LA Firm Cuts Associate Pay, an Indication of Cracks in Lockstep Pay Model?
Salary reductions at the Los Angeles-based Am Law 200 firm Allen Matkins may mean fewer layoffs. But is it also a sign that cracks are showing in the lockstep compensation model for new associates?
That’s the argument of the Recorder, which reports that three Am Law 200 firms have now cut salaries, including Cleveland-based Thompson Hine, and the now-defunct WolfBlock, based in Philadelphia.
“It’s clear that firms high on the Am Law 100 list are salivating for a salary cut as well,” the Recorder notes. But the paper, quoting Peter Zeughauser, says firms in the top 10 to 15 aren’t likely to slash salaries until they’ve exhausted all other options.
“They want to do it. [But] if the market doesn’t follow, then they are left out there alone. … They need to be convinced that the market will follow,” he is quoted saying. “That means one or two market leaders need to do it first.”
The Recorder notes that the BigLaw “salary wars” started in California during the dot-com boom, which forced competitors to follow suit. N.Y. firms stepped it up again in 2007 with starting rates of $160,000.
Rather than cut pay, many firms so far have frozen salaries, deferred start dates or laid off lawyers.
