September 2022 - Big Law Salaries?

[C_Terror]

8 hours ago, Jaggers said:

They’re not “comparable firms”.

Comparable work at the junior level though, although less hours. Still crazy knowing that a US first year associate (aka articling student) is getting billed out more than a senior associate in Canada (and paid more!).

[Grey]

7 hours ago, C_Terror said:

Comparable work at the junior level though, although less hours. Still crazy knowing that a US first year associate (aka articling student) is getting billed out more than a senior associate in Canada (and paid more!).

Yup, bigger market, bigger fees, bigger salaries. Milbank just announced another round of raises for next year that all the other US biglaw firms will likely match - 1st year starting salary up from US$215k to $225k. Much easier for the US firms to handle when first years are billed out at ~$800/hour vs. what the Toronto market charges / can support. 

[CheeseToast]

16 hours ago, Jaggers said:

They’re not “comparable firms”.

Very true, that was a poor choice of wording.  

[easttowest]

On 11/8/2023 at 5:19 PM, Jaggers said:

They’re not “comparable firms”.

Eh, depending on the firms they could be considered comparable on a few metrics, including the work. The stark difference is their revenue is just eye-watering given what the American market will pay for lawyers and size of the firms. 

[C_Terror]

16 hours ago, Grey said:

Yup, bigger market, bigger fees, bigger salaries. Milbank just announced another round of raises for next year that all the other US biglaw firms will likely match - 1st year starting salary up from US$215k to $225k. Much easier for the US firms to handle when first years are billed out at ~$800/hour vs. what the Toronto market charges / can support.

Also rumours but apparently Sidley might be pushing it up to $230K for first years (Articling Students!!!). With the continuous devaluation of the Canadian dollar the gap just keeps widening. 

[reaperlaw]

You still get this in Canada but the effect is much more pronounced in the United States with respect to what clients are willing to pay for legal services vis-a-vis certain clients who think if they are paying anything less than the top of the market rate that they are getting a "worse" service than a firm who charges less. Still happens here for sure but there are U.S. clients who are willing to accept a $800/hour rate for a first year and a $1,500/hour rate for a junior partner (if not more) because that's the most expensive legal services money can buy and anyone charging less clearly wouldn't do as good a job. Meanwhile in Canada, we routinely get undercut on fee caps when competing for work with big law firms who ostensibly charge higher hourly rates than we do...

So I'd say clients are just a lot more price sensitive in Canada than in the United States. So of course no one in Canada can match U.S. pay.

What is most stark to me is for the multinationals who have the same GC running files in both the United States and Canada, but they are willing to pay at least twice as much for similar litigation in the United States. I've had cross border files with parallel work in Canada and the United States where despite the job requiring about the same amount of work, the client is willing to pay double what we charge for their U.S. counsel even though we are a band one firm in the legal rankings for this type of work in Canada and our U.S. colleagues are only band two or three...At least we can charge them in USD.

 

[Peculiar Frond]

I am a litigator at a large firm in New York.  The raise is no problem for our corporate colleagues with predominantly blue-chip clients.  It is challenging for many big-law litigators.

This round may break the market in two.  People talk about firms breaking with the “Cravath” (read: Milbank) scale.  But I suspect we may also see firms taking small steps to widen the gap between litigation and corporate associates’ take-home pay.  This already happens, to some extent, through bonus structures.

The most surprising thing about the raise is that Millbank went for a flat $10,000 across all years.  There’s no way that’ll be market when the dust settles.  I don’t know anyone who thinks first years need to be paid more.  Recruitment isn’t a problem.  Retention is. 

[easttowest]

59 minutes ago, Peculiar Frond said:

I am a litigator at a large firm in New York.  The raise is no problem for our corporate colleagues with predominantly blue-chip clients.  It is challenging for many big-law litigators.

This round may break the market in two.  People talk about firms breaking with the “Cravath” (read: Milbank) scale.  But I suspect we may also see firms taking small steps to widen the gap between litigation and corporate associates’ take-home pay.  This already happens, to some extent, through bonus structures.

The most surprising thing about the raise is that Millbank went for a flat $10,000 across all years.  There’s no way that’ll be market when the dust settles.  I don’t know anyone who thinks first years need to be paid more.  Recruitment isn’t a problem.  Retention is. 

You can squint and stratifying practice groups could make sense, but the knock-on effects seem obvious. There are already lots of reasons to choose corporate over litigation but if you told me coming in I’d also make less than my peers, I’d obviously have picked that route. 

[Peculiar Frond]

1 hour ago, easttowest said:

You can squint and stratifying practice groups could make sense, but the knock-on effects seem obvious. There are already lots of reasons to choose corporate over litigation but if you told me coming in I’d also make less than my peers, I’d obviously have picked that route. 

All true.  I don't expect firms will explicitly go to two salary scales for the reason you state, but there are other ways to structure compensation that achieve the same thing.  

In my view, even today, a first year associate should expect to make less over her career by choosing litigation over corporate.  That's true whether she aims at partnership (with the death of lockstep in NY) or practicing law elsewhere, be that in-house of government.   Yet we still see people picking litigation because some of us want to be real lawyers.  Or at least pretend to be real lawyers.  (I kid, I kid.) 

[Rashabon]

I assume it's mostly because they can't reach consensus and need to fight over every minor point :).

[easttowest]

18 minutes ago, Peculiar Frond said:

All true.  I don't expect firms will explicitly go to two salary scales for the reason you state, but there are other ways to structure compensation that achieve the same thing.  

In my view, even today, a first year associate should expect to make less over her career by choosing litigation over corporate.  That's true whether she aims at partnership (with the death of lockstep in NY) or practicing law elsewhere, be that in-house of government.   Yet we still see people picking litigation because some of us want to be real lawyers.  Or at least pretend to be real lawyers.  (I kid, I kid.) 

Definitely true and the long-term outcomes were part of why I took a hard look at changing paths during articling. I decided against it for a few reasons including the most practical one that a spot may not have been there for me whereas I was guaranteed one if I stood pat. However if it was just straight up “you also less that the other associates” I might not have been on the litigation path to begin with as a summer student and expect that would permeate through the law schools. 

[JackoMcSnacko]

5 hours ago, Peculiar Frond said:

This round may break the market in two.  People talk about firms breaking with the “Cravath” (read: Milbank) scale.  But I suspect we may also see firms taking small steps to widen the gap between litigation and corporate associates’ take-home pay.  This already happens, to some extent, through bonus structures.

Could you expand on what you mean?  Do you mean there are firms in NY that explicitly split corporate and litigation bonuses, or are you trying to say that one litigation billable is not equal to one corporate billable so target is harder to hit?  

[theycancallyouhoju]

On 11/11/2023 at 2:19 AM, Peculiar Frond said:

I am a litigator at a large firm in New York.  The raise is no problem for our corporate colleagues with predominantly blue-chip clients.  It is challenging for many big-law litigators.

This round may break the market in two.  People talk about firms breaking with the “Cravath” (read: Milbank) scale.  But I suspect we may also see firms taking small steps to widen the gap between litigation and corporate associates’ take-home pay.  This already happens, to some extent, through bonus structures.

The most surprising thing about the raise is that Millbank went for a flat $10,000 across all years.  There’s no way that’ll be market when the dust settles.  I don’t know anyone who thinks first years need to be paid more.  Recruitment isn’t a problem.  Retention is. 

Everyone waiting on Sidley to say 230, but this is the real point - we aren’t lacking juniors, we’re (sometimes) struggling to keep all the best seniors. The most likely change to the new Milbank scale is greater increases higher up the chain.

[C_Terror]

4 hours ago, theycancallyouhoju said:

Everyone waiting on Sidley to say 230, but this is the real point - we aren’t lacking juniors, we’re (sometimes) struggling to keep all the best seniors. The most likely change to the new Milbank scale is greater increases higher up the chain.

Out of curiosity,what year of calls are the firms lacking at this moment? Is it class or 2018/2019, or even before that?

[theycancallyouhoju]

1 hour ago, C_Terror said:

Out of curiosity,what year of calls are the firms lacking at this moment? Is it class or 2018/2019, or even before that?

I don’t have a firm-wide spreadsheet on hand that I can base a precise answer on. The way I think about it as a PE lawyer, we want to make sure we hang on to the good midlevels and seniors and always have lost more of those than we’d like. It’s acute now because deal activity has been very off and very on the past few years, leading to some people missing out on much work in key developmental years.

And in any event, we never struggle to get first/second years. Giving them a proportionally bigger chunk of the raise money makes no sense from the perspective of talent pool management. 

[helloall]

On 11/7/2023 at 2:58 PM, helloall said:

Given the raises in US BL, it's time for Canadians to pester their firms for similar inflation-adjusted pay raises.

More raises announced - again, probably won't hurt to make some noise in the Canadian market (yes, no matter how different the Canadian market is is yada yada yada)

Edited November 29, 2023 by helloall

[C_Terror]

1 hour ago, helloall said:

More raises announced - again, probably won't hurt to make some noise in the Canadian market (yes, no matter how different the Canadian market is is yada yada yada)

The excuses that the Canadian market can't handle additional raises for associates is bullshit. Partners have been raking in record profits for the past 3 years, billable rates have been increasing and available work, while levelling out from pandemic levels, is just as busy as pre-covid (at least it was for my firm).

Bay Street saw a $20K increase during the pandemic, and that was only by complete necessity because every single firm was bleeding associates for literally Greener Pastures in the states. If you factor inflation, $130,000 in 2021 is the same as $145,000 in 2023.  The shallow argument that salary increases last forever is moot too, as top firms have been increasing billable rates every single year. It's not like these firms will be lowering the rates for their clients. If firms are reticient to increasing salary, then why not increase discretion bonuses?

Pitiful.

Edited November 29, 2023 by C_Terror

[Bob Jones]

As seen on LinkedIn, supposedly US BigLaw salaries have increased:

“Breaking* Finally! Shots fired by Cravath, Swaine & Moore LLP with additional salary raises for more senior lawyers to the new Milbank rates. Full salary scale below:

- Class of 2023 - $225,000 ($10K raise)
- Class of 2022 - $235,000 ($10K raise)
- Class of 2021 - $260,000 ($10K raise)
- Class of 2020 - $310,000 ($5K more than Milbank, $15K total raise)  
- Class of 2019 - $365,000 ($10K more than Milbank, $20K total raise)
- Class of 2018 - $390,000 ($10K more than Milbank, $20K total raise)
- Class of 2017 - $420,000 ($10K more than Milbank, $20K total raise)”

 

I know I know the market is bigger down there, Associates and Partners charge much higher rates, but it’s quite depressing that we have to struggle for 4-5 years + articling to mayyybe make what a 1st year makes in the US. And not to mention, there’s only maybe a 10-15 firms or so that are on the Canadian lock step.

[C_Terror]

24 minutes ago, Bob Jones said:

As seen on LinkedIn, supposedly US BigLaw salaries have increased:

“Breaking* Finally! Shots fired by Cravath, Swaine & Moore LLP with additional salary raises for more senior lawyers to the new Milbank rates. Full salary scale below:

- Class of 2023 - $225,000 ($10K raise)
- Class of 2022 - $235,000 ($10K raise)
- Class of 2021 - $260,000 ($10K raise)
- Class of 2020 - $310,000 ($5K more than Milbank, $15K total raise)
- Class of 2019 - $365,000 ($10K more than Milbank, $20K total raise)
- Class of 2018 - $390,000 ($10K more than Milbank, $20K total raise)
- Class of 2017 - $420,000 ($10K more than Milbank, $20K total raise)”

 

I know I know the market is bigger down there, Associates and Partners charge much higher rates, but it’s quite depressing that we have to struggle for 4-5 years + articling to mayyybe make what a 1st year makes in the US. And not to mention, there’s only maybe a 10-15 firms or so that are on the Canadian lock step.

Not to make it sound worse, but it's closer to 7th year salary, assuming 20K per year increase and  assuming a lofty 30% bonus (which very few Canadian firms give). As in, the equivalent of an articling student in Big Law US is making as much as a 7th year Bay Street associate with full bonuses on either side. 

Even looking beyond the salary comparison of US vs Canada, Canadian law firms should be increasing salary, or at the very least dole out discretionary bonuses. 

[Bob Jones]

17 minutes ago, C_Terror said:

Not to make it sound worse, but it's closer to 7th year salary, assuming 20K per year increase and  assuming a lofty 30% bonus (which very few Canadian firms give). As in, the equivalent of an articling student in Big Law US is making as much as a 7th year Bay Street associate with full bonuses on either side. 

Even looking beyond the salary comparison of US vs Canada, Canadian law firms should be increasing salary, or at the very least dole out discretionary bonuses. 

Unless you can make equity at full service/sizeable boutique on Bay, I find it’s just not possible to hit those numbers. Perhaps if you’re in an in demand field and are entrepreneurial, going solo and growing a small firm may end up being more lucrative and closer to US Associate rates, which is a sad comparator but still an excellent compensation package. 

Edited November 29, 2023 by Bob Jones

[WhoKnows]

10 hours ago, Bob Jones said:

Unless you can make equity at full service/sizeable boutique on Bay, I find it’s just not possible to hit those numbers. Perhaps if you’re in an in demand field and are entrepreneurial, going solo and growing a small firm may end up being more lucrative and closer to US Associate rates, which is a sad comparator but still an excellent compensation package. 

Are you saying that you need to make equity on Bay to get to 225K/year? 

If so I can guarantee that isn't right. 

[Rashabon]

I mean there is an easy way to boost associate salaries, and that's kill off access to partnership.

If you want to use Cravath (noted above) as an example, they have 97 partners and 299 associates, but also nearly double the revenue of Osler (as an example). Osler (again being roughly comparable in size to Cravath) has double the partners of Cravath. The U.S. market is a lot bigger than Canada and as much as people hate to hear it, it remains the case and that's true for every single industry (Canadian tech has the same compensation issues as U.S. tech, and so does Canadian finance, etc.), but one way they manage to boost associate salaries is by absolutely slamming the door on partnership paths.

Millbank, who kicked off the recent raise, is larger than Osler (728 lawyers vs. 500 or so) and yet has less partners than Osler.

So yeah, easy answer is to prevent associates from ever making partner and reallocate that money back to associates.

[C_Terror]

30 minutes ago, Rashabon said:

I mean there is an easy way to boost associate salaries, and that's kill off access to partnership.

If you want to use Cravath (noted above) as an example, they have 97 partners and 299 associates, but also nearly double the revenue of Osler (as an example). Osler (again being roughly comparable in size to Cravath) has double the partners of Cravath. The U.S. market is a lot bigger than Canada and as much as people hate to hear it, it remains the case and that's true for every single industry (Canadian tech has the same compensation issues as U.S. tech, and so does Canadian finance, etc.), but one way they manage to boost associate salaries is by absolutely slamming the door on partnership paths.

Millbank, who kicked off the recent raise, is larger than Osler (728 lawyers vs. 500 or so) and yet has less partners than Osler.

So yeah, easy answer is to prevent associates from ever making partner and reallocate that money back to associates.

That's not a valid argument. That MIGHT be true if everything else stayed the same, but it's not. Associate billable rates have gone up year after year, firms have hit record profits, and partner take home on Bay Street have gone up substantially during the pandemic years. The biggest expenses of any law firms or professional services industry for that matter are wages, and it has remained flat over the past 2 years. How is this going to kill off access to partnership? 

Let's say firms are worried about a permanent salary increase impacting their cash flows (which, again is offset by billable rate increases already). Firms could easily dole out discretionary bonuses during these record years, but other than 2021 to prevent literal collapses of personnel at firms, partners have chosen to keep those substantial increases at the top. 

There's no point of comparing the American big law structure to the Canadian structure here, this is insulated within the Canadian sphere. 

So no, the answer isn't to prevent associates from ever making partner because we're talking about reallocating a small portion of the net incremental money back to associates. Partnership access shouldn't even be a consideration in this because the fundamental financials are still there for partners. 

This isn't even getting into the point of how much more difficult it's been to become an equity partner. It used to be 6-7 years for a lot of firms; now it's closer to 8-9. The carrot at the end of the Canadian associates stick has always been about "ease of partnership" for lower pay but much more manageable workloads. Now the ease of partnership is getting further out of reach, for the same lower pay and less manageable workloads. 

[Dinsdale]

Firms are not going to raise associate salaries out of the goodness of their hearts, especially for juniors.  Articling students/first year associates are very easily obtainable -- they make hundreds more every year -- and therefore there is no upward price pressure.  U.S. biglaw salaries are only relevant if Canadian firms experience attrition of valuable mid-level associates to those firms.  Otherwise, Canadian partners will choose to keep as much of the profit as possible at the partnership level.  The point that are more equity partners per firm in Canada than the U.S., each of whom wants a nice fat slice of that pie, is a very relevant one.

On 11/10/2023 at 6:52 PM, JackoMcSnacko said:

Could you expand on what you mean?  Do you mean there are firms in NY that explicitly split corporate and litigation bonuses, or are you trying to say that one litigation billable is not equal to one corporate billable so target is harder to hit?  

Very easy.  You structure bonuses as a % of cash received over a floor amount.  Has nothing to do with hours recorded.  Corporate associates working on large deals have the inherent advantage of being able to turn the meter on for the entire day, coupled with a high likelihood that those fees are going to get paid in full by the corporate client at the conclusion of the transaction.

Edited November 29, 2023 by Dinsdale

[Bob Jones]

On 11/29/2023 at 10:11 AM, WhoKnows said:

Are you saying that you need to make equity on Bay to get to 225K/year? 

If so I can guarantee that isn't right. 

I agree, but I think you misunderstood my comment/observation. 

It seems like it may be possible in Canada to get to 1st-3rd year Associates rates in the US, but push comes to shove, most of us won't hit the the class of 2019-2017 base salary rates, unless you end up in a Partner-track role. Obviously that has the potential for a more lucrative compensation package than US Associate rates (particularly if you end up in an Equity gig), but that's probably the exception, and not the rule. 

It seems like you can make a good compensation package in Canada relative to Median Canadian incomes that goes without saying, but when looking to the amount of work and energy we're putting in, the majority of us won't end up anywhere near the top end of US Associate rates, unless like I commented you can end up in a Partner-track role at a reasonably sized firm, and/or go solo in a high demand/niche area.

23 hours ago, Rashabon said:

I mean there is an easy way to boost associate salaries, and that's kill off access to partnership.

If you want to use Cravath (noted above) as an example, they have 97 partners and 299 associates, but also nearly double the revenue of Osler (as an example). Osler (again being roughly comparable in size to Cravath) has double the partners of Cravath. The U.S. market is a lot bigger than Canada and as much as people hate to hear it, it remains the case and that's true for every single industry (Canadian tech has the same compensation issues as U.S. tech, and so does Canadian finance, etc.), but one way they manage to boost associate salaries is by absolutely slamming the door on partnership paths.

Millbank, who kicked off the recent raise, is larger than Osler (728 lawyers vs. 500 or so) and yet has less partners than Osler.

So yeah, easy answer is to prevent associates from ever making partner and reallocate that money back to associates.

I would also add there while there are some Canadian big law firms which don't "nudge" you out once you're at the top end of the Associate class (and they're not going to bump you to partner), it would be more beneficial to all if there was an opportunity to stay in indefinitely as a Sr. Associate or Counsel, with a reasonable base salary + commission/bonus model. That would help keep comp packages overall attractive, even when there may not be an opening for Partnership.