Early Career Moves: How Young Lawyers Are Changing the Game
$190,000 for a first-year associate, and up to $315,000 for a seventh-year associate, as well as special bonuses. Not to be outdone, Cravath raised the scale yet again, matching junior associate salaries of $190,000, and raising mid-level and senior associate compensation by $5,000 and $10,000, respectively. The Houston market has largely followed suit, matching these new associate scales to some degree. However, not all firms that start associate compensation at $190,000 are “lockstep” all the way through the seventh year, resulting in some salary variation among the mid-level ranks, thus making for a more dynamic, mid-level lateral associate market.
The most in-demand associates have approximately three years of experience from a top law firm. Homegrown associates are becoming a rare breed, as the majority of mid-level associates will have made at least one move by their fourth or fifth year of practice. Reasons for moves vary by individual associate, but often, partnership considerations are at the forefront. Despite such a frothy market for associates, partnership opportunities are rare at the average professional changes jobs 14 times during the course of his or her career. Historically, this has been less true for lawyers who, in the past, exhibited staunch devotion to their firm and its brand. The current legal market, however, looks vastly different.
Young lawyers are entering the market saddled with six-figure debt from the increasing costs of attending law school. With many established law firms paying lateral associates five and sometimes six-figure bonuses, junior lawyers are able to capitalize on opportunities to pay off debt and maximize their earning potential early on, and then later figure out how they wish their careers to unfold.
The Houston legal market is especially lucrative for young lawyers, given the interest of out-of-state firms entering the city. There are presently 56 of the Am Law 100 firms in Houston and 75 of the Am Law 200, 14 of which have arrived in just the past five years. The influx of out-of-state firms is creating a ripple effect, where top firms are competing for top business in Houston, and associates with top credentials are coveted.
Until 2016, first year associates at elite firms could expect to be paid $160,000 as a starting salary. In the summer of 2016, however, the New York law firm Cravath Swaine & Moore increased its associate compensation to $180,000 to meet the demands of associates in high cost of living markets. Most of the big firms followed suit, with some form of what is now known as the “Cravath Scale.” In 2018, Milbank, Tweed, Hadley & McCloy announced a new compensation scale, with starting salaries of satellite offices, and mid-level associates who have been billing 2,200-hour years finally look up and shift their focus to the long-term. At the elite levels where compensation is virtually equal across the board, other differentiating factors become more paramount in a lateral move: lifestyle, work-type, and partner- ship opportunities.
Millennials continue to comprise an increasing percentage of firm lawyers and will shape the future of firms in terms of work-life balance. While law firms have made some attempts to cater to the younger generation by offering remote work opportunities and adopting more flexible parental leave policies, the law firm model has remained largely unchanged in the last 30 years: partners develop business and maintain those relationships, and associates service the work.
As the millennial generation shifts into partnership roles, there will naturally be some cultural shifts. For example, it will likely fall on the millennial generation to redefine the role of law firms through increasingly popular alternative fee agreements.
For now, young lawyers are able to capitalize on a strong legal market and secure large bonuses. In a strong market, young lawyers wield significant power. In a weak market, however, they are at the mercy of their firms. For law firms, these first-year lawyers can be expensive, and firms make a big investment by training them, despite knowing the risks of losing them to other opportunities. One need look no further than the classes of 2010 and 2011 to appreciate the toll a poor economy can take on a young lawyer’s career, as most law firms laid off young lawyers, deferred start dates for entering lawyers, or rescinded offers altogether. Given the maturity of the current bull market, there are many who anticipate that we are on the cusp of another recession, hopefully not as severe as the last.
What does this mean for job searching? Young lawyers are inundated with mass e-mails from national recruiting firms. In the first few years of practice, lawyers from major firms are virtually interchangeable. Many of these young lawyers came straight from law school, or perhaps, a judicial clerkship. Despite holding a degree from a prestigious law school, young lawyers are largely kept in the dark about law firm life. They keep their heads down, bill hours, and start to pay back their massive amounts of debt. Under these conditions, the opportunity to make an extra $10,000 to $30,000 can lure an otherwise happy associate to a different platform. And why should it not? While it would seem logical to assume that loyalty to a firm would increase the likelihood of making partner, that is often not the case. Increasingly, laterals are offered partnership more readily over homegrown associates. Accordingly, a well-timed and well-thought-out lateral move three to five years into practice can make the difference in a lawyer’s career. Financial incentives aside, the conditions for making partner vary greatly between firms. Most lawyers, however, only know what they know from their own firm experience and often lack a broader perspective to make a true comparison to another platform.
Naturally, the world and especially younger lawyers are moving more toward technology for communication, job searching and networking. However, young lawyers that use a broader resource base are the ones seeing the most success in the long term. Technology alone cannot help young lawyers find a mid-career position that will improve work-life balance, partnership opportunities, and compensation.
Successful young lawyers often have a foundation of varied resources, including relationships with peers and advisors. While lawyers used to look to find mentors that were quite a bit older, young lawyers are looking more to their peers who may be three to five years ahead in their career. These peers will have the most authentic feedback because these are the lawyers that are experiencing timely changes in their own careers. Young lawyers who engage and provide leadership in legal associations, tend to be in the know on industry trends and chatter. The role of the recruiter has shifted as well, as recruiters are not simply recruiting or headhunting for a firm. They are increasingly acting as an agent for a lawyer in her job search and being a source of information on the market. As young lawyers are viewing recruiters more in the agent role they are not timid about asking for information or help and use a recruiter to be their eyes and ears in a continually shifting market.
14 May/June 2019 thehoustonlawyer.com
Megan Penrod is a legal recruiter with Amicus Search Group specializing in associate and partner placements at law firms in Houston. She graduated from Saint Louis University School of Law with a certificate in health law and is a member of the State Bar of Texas