Dechert Announces $15,000 Raises for First-Year Associate Attorneys

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Summary: To remain competitive in the Philadelphia and Princeton markets, Dechert has announced that it will increase its associate salaries by at least $15,000. Some associates, such as those who have been at the firm several years, will see up to a $70,000 increase in pay.

According to The Legal Intelligencer, law firms are not only competing for a piece of the market share, but also for associate attorneys. As an illustration, Pennsylvania law firms have quietly increased associate salaries over the past two years. Additionally, Dechert has increased its first-year associate salary for attorneys in Princeton and Philadelphia to $160,000. This salary matches what the firm was paying associates in its other offices throughout the United States. Such raises will impact all firm associates in various amounts.

  

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DLA Piper has also said that it would increase starting salaries in its Philadelphia office to $160,000, although, at that time, no first-year associates were employed in that office. Previously, according to the Pittsburgh Post Gazette, associates were paid $145,000, and Pennsylvania firms usually only paid $160,000 in their New York law offices.

Dechert’s announcement will increase the paychecks of 90 associates in those two offices. Dechert’s decision was largely based on competition in the Princeton and Philadelphia areas for associate attorneys, as well as the desire to close the gap between those two firms and the remaining law offices. With more competitive salaries, Dechert hopes to continue to draw legal talent to its practice.

Daniel O’Donnell, the chief executive officer of Dechert, said that the firm’s Philadelphia and Princeton associates had questions about the differences in pay between their offices and their colleagues elsewhere in the country. O’Donnell and Andrew Levander, Dechert chairman, decided that increasing pay was the right decision.

O’Donnell said of the pay gap, “It’s generally been justified based on local market conditions.” O’Donnell admitted that he supported such pay gaps in the past.

After discussing salaries with the associate committee, O’Donnell had a couple of realizations. First, Philadelphia and Princeton associates are collaborating with associates in Washington, D.C., New York, and Los Angeles—meaning that they work for the same clients and bill the same hourly rates. Although this was always the case to an extent, according to O’Donnell, the practice has become more common. O’Donnell said, “…nobody wants to feel like they are a second-class citizen.”

Additionally, O’Donnell commented that associates at both firms have been key to the firm’s success. “It is one of the strengths of our firm. Anything that could jeopardize or erode that we’re going to resist,” he explained.

Plus, with such mobility in the legal market, and the ability for attorneys to work for clients globally, no matter where their physical offices are located, the location of one’s office has become less of an issue, O’Donnell said.

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Competition is a major factor of associate salaries. In just the past six months, according to O’Donnell, corporations in the Philadelphia area have become a major source of competition for associates, since they can offer benefits, such as stock options, that law firms cannot offer. O’Donnell said, “When you put all that in the mix, we thought the right and fair thing to do was to increase.”

Dechert has various offices nationwide that are in smaller markets than Philadelphia, but was paying more in those other areas for competitive reasons. For example, in Charlotte, North Carolina, the firm’s focus is on real estate finance work and securitizations, which means that it must compete with Am Law 100 law firms that also have specialized practices in those departments. First year associates in Charlotte were paid $160,000.

But in Philadelphia, the firm has a larger pool of associate talent. Philadelphia does have the characteristics of a local market, but since it is between New York and Washington, the areas often bleed into each other. O’Donnell commented, “It’s not a matter of cost of living, because that really isn’t the issue. The issue is what market are you in for talent. Where’s the relevant market for the talent?”

DLA Piper and Dechert now pay $15,000 more annually to first-year associates in Philadelphia than any other big law firm. For example, Morgan, Lewis & Bockius and Duane Morris pay $145,000 as their starting salaries. Pepper Hamilton, Drinker Biddle & Reath, and Blank Rome pay $140,000. Reed Smith pays $125,000 to its Pittsburgh associates and $130,000 to its Philadelphia associates. Last year, it announced that starting salaries in New York would be increased to $160,000.

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Saul Ewing also recently announced associate increases last year, up to $135,000 from $125,000. Managing partner Barry Levin wanted to attract the best talent, and that the firm plans hiring a year or two in advance and tries to remain competitive.

Certainly, many of Dechert’s associates will be thrilled with the extra cash in their bank accounts. First-year associates, of course, will receive a $15,000 raise. Second-year associates will see an increase from $152,500 to $170,000; third-year associates will jump from $160,000 to $185,000; fourth-year associates will increase from $170,000 to $210,000; fifth-year associates will increase from $180,000 to $230,000; sixth-years will see an increase from $190,000 to $250,000; seventh-year associates will jump from $200,000 to $265,000, and eighth-year associates will increase from $210,000 to $280,000.

Although associate salaries are making significant jumps, O’Donnell said that the firm will not be increasing its hourly rates.

It is not clear whether other firms will follow suit in increasing their associate salaries. Ward Bower, the principal of Altman Weil, commented on the “salary wars” last year: “I think eventually, f the legal economy stays solid, we’ll see some of that come into play in order to get the best graduates they can possibly attract.”

Source: The Legal Intelligencer, Pittsburgh Post Gazette

Photo credit: Huffington Post, legalbusiness.co.uk (O’Donnell)