Just over three weeks ago, Milbank declared a $10,000 raise for each associate. Since then, no other firms have followed suit. The increased compensation has been met with criticism from unnamed leaders labelling it as greedy and tone-deaf. However, this seems to be more of a knee-jerk response than a well-founded argument.
The underlying mathematics is simple: the raise amounts to an additional $5 per hour assuming an average of 2000 hours billed per year. Even if clients bear the brunt of these costs, increasing salaries to match Milbank is pragmatic, given the revenues of Biglaw firms. Here are a few illustrative examples:
- Cravath could shell out less than $3 million to match Milbank’s raises for its 299 associates according to Am Law, representing a mere 0.3 percent hit on its annual revenue, assumed to remain stagnant for this year.
- If Davis Polk, with its 779 associates, matches Milbank, it is looking at an approximate expense of $7.8 million, which is a paltry 0.4 percent increase on its last year revenue of $1.8 billion.
Biglaw giants like Kirkland and Skadden would also only need to allocate 0.3 percent of their revenues to give a $10,000 raise to their 2000 and 1000 associates respectively.
In retrospect, matching the raises communicated by Milbank, or as achieved in real terms two decades ago, is both financially manageable and morally correct.
Further reading: voice against fly-speckled criticisms of Milbank’s raises.