Matching Milbank Is Incredibly Affordable... Don't Believe Anyone Suggesting It's Not.
You'd be shocked how little it would cost to give associates a raise.
It’s been 20 days since Milbank announced that it would increase every associate’s base compensation by $10K. No one has matched. Instead, we’ve been treated to anonymous “leaders” calling the minor raise tone-deaf and greedy. It’s insufferable nonsense, of course. Biglaw will gleefully celebrate gaudy profits per partner numbers in April and then fret about “the math” of issuing a cost-of-living increase in November.
If the American Lawyer wanted to perform a service to the legal industry, it would put out the Am Law 200 on Thanksgiving to place bonuses and — in years like this — raises in their proper context.
The thing is, the “math” is not hard. It’s $10,000 per associate! Clients kvetch generically about not wanting to pay higher rates, but we’re talking about $5 more an hour. And that’s assuming a 2000/hr average for associates and some firms definitely average more.
But even if clients don’t shoulder the entire cost of a match, Biglaw firms have more than enough coming in to raise salaries.
Consider Cravath, who has one-upped Milbank’s raises before. The firm has 299 associates according to Am Law, meaning a Milbank match costs the firm less than $3 million. Assuming the firm’s revenue is stagnant this year, it brings in just a shade under $1 billion a year. That makes this raise a 0.3 percent hit. Spread evenly across its 97 equity partners, this is about $31,000 out of the $4.6M PPP average.
Davis Polk, a firm that has gone over the top of Milbank before, has 779 associates so it would be on the hook for about $7.8M. But it brought in $1.8 billion last year making it a 0.4 percent increase. Its 167 partners would take a greater hit at around $48K per, but they’re also averaging a whopping $5.5M in PPP so should be able to swing it.
Kirkland would have to cough up 0.3 percent of its revenue to lift its 2000 associates up by $10K. Ditto for Skadden’s 1000 associates. Oh, and I’m not even getting into the situation where international associates aren’t on the same pay scale.
Every way you look at this, raising associate salaries to match what — in real terms — they were making 20 years ago is an easy call.
Earlier: The Insufferable Nonsense Biglaw Is Spouting Over Milbank’s Raises
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
