Morrison & Foerster said Monday it will pay incoming associates $145,000 in offices outside of New York and Asia, making it one of the first firms to publicly state it won't pay California first-year associates as much as those in the Big Apple.
For the past few years, associates in California and New York have typically made $160,000 at the top firms, while those in other markets could expect to make less.
But MoFo Chairman Keith Wetmore said there's long been a difference between the California and New York markets.
"Except for some periods during the last decade, there's been a historical difference between New York and the rest of the country, reflecting different billing rates, among other things," Wetmore said.
The announced salaries are not set in stone, a firm statement said.
"Note, however, that the market for first-year salaries among national firms is undetermined at this time. Given that, we will continue to assess starting salaries, in light of market trends, and may elect to adjust as required based on larger market developments," the statement said.
Wetmore said salaries aren't likely to fall further.
"It would surprise me if the market went lower than that," Wetmore said.
Associate salaries have taken a hit this year, with many AmLaw 100 firms freezing or lowering compensation or going off lockstep altogether.
Several firms have already stopped paying existing first-years $160,000, among them Manatt, Phelps & Phillips, which is now paying them $144,000; and DLA Piper, which announced a return to $145,000 as part of 10 percent salary cuts for associates across the board.
Others have announced they'll pay newly arriving first-years less: Howrey just started paying $125,000 under its new apprenticeship model. Sheppard, Mullin, Richter & Hampton has announced internally that first-years joining this fall and winter will be paid $145,000. And Townsend and Townsend and Crew recently announced it will reduce first-year associate salaries from $160,000 to $145,000 in 2010.
Some industry experts predict the market will blur further as more firms shift from lockstep models to merit-based compensation. At the same time, industry experts expect more firms to pare first-year pay back to $145,000.
Lisa Smith, who heads Hildebrandt's law firm consulting practice, including associate management and finances, has estimated that about one-third of large law firms are seriously looking at merit-based compensation models, and has predicted far more variation in associate salaries going forward.