Law firms have hiked associates' base-pay levels 15 to 40 percent since January, with first-year salaries jumping to between $125,000 and $160,000 at major firms across the nation, according to a recent report. This raises the unpleasant scenario of firms having to pay more for what some perceive is less, in the form of work from junior counsel.
At many firms, including trend-starter Brobeck, Phleger & Harrison LLP, in San Francisco, 20 to 40 percent raises were extended to all associates, retroactive to the beginning of the year. Brobeck saw the salary increases as a way to boost recruitment returns and keep current associates from head- ing for general-counsel positions at tech start-ups, which in many areas of the country are draining talent.
So far, most corporate attorneys who hire outside law firms say they have yet to see the higher salaries reflected in higher billing rates, thanks to long-term contracts and volume discounts negotiated before the salary increases. Pam Strobel, executive vice president and general counsel for Chicago- based electric utility Unicom Corp., says such agreements have pro- tected her company from unexpected rate hikes. But she has already seen greater reluctance from firms to take risks on nontraditional billing arrange-ments, and expects hourly rates to rise with the next round of negotiations.
To avoid a rate hike for slow work by inexperienced associates, many companies are looking to alternative legal resources, like the Los Angelesbased Legal Research Network, which contracts 1,600 law professors and attorneys to provide research in their areas of expertise at fixed costs and deadlines.