Bonuses and the Reality of Big Law Associate Compensation

In December, Cravath, Swaine & Moore circulated an internal memo setting associate bonuses according to the same scale set in 2014 by Davis Polk & Wardwell. First- and second-year associates will receive up to $15,000, while senior associates can make as much as $100,000.

Paul, Weiss, Rifkind, Wharton & Garrison, Skadden, Arps, Slate, Meagher & Flom and Milbank, Tweed, Hadley & McCloy each quickly followed suit, matching Cravath's rate. Skadden said that high-performing senior associates are eligible for an extra 10% above the $100,000 bonus, according to Above the Law.

Still unknown is whether Big Law associate base salaries for 2016 are in for a boost, or whether they'll continue to remain at the levels set in 2007. Already, rumors have circulated that this is the year that associate salaries will rise in New York. Firms often announce salaries at the start of the year.

To senior partners and managers at law firms, associate bonuses and salaries in 2015 must seem generous. A $160,000 starting salary with an annual bonus is multiples of what many of them made when they graduated from law school.

But the picture is more complex when other factors are considered, such as rising law school tuition, inflation and stagnant U.S. incomes as a whole. For associates living in expensive cities such as New York or San Francisco, working long hours to whittle away at a six-figure pile of debt, it's easy to see why bonus season looms large. But it's also easy to see why other U.S. workers might not be sympathetic.

A Reality Check

It's true that flat associate salaries since 2007 means that the value of associate incomes has actually gone down when adjusted for inflation. A starting salary of $160,000 has the same buying power that $139,500 did in 2007, according the Bureau of Labor Statistic's inflation calculator.

But let's face it: Compared with the rest of the U.S. population, associates at big law firms are making gobs and gobs of money.

Since 1995, when first-year associates in New York made $85,000, their salaries have almost doubled, according to the National Association for Law Placement. Meanwhile, household income in the U.S. has barely budged in the past 20 years, when adjusted for inflation. In 1995, the median was $50,978, while in 2014 it was $53,657.

In other words, salaries for the very youngest, most inexperienced Big Law associates ' not including bonuses ' are now roughly three times the median household income. Something to think about when depositing those holiday checks.

' Nell Gluckman, The Am Law Daily

In December, Cravath, Swaine & Moore circulated an internal memo setting associate bonuses according to the same scale set in 2014 by Davis Polk & Wardwell. First- and second-year associates will receive up to $15,000, while senior associates can make as much as $100,000.

Paul, Weiss, Rifkind, Wharton & Garrison, Skadden, Arps, Slate, Meagher & Flom and Milbank, Tweed, Hadley & McCloy each quickly followed suit, matching Cravath's rate. Skadden said that high-performing senior associates are eligible for an extra 10% above the $100,000 bonus, according to Above the Law.

Still unknown is whether Big Law associate base salaries for 2016 are in for a boost, or whether they'll continue to remain at the levels set in 2007. Already, rumors have circulated that this is the year that associate salaries will rise in New York. Firms often announce salaries at the start of the year.

To senior partners and managers at law firms, associate bonuses and salaries in 2015 must seem generous. A $160,000 starting salary with an annual bonus is multiples of what many of them made when they graduated from law school.

But the picture is more complex when other factors are considered, such as rising law school tuition, inflation and stagnant U.S. incomes as a whole. For associates living in expensive cities such as New York or San Francisco, working long hours to whittle away at a six-figure pile of debt, it's easy to see why bonus season looms large. But it's also easy to see why other U.S. workers might not be sympathetic.

A Reality Check

It's true that flat associate salaries since 2007 means that the value of associate incomes has actually gone down when adjusted for inflation. A starting salary of $160,000 has the same buying power that $139,500 did in 2007, according the Bureau of Labor Statistic's inflation calculator.

But let's face it: Compared with the rest of the U.S. population, associates at big law firms are making gobs and gobs of money.

Since 1995, when first-year associates in New York made $85,000, their salaries have almost doubled, according to the National Association for Law Placement. Meanwhile, household income in the U.S. has barely budged in the past 20 years, when adjusted for inflation. In 1995, the median was $50,978, while in 2014 it was $53,657.

In other words, salaries for the very youngest, most inexperienced Big Law associates ' not including bonuses ' are now roughly three times the median household income. Something to think about when depositing those holiday checks.

' Nell Gluckman, The Am Law Daily