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Cravath joins rush to raise salaries, bringing more NY firms along

3 minute read

Signage on the exterior of the building where law firm Cravath, Swaine & Moore LLP is located in Manhattan, New York City, U.S., August 17, 2020. REUTERS/Andrew Kelly

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  • Law firms are in competition for talent, with NY firms losing associates to tech-focused rivals
  • Top firms have lost associates to those promising work-life balance

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(Reuters) - New York’s traditional law firm compensation leader Cravath, Swaine & Moore is upping associate salaries, a move that sparked a wave of similar announcements from its rivals on Thursday.

Another New York firm, Milbank, kicked off the compensation battle last Thursday when it raised incoming and current first-year associates' salaries to $200,000. Davis Polk & Wardwell upped the ante on Friday, offering $202,500 for incoming first-year associates, the class of 2021, and $205,000 for current first-year associates, the class of 2020.

While firms including Chicago-founded Baker McKenzie and Philadelphia-founded Dechert matched Davis Polk quickly, elite New York firms had, until now, largely hesitated.

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Cravath is increasing salaries for its current first-year associates from $190,000 to $205,000. Legal industry blog Above the Law first reported the news late Wednesday. The firm declined to comment.

Paul, Weiss, Rifkind, Wharton & Garrison, matched the rate soon after Cravath, according to an internal memo viewed by Reuters.

New York-based Willkie Farr & Gallagher said Thursday that starting salaries for its class of 2021 associates and its current class of 2020 first-year associates will be $205,000.Simpson Thacher & Bartlett is offering the same.

Kramer Levin Naftalis & Frankel matched Cravath's salary for the class of 2020, according to an internal memo.

Debevoise & Plimpton confirmed it's raising incoming first-years' salaries to $202,500 and current first-years' salaries to $205,000.

The firms also raised rates for senior associates, but varied in what class year topped their scale. Cravath's scale ended at $350,000 for the class of 2014 while Debevoise's ended at $375,000 for the class of 2012 and above.

The salary hikes may not be enough to stem a tide of associate departures from elite New York firms.They come as Big Law firms grapple with how to retain associates. Deal volume remains high, the hiring market is hot and the coronavirus pandemic has increased the risk of burnout.

The ten most profitable elite New York firms - including Cravath and Davis Polk - have together lost hundreds of associates in 2021.

Throwing money at the retention issue has been a popular solution. Elite New York firms were among dozens of firms in the spring that announced special two-installment bonuses as high as $64,000 for associates who stick around until later this year.

But it may not keep junior lawyers from leaving. Data from LinkedIn and lateral due diligence provider Decipher Investigative Intelligence shows associates left New York's elite firms for new cities, smaller firms, or firms more tied to Silicon Valley than Wall Street.

Associates who left have said they wanted to move closer to family, into a larger living space and to a firm offering more work-life balance, and were willing to take pay cuts or leave bonus money on the table.

CORRECTION: A previous version of this story incorrectly stated that Cravath set salaries for incoming first-year associates, the class of 2021, at $202,500. This story has also been updated to add information on more firms matching salary increases.

Read More:

Elite N.Y. firms are in a battle for talent. Could they all be losing?

Some firms rush to match associate raises as others watch and wait

Surpassing Milbank, Davis Polk boosts 1st-year associate pay to $202,500

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Caroline Spiezio covers legal industry news, with a focus on law firms and in-house counsel. She is based in New York. Reach her at Caroline.Spiezio@thomsonreuters.com.

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