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Associate Costs from the Viewpoint of In-House Counsel

By Susan Hackett
April 27, 2007

In late January, Simpson Thacher & Bartlett LLP announced that it was hiking its first-year associate pay to $160,000. Since then, the legal press has noted that an increasing number of firms in every major legal market plan to follow suit.

I've heard disgusted buzzing about this among corporate counsel at private luncheon meetings. But that's all. There's been no hint of the revolution that I was sure would erupt. In-house counsel of the world: What are you waiting for? Who's managing your company's legal spending: you, or the firms?

Let's do the math. Be conservative and say that an average sophisticated law firm pays an extra one-third of an employee's compensation in benefits. So that's the newly announced first-year salary level of $160,000, plus another $50,000 or so, taking us to $210,000. Then there's overhead, including a portion of the law firm's high-market rent; top-notch administrative support; computer, library, and other office technologies; and that fancy art-filled lobby (so crucial to not only impressing clients, but to attracting those top first-year associates). So let's add another $100,000 for overhead, round it off, and say that now our highly recruited first-year associate costs the firm $300,000 a year.

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