One of the world’s largest law firms by headcount, Baker McKenzie has created a new associate salary scale as law firms everywhere compete for talent in a very tight market. The legal profession is no different than many industries in the present climate. With unemployment low, companies across the economy are competing for an ever-dwindling supply of workers and are finding it necessary to increase salaries and/or benefits just to stay in the competition.
The move by Baker McKenzie, retroactive to January 1, adds $10,000 to $20,000 in pay for lawyers with between one and eight years of experience. These raises bring first-year associate salaries to $215,000 and eight-year associate salaries to $385,000. This is all according to a memo obtained by Bloomberg Law from the Chicago-headquartered firm.
It is expected that big law firms will report a record year for 2021, which was driven by a boom in corporate deal-making and financings. In its latest fiscal year, which ran through June, Baker McKenzie brought in $3.1 billion in revenue. This translates to a revenue increase of nearly 8% and a profit increase of more than 36%.
Milbank LLP kicked off the latest round of salary increases amongst law firms in mid-January, with firm chairman Scott Edelman calling the bumps in pay a reaction to a strong financial performance by the firm and a recognition of the work junior lawyers have done over the year.
Many firms said they would match the new scale. Included in the list were Goodwin Procter; Cadwalader, Wickersham & Taft; McDermott, Will & Emery; and Fried, Frank, Harris, Shriver & Jacobson.
Last year, Big Law firms gave out record bonuses to their associates, with some of them paying out $115,000 or more to their hardest-working lawyers. Despite these dramatic increases in salaries and bonuses, firms are still finding it difficult to keep the record rates of attrition down. Nearly 25% of associates are leaving firms each year, and if only some of the major firms implement new salary scales and bonus packages, then the rate of attrition may only increase.