A few years ago, most of California's premium midsize firms lined up to match big firms' top pay for young lawyers. Now, even as some of the biggest firms have begun to slash salaries, many midsize firms claim to be sticking with $160,000 -- though there are some exceptions.
San Francisco's 96-lawyer Howard Rice Nemerovski Canady Falk & Rabkin, which matched the market in 2007, says it last month trimmed roughly 10 percent off salaries at all associate levels. Less than three months before, Allen Matkins, a Los Angeles-based firm with about 200 lawyers, went back to paying first-years $145,000. As the downturn continues to reshape the legal landscape, others are mulling change too. Leaders at San Francisco intellectual property shop Townsend Townsend and Crew and at Los Angeles' Jeffer Mangels Butler & Marmaro say they may back off from the top market rate before the year is over.
Bruce Jeffer, the managing partner of 150-lawyer Jeffer Mangels, said the one-size-fits-all model is passé. His firm is looking to adjust salaries and billing rates according to demand in each practice area. "In the past, a lot of firms -- ourselves probably included -- were driven up by the belief that everybody had to do it because it was the common denominator," he said. "I think now it's the opposite."
A string of firms have reduced associate salaries since WolfBlock's February announcement that all its associates would be taking a 10 percent cut. (The firm announced its dissolution a month later.) Firms like Orrick, Herrington & Sutcliffe and DLA Piper have since said they are revamping their associate training and compensation models, including moving away from lockstep pay.
Legal observers predict more firms -- but not all -- will follow the market down.
Blane Prescott, a consultant with Hildebrandt International, said there are probably as many exceptions as there are rules. But he points to a class of litigation-heavy boutiques that he says have been sheltered from the worst of the downturn. "They may be 200 lawyers, but that combination of size and litigation focus tends to mean that those firms are really busy," he said. "They're not as pressed to make a change."
Indeed, two firms meeting his description, L.A.'s Munger, Tolles & Olson and Irell & Manella, say they aren't lowering salaries. But some smaller high-end shops in San Francisco like Farella Braun & Martel are saying the same thing.
A firm's financial success may not indicate how it will treat pay, cautioned Lisa Muñoz, a Southern California legal recruiter with Major, Lindsey & Africa. "It's very market driven and traditionally the salaries of the New York-based firms have been the leading indicator. If prestigious firms start freezing and cutting I think [other] firms will see that's acceptable."
To be sure, leaders at midsize firms are watching what's happening on the national scene. Townsend Managing Partner James Gilliland said the 198-lawyer firm is rethinking its own recruiting and training. Depending on changes the firm adopts, salaries may be affected.
New file openings and cases at the IP-focused Townsend are down by about 20 percent this year over the same period last year. "That's for both our prosecution disciplines and our litigation work," he said. "We're getting the message from clients that if they're going to pay these prices they want highly trained lawyers for that." The firm's first- and second-year associates bill between $260 and $290.