know that you are planning on making lateral moves to better assess the full compensation package offered to you.
If you have a current position and are looking for a new one, ask yourself whether it is worth the time and effort to leave your current firm and join your target firm. If the answer is yes, then you have a compelling reason to initiate discussions regarding compensation. It is my experience that most firms want you, and want you badly. This means that they will do what they can to keep you from taking an offer that is attractive to you. If you push for the additional compensation you seek, the worst that can happen is that the hiring firm retracts its offer, at which point you are no worse off than you are now. On the other hand, you could end up with more money in your bank account or in your retirement fund, which makes making the lateral move worthwhile.
A key component of negotiating your salary is being comfortable and confident in advocating for yourself. This means that it is imperative to remember that the decision to become a lateral move is yours alone. You are not obligated to move from your current firm. You should move only if doing so continues to support your career path and makes sense for you financially. While every person desires to be appreciated and respected, you must remember that the hiring firm is "hiring you to be fired" (excepting, of course, a few rare circumstances!) If you do not advocate for yourself, you may inadvertently suggest to the hiring firm that you will allow them to dictate all aspects of your employment, including your career trajectory. For this reason, it is critical that you be steadfast in your efforts to negotiate the terms of your employment; it will show the hiring firm that not only do you believe that you are a good fit for their firm, but that you will not allow others to dictate your personal and professional needs.
Trends in Associate Salaries
The remuneration of law firm associates is strongly influenced by both economic factors and the structure and management of the firm. Historically, a minority of large firms have paid high salaries to entry-level associates, but generous salaries are no longer limited to top-tier firms. Above-average starting salaries have also become commonplace at service firms and in medium-sized markets. In addition to large and regional firms, several national firms have adopted pay systems based on those of the largest firms. Thus, pay scales for many entry-level associates are now higher than they were likely to be in the absence of the recession, but these increases are offset by larger class sizes and a larger number of law students who will be forced to accept entry-level positions even though they might have rejected them in more prosperous times. Although the market for legal services has improved, its growth has been modest . There are signs that clients remain cautious, and some are demanding (and obtaining) lower rates. Salaries at large firms have climbed, but the increases have been modest and often offset by an increase in the number of associates. As a result, although starting salaries for associates are expected to reach an all-time high very soon, salary growth in future years is unlikely. Even so, so long as the recession is in the rear view mirror, firms are likely to continue to use manageable increases in associate salaries to attract capable lawyers. Schools, services and boutiques should be able to increase starting salaries, but new firms are likely to be severely restrained. The recession has made it more difficult to find clients that will pay attractive rates or to recruit lawyers with portable books of business. Service and boutique firms may be more successful in this market since they have less slack in their salary budgets.