Following the decision by Milbank to increase its associate salaries, there’s an expectation among legal experts that some of the elite firms who are their key market competitors may also consider following suit. As indicated in a previous announcement by Milbank, the firm plans to raise the salaries of its associates by $10,000 in 2024 across all classes, with the most junior class making $225,000. In addition, the firm’s year-end bonus scale will remain consistent with the last year’s, ranging from $15,000 to $115,000.
However, there’s also a notable hesitation in the broader market, as suggested by the apparent lack of immediate, counterpart increases. As of Wednesday afternoon, post Milbank’s announcement, no other firms had publicly matched the Milbank salary scale.
It seems firms are waiting for movements from other market leaders, such as Cravath Swaine & Moore and Davis Polk & Wardwell, before adjusting their own market salaries and bonuses. Even firms that have traditionally been quick to match are currently silent, possibly indicating ongoing internal discussions.
While a salary raise for associates occurs during a time when firms are grappling with increased costs, geopolitical instability, and significant questions regarding politics and technology, some experts argue that firms with strong financials could not only match the salary increase, but potentially raise their bonus scales as well.
However, rising associate salaries might not be sustainable for all firms, prompting the need for a careful analysis to ensure any changes made are thoughtful and would not present a long-term financial burden. Overall, law firms saw modest average revenue growth of 4.0% through the first half of 2023, while demand declined by 0.9% and the collection cycle continued to lengthen (source).
This phenomenon could further stratify the industry, creating a divide between the very elite firms and those trying to keep up. Smaller firms, especially those that generally do not compete on top-of-market compensation, may have to tread lightly when considering their options.
As far as bonuses are concerned, while some firms might match them at the lower end or link bonuses more closely to hours, recruiters remain skeptical about the prospect of firms coming over the top. However, bonuses might still be used to reward particularly high-performers, even if the performance is varied across the firm.