First-year lawyers at law firm Cravath, Swaine & Moore are getting a raise for the first time in nearly a decade. The starting salary for associates is increasing $20,000, from $160,000 to $180,000.
In a memo to staff on Monday, firm leadership announced the new starting salary and similar bumps for more experienced lawyers. An eighth-year associate, for instance, will now earn a base salary of $315,000, plus a year-end bonus. Partners at Cravath earned average profits of $3.56 million last year, according to The American Lawyer magazine.
The last time the firm increased pay was in 2007, when its starting salary inched up 10% to $160,000.
Since then, the legal industry has all but transformed, as clients—racked by the recession—have pushed back on paying for the services of inexperienced lawyers and allotted more work to their in-house legal departments, causing profits at outside law firms to shrink.
All the while, law school graduates have larger debt loads but fewer job prospects, leading some to go as far as to sue their alma maters for fraud.
Cravath's move is likely to trigger similar salary increases at other elite firms since competition for talent is still fierce within the top-tier of the legal industry. But the generous salaries they pay are anomalies, even among graduates who choose the law firm route. About half of all employed graduates from the Class of 2014 obtained a job in private practice, according to the National Association for Law Placement. The national median salary for those lawyers was $95,000; salaries of $160,000 accounted for 31% of the law firm salaries reported. Overall, law school graduates earned median salary of $63,000.