Earlier this week, Milbank’s refreshing compensation scale for associates took the Biglaw community by surprise, and the industry is now reflecting on its impact. So far, no other firm has successfully matched Milbank’s new scale, yet it’s likely that some firms will be compelled to reassess their compensation strategies.
Here are five key factors for Biglaw firms that have not yet matched this newfound remuneration standard:
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Regardless of Milbank’s proactive approach to raising base salaries, it’s important to remember that historically firms such as Davis Polk and Cravath have had the final say in setting industry compensation standards. Will these firms come through with yet another standard raise?
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It’s essential to carefully read any firm statement about matching the new industry standard. A superficial match might come with hidden stipulations that could tie salary raises to increased billable hours, office attendance or other factors.
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Considering the exorbitant cost of new hires, recently reduced numbers for first-year associate hiring may provide an indication as to how Biglaw firms will manage their hiring strategies amidst these new financial implications.
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The timeframe in which Biglaw firms react to this new compensation scale is also a critical factor. With Milbank’s new scale due to take effect in January, other firms have ample time to revise their strategies to match or surpass the new standard.
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The state of the market is a crucial aspect to consider during these times. Under varying circumstances, Biglaw firms may have different approaches toward salary adjustments, with some firms potentially needing to conduct layoffs in order to afford significant salary augmentations.
In the wake of industry-wide anticipation, Biglaw firms must evaluate their position and react accordingly. As firms decide on their remuneration strategies and strive to compete with the likes of Milbank, the Biglaw landscape could see considerable changes in the near future.