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ANALYSIS: First-year salary: too much, too little or just right?

First-year associate compensation has been a hot topic lately, as law firms continue to increase starting salaries in an effort to recruit top talent to their firms. Bloomberg Law’s State of Practice Survey asked attorneys to estimate starting salaries for first-year partners at their firms, as well as share their thoughts on first-year compensation.

The average starting salary for first-year associates, according to the best estimates of 287 attorneys at law firms nationwide, is $139,945.

Lawyers’ views on the adequacy of lawyers’ compensation

As a follow-up, respondents were asked whether they thought their company’s first-year associates were overpaid, underpaid, or compensated appropriately, based on their salaries and bonuses. More than half (57%) said they felt the pay for the first few years at their company was not up to par, either because it was too high (27%) or too low (30%) . Only 43% of lawyers felt that their firm received compensation for first-year partners “just right”.

I was curious to see what each of these opinion groups, on average, felt was the starting salary for the first few years at their company, and whether they differed from the collective average of $139,945 – and they did. have done, significantly.

Lawyers who felt that first-year associates earned too much also estimated the starting salary, on average, for these new lawyers at their firm to be $179,000. This is a difference of $69,000 from the average estimate of respondents who believe that the first years in their company are not paid enough. (The significant difference in the estimated averages could be explained by company location or even company size, a data point I plan to track soon.)

The factors behind the opinions

Respondents were also asked why they felt the way they did about first-year associate compensation. Most cited salary competitiveness (58%), job responsibilities and requirements (55%), and level of expertise or experience (51%). However, some considerations were more important than others, depending on whether lawyers felt the early years of their firms were overcompensated, undercompensated, or adequately compensated.

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For example, let’s look wage competitiveness. The majority of lawyers who felt the first few years in their firm were underpaid (71%) cited salary competitiveness as the reason they felt that way. But only around a third of those who thought the early years were overcompensated said they considered this a factor.

As many employers continue to increase employee wages in today’s job market – legal and non-legal – it makes sense that a majority of respondents who think their company’s first-year associates aren’t compensated fairly fear that these salaries are not competitive. enough to attract, and subsequently retain, new legal talent.

Somewhat surprisingly, Cost of life was not a major consideration for attorneys when weighing the appropriateness of first-year associate salaries; only 36% of all respondents chose it as their reason. Half of lawyers who found first-year compensation lacking said they factored the cost of living into their opinions, and only 6% of those who found salaries excessive considered it.

These numbers all seem pretty low to me, based on my personal observations of the current cost of living in my own life as a relatively new lawyer living in a crowded city with a dense legal market. Increases in the cost of living brought on by strong inflationary pressures this year are expected to further influence wage-setting processes economically, especially considering the amount of debt accumulated during law school.

But perhaps for survey respondents, cost-of-living increases and heavy student loan debt are no longer a priority. After all, they’ve been in practice for about 18 years now, according to average survey results. This more established career mandate could leave them without a frame of reference for the current pressures new lawyers face.

One of the main points to consider for lawyers who feel that first-year salaries are exorbitant is the level of expertise or experience that new lawyers bring to the table. More than three-quarters of those respondents cited level of experience as a factor in their opinion, while only 16% of those who felt associate compensation was insufficient cited level of experience as the reason.

While I agree that level of experience naturally and rightly plays a role in determining compensation levels in every industry, the legal industry should reconsider what experiences constitute that threshold. As a lawyer just three months into my first year of practice, navigating the job market as a new lawyer was extremely difficult. Many employers required candidates to have several years of experience as a practicing lawyer under their belt, despite marketing positions as “entry level”. It was almost as if the more than five years of experience I had in the legal industry disappeared after my swearing in and I started from scratch – a feeling that perhaps those who went to college can right after a full career can also identify. Getting your law degree shouldn’t boost your level of experience; instead, employers in the legal sector should consider this experience, provided it provides a relevant basis for the vacancy.

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