Milbank conveys associate pay contest in 2022

Milbank conveys associate pay contest in 2022

Firms battling to retain associates among those falling in line first, are Baker McKenzie, Cadwalader, McDermott and Steptoe & Johnson

A growing number of law firms, including Baker McKenzie most

Recently are matching Milbank's salary increase by growing first-year associate salaries by 5percent to $215,000 - a move that sparks a new associate salary war among exclusive US law firms.

According to the Society of Legal Cheek, Milbank has become the highest paying law firm in London with a $10k salary hike added to a $205k salary for first-year associates set at June 2021, this hike also applies to overseas lawyers.

As stated by Above the Law, the new increase, first reported last Thursday (20 January), starts at $10k for the class of 2021 and shoots up to $20k for those in the class of 2017 and above, the most senior associates walking away with $385k.

Several firms, including McDermott Will & Emery, Steptoe & Johnson and Cadwalader Wickersham & Taft, have matched the scale by the end of Friday. Above the Law reports that Baker McKenzie follows suit and has set the pay scale for its US associates at the same level, backdated to January 1.

Milbank's benchmark could settle around the market rate or companies may strive to gain an edge by exceeding it in the current hyper-competitive recruitment market. In the latter scenario, Milbank made headlines last summer when it started the salary war by increasing its salary to $200,000 – up from $190,000 – only to raise it again by $5,000 within weeks to keep pace with rivals that had surpassed it.

Cravath Swaine & Moore, which handed out bonuses from $15,000 to $115,000 based on seniority, has set the benchmark for year-end promotions, which follows on the heels of a generous round of year-end compensation.

Big Law firms are placing a high priority on retaining hard-working associates, especially since the record-breaking deal activity that flooded the legal landscape in 2021 has not slowed.

An annual report by Thomson Reuters and Georgetown Law published on November 2021 found that more than half of the firms surveyed viewed acquiring and retaining employees as a significant risk to future profitability due to the plethora of legal work resulting from exploding work volumes.

The research showed that law firm leaders moved their focus from underperforming lawyers to general economic volatility as the primary threats to the financial success of their companies. In Jan 2022 report, the State of the Legal Market and also Georgetown Law Centre and Thomson Reuters warn that firms are 'edging dangerously close to losing one-quarter of their associates by 2021', despite increasing attorney salaries.