New York-based law firm Simpson Thacher & Bartlett paved the way towards higher salaries, and other top-tier law firms are now bending backwards to woo associates with equally high salaries.  As a result, many first-year lawyers now take home fatter purses than Supreme Court Associate Justices do.

Associate pay trends have hiked to almost surreal proportions, many concur.  Others disagree.  In the meantime, the debate between the ‘shoulds’ and ‘should-nots’ continues.

Proponents of salary hikes argue that new associates have to slog around-the-clock for nit-picky partners.  With law firms’ recent adoption of advanced technology, error acceptability has been reduced and demands have increased.  It is only logical that with the demands of more intensive labor comes more frequent pay raises.

First-year associate salaries also help students to weigh their options prior to donning the mantle.  After all, why should they invest in such an expensive law degree if the expected returns are so miserly?  In order to invigorate the legal field, law firm salaries must compete with more lucrative occupations such as banking and hedge funds. 

Compared to median starting salaries that recent MBA graduates’ receive — Harvard ($186,174), Stanford ($183,000), Columbia ($169,194), and Wharton ($167,607) — the salary of recent law grads is humble.  Therefore, it is hardly unreasonable that a first-year associate at New York should demand $160,000 per year.

Proponents of salary hikes argue that because law grads juggle between paying off their law school debt and high monthly rents, raises are both practical and necessary. 

Most big firms operate on a lockstep salary system when determining associate compensation, which means that first-year associates’ salary increases must correspond with the raises of all other successive classes.  In this system, first-years associates aren’t the only ones becoming more expensive; all associates are becoming more costly.  Because of this fact, many senior partners claim that the raucous surrounding first-year salary hikes are unnecessary.

Opponents of salary hikes, on the other hand, strongly criticize the profligacy.  They ask, “Whose pocket will burn because of across-the-board salary hikes?”

Most top-tier law firms also reward their associates’ with bonuses and other forms of compensation, which usually sums up to one-third of an employee's annual salary. 

So, what does the law firm actually pay? 

If an associate receives $160,000, plus an additional $50,000 in bonuses, the associate will receive $210,000 per year.  Other expenses incurred for fringe benefits; such as up-market rent, administrative support, library maintenance, computers, office automotive technologies, and lobby remodeling (Aside: Law firms often remodel lobbies in order to impress and lure first-year associates!); cost the firm an additional $100,000. 

In total, the firm actually spends $300,000 a year to recruit first-year associates. 

Another major opposing contention is that first-years should actually be paid very little in exchange for the extraordinary training they receive in their first year out of law school. 

They argue that law schools impart very little practical experience to its students.  Therefore, clients will not want to cough up $200 an hour for a junior associate.  Instead of working with efficient assuredness, many feel that first-year associates will spend that hour getting hands-on training. 

With this reputation, clients often look towards firms outside New York for better deals and more experienced attorneys.

Opponents reason that if firms want to dish out raises, it can.  However, it should fund these raises at the expense of the firm itself, not the client.
 
In any case, if the present trend is any indication, first year associates will continue raking in money as the debate rages on.