Superstars or Falling Stars? New associate $101,000 salaries may be fast track to disasterAuthor(s): TERRY CARTERSource: ABA Journal, Vol. 84, No. 8 (AUGUST 1998), p. 28Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/27840366 .

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NEWS

Superstars or Falling Stars? New associate $101,000 salaries may be fast track to disaster BY TERRY CARTER

None of them can throw a 98 mph fastball. None of them can block Michael Jordan's fadeaway jumpshot. None of them can hit a wide receiver 45 yards downfield between two defenders. But newly minted lawyers at age 24 or 25 can now command $101,000 a year.

Something had to be behind the $10,000 rocket boost this spring, after starting salaries already had climbed nearly that much last fall. Starting salaries at the top New York City firms had been at $87,000 last year. Law firms in other big cities don't often match the New York largesse, but they follow closely behind in tiers that get pulled along by the curve. The two quick spikes up the graph amount to a 16 per cent increase.

Reverse the usual social commentary, which questions the huge sums that go to star athletes?and to be fair, some phenoms at that age might get, say, $101,000 per game: Is someone just out of law school,

who doesn't yet know the way to the courthouse or even the law firm's bathroom, worth $101K from the get-go?

"Definitely not," says Joel Henning, a consultant with Somerville, N.J.-based Hilde brandt Inc. who specializes in law-firm associate issues.

But, just when the go-go '80s seemed gone for good, along came the merger mania of the mid-to-late '90s. Summer associates may no

longer be wined, dined, coddled and kept from heavy lifting, but the big firms want them so badly that some offer full-time jobs after gradua tion, just to get them to accept the summer job now.

Will History Repeat Itself? In the 1980s, big law firms

bulked up on the Top 10 Club or Top 20 Club like they were taking steroids?gobbling up the top 10 percent or 20 percent of graduates from the top law schools and pay ing whatever it took. And when the corporate mergers and acquisitions

market flattened and put pressure on partner profits, the release valve was the back door?associates were sent packing.

"We're heading for another train wreck," Henning predicts.

A number of trains have left their stations:

Big law firms are bringing in more associates at top dollar to handle a bounty of work. Some

rting saryfora in 199 full-ti.. a

. n fl -to-earth medl

ating classes in other cities:

Atlanta $59 59 60 63 6-trn 66 68 73 75 Cleveland 46 51 55 58

Fresno 50 51 50 52 Houston 53 53 60 62

leRock 34 36 35 4 Paul 46 55 0

51 52 5 itia 5 51 53

Source: National Association for Law Placement

work and associates eventually go away, but in the 1980s more associ ates than work hung around and there's no reason to believe that won't happen again.

More and more clients are in sisting on preset fees rather than billable hours, with hours having long been a big factor in determin ing an associate's value. (With 2,400 billables as the gold stan dard, that comes to 46.1 actual billed hours per week for 52 weeks.)

Those same clients are turn ing more to utilization review, bringing in outside auditors to look over the shoulders of lawyers. Some clients are asking that more of the work be farmed out for cheaper doc ument review and research.

Fortune 1,000 companies are

beefing up their in-house legal staffs to handle more operations and compliance matters as well as doing their own deals.

"You can't throw bodies and deals at cases the way you once did," Henning says. "Overhead is going to increase and squeeze part ner profits, which are really good right now in big firms. It'll be a train wreck."

A study last year by the National Associ ation for Law Place ment, done before the recent hikes in starting salaries, found the me dian starting salary for the 11,484 law gradu ates in the class of '97 who went into private practice was a very re

spectable $55,000. That means more

than 5,700 of them made more than that, and the same number made less. Breaking it down a bit more, 29 percent of them got more than $70,000, but 30.5 percent made $40,000 or less. In the over-$80,000 bracket, which now is pegged at $101,000, 14.9 percent landed there.

One prominent partner at New York's Fried, Frank, Harris,

Shriver & Jacobson, which often matches top-dollar ratcheting, be lieves the rap against high starting salaries misses the mark.

"That's a euphemism for say ing firms put a lot of them on a mat ter and not effectively, and then charge a client a lot of money, being wasteful," says Robert Juceam, head of the firm's Washington, D.C., liti gation group and former head of the New York management committee. "We're against wastefulness, and it's unfair to say these kids aren't

worth it." Fried Frank now has about 450

lawyers; it had 60 when Juceam came in as an associate in 1966. "I don't know what to say they're worth," he says. "I started at $6,000, and I know I wasn't worth it."

28 ABA JOURNAL / AUGUST 1998 GRAPHIC BY JEFF DIONISE

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