Big Law Salary Increase

[Jaggers]

15 minutes ago, Mountebank said:

Ptthft. Call me. My rates are slightly lower!

They wouldn't be if you jumped through all the hoops you need to in order to get on our approved legal services providers list.

[Rashabon]

I know it was de rigueur to downplay the Seven Sisters thing on the old forum and if you’re junior that’s right and makes sense but keep in mind firms are run by people that went to law school 30-40 years ago. To them it matters. Cassels isn’t considered comparable to some of those firms by that leadership.

could it hurt them with associate recruitment and retention? Absolutely, but they’re in their 50s and 60s and not business people.

Until one of the non-Davies sisters makes a move I wouldn’t expect a broader market trend. What’s interesting is how the Cassels tier firms have addressed this, which is by doing nothing at all.

[Mountebank]

43 minutes ago, Jaggers said:

They wouldn't be if you jumped through all the hoops you need to in order to get on our approved legal services providers list.

Do I have to docket for my time? BECAUSE I DON'T EXPLAIN MYSELF TO ANYONE!

[Bob Jones]

7 hours ago, C_Terror said:

Right now, 2021 calls are encouraged to apply and given interviews to NY, San Fran, LA and London essentially whenever they want. Personally, I know about 50% of my peers that have their resumes/deal tables (or lack thereof) updated and ready to go. 

Just out of curiosity, any idea why the larger US and UK firms are trying to poach foreign talent? I suppose M&A work for instance may be similar but you're still not licensed to practice in that jurisdiction, which presents its own headaches. 

[BlockedQuebecois]

It's easy to get called in New York (or California, if you've been called in Canada), and there are a lot of lawyers in London practicing cross border work with only a NY call. For example, this was the first person in Shearman & Sterling's London office I clicked on; he's educated in Canada, called in Ontario and NY, and working in London.

Edited September 24, 2021 by BlockedQuebecois

[Rashabon]

2 hours ago, Bob Jones said:

Just out of curiosity, any idea why the larger US and UK firms are trying to poach foreign talent? I suppose M&A work for instance may be similar but you're still not licensed to practice in that jurisdiction, which presents its own headaches. 

You get called or else another lawyer owns the legal side and you get stuff done. M&A and parts of capital markets work don’t necessarily need a total local law understanding and keep in mind that these firms are massive and have dedicated people to handle aspects of the heavy legal lift. Also their internal model is premised on attrition so by a certain year they’ve lost most of their bodies.

A Canadian capital markets lawyer needs a broad skill set. You have US and UK lawyers that, for example, only do public bond offerings. It’s a narrower universe.

 

but it’s also why litigation is not as hot as corporate/M&A/capital markets. Litigation is inherently jurisdictional in almost all respects.

 

[Hitman9172]

Not sure how true but I've heard from a US lawyer that US law firms have trouble billing out 1st and 2nd year associates because clients don't want to pay their rates "just so law firms can train their baby lawyers"; hence why a trained 3rd year call or above lawyer from a foreign jurisdiction is so valuable given the rate of attrition these firms see with their own 3rd years and above. Might be total BS, but I have been contacted by a lot of foreign recruiters looking for 3rd year calls and above from common law jurisdictions. Might just be because they expect you to be trained by that point.

[C_Terror]

6 minutes ago, Hitman9172 said:

Not sure how true but I've heard from a US lawyer that US law firms have trouble billing out 1st and 2nd year associates because clients don't want to pay their rates "just so law firms can train their baby lawyers"; hence why a trained 3rd year call or above lawyer from a foreign jurisdiction is so valuable given the rate of attrition these firms see with their own 3rd years and above. Might be total BS, but I have been contacted by a lot of foreign recruiters looking for 3rd year calls and above from common law jurisdictions. Might just be because they expect you to be trained by that point.

Considering the States don't have articling, a 3rd year call here is essentially a 4th year call (worth of experience) in the States as well, so they're getting more experience for their buck. (Although I've heard that some firms do recognize articling as a year of experience as well).

 

4 hours ago, Rashabon said:

I know it was de rigueur to downplay the Seven Sisters thing on the old forum and if you’re junior that’s right and makes sense but keep in mind firms are run by people that went to law school 30-40 years ago. To them it matters. Cassels isn’t considered comparable to some of those firms by that leadership.

could it hurt them with associate recruitment and retention? Absolutely, but they’re in their 50s and 60s and not business people.

Until one of the non-Davies sisters makes a move I wouldn’t expect a broader market trend. What’s interesting is how the Cassels tier firms have addressed this, which is by doing nothing at all.

Right? The firms could at least acknowledge that they're aware of the Cassels bump. Right now it's an open secret in my firm, but at least we know the associate manager knows about the bump because some of us sent an email to them.  

[Rashabon]

I think the larger firms might wait to see how much grumbling there is and then try to introduce a bonus or other bump to existing bonuses. So they aren’t tied permanently like Cassels and also can justify it to stakeholders internally as rewarding the hard workers and not everybody but who knows.

I do know that none of the firms pay attention to BJ’s pay scale and Cassels becoming a BJ doesn’t guarantee anyone follows their lead, they just get looked at like BJ (although less toxic).

Edited September 25, 2021 by Rashabon

[Ghalm]

1 hour ago, Rashabon said:

I think the larger firms might wait to see how much grumbling there is and then try to introduce a bonus or other bump to existing bonuses. So they aren’t tied permanently like Cassels and also can justify it to stakeholders internally as rewarding the hard workers and not everybody but who knows.

I do know that none of the firms pay attention to BJ’s pay scale and Cassels becoming a BJ doesn’t guarantee anyone follows their lead, they just get looked at like BJ (although less toxic).

This never made sense to me. Why do they view BJ or a firm like Cassels somehow less worthy? Why would a salary bump at a firm that practices in similar areas, recruits from the same schools, presumably sees laterals to and from similar firms not be an appropriate comparator?

[BlockedQuebecois]

Because they think they’re better than Cassels.

That’s largely because while they practice in the same areas, they don’t generally compete for the same mandates. They also don’t generally see themselves as competing for the exact same legal talent (laterally or out of school), either. 

[Ghalm]

3 hours ago, BlockedQuebecois said:

Because they think they’re better than Cassels.

That’s largely because while they practice in the same areas, they don’t generally compete for the same mandates. They also don’t generally see themselves as competing for the exact same legal talent (laterally or out of school), either. 

On the last point: perhaps that will change since more and more laterals are coming from mid size shops. The last few offers going out at my sister firm have been to associates from regional firms that don’t strike me as practicing top notch m/a. Not sure about the out of school point, thinking back to my OCI experience the students who went to sister firms vs non sister firms didn’t strike me as so different in quality that some kind of general statement could be made about tiered competition. 

Edited September 25, 2021 by Ghalm

[Rashabon]

9 minutes ago, Ghalm said:

On the last point: perhaps that will change since more and more laterals are coming from mid size shops. The last few offers going out at my sister firm have been to associates from regional firms that don’t strike me as practicing top notch m/a. Not sure about the out of school point, thinking back to my OCI experience the students who went to sister firms vs non sister firms didn’t strike me as so different in quality that some kind of general statement could be made about tiered competition. 

Nobody is saying the associates/students are not good quality. But client quality and the mandates other shops work on are not universally shared.

Certain firms dominate underwriter side work for example. That’s only one area but revenue is revenue and those clients drive mandates in other areas.

Same thing with IPOs. Every Bay Street firm with an advanced capital markets practice will do them, but only a few are on multiple.

[Rashabon]

That being said, absolutely people are getting opportunities now they would not have even 3-4 years ago. A lot of associates at my firm would not have gone straight to New York back then but are now going, because they’ve been laundered through the firm. Whether they’d still be able to go if they graduated right now is an open question.

Likewise, lots of people from smaller or regional shops are getting a chance to upgrade (and in my practice area it absolutely is an upgrade - I’m not denigrating those other firms but it’s not even comparable). They’re great from the work I’ve seen so far, because hiring isn’t a science. But there’s no guarantee that some of them would have made it here or somewhere comparable absent the current market conditions.

 

Edit: last thing I’ll add for now is that other than Davies and Goodman’s, I believe all the major firms have offices in at least 3 if not all 4 of the major metropolitan areas in the country. Cassels only moved into Alberta in 2016 and doesn’t have an MtL office. That limits your mandates and clientele and certain opportunities, and prior to cannabis, I think the only category in which Cassels was a true market leader was mining, which was going through bust times for most of the 2010s.

Goodmans has its market leading REIT and insolvency practices, along with being a firm that practices in some niche areas (entertainment/sports) that some others don’t, along with the Lastman connection, and Torys has Brookfield among others, to help bolster it (since I believe its Calgary is small and its Montreal practice is new).

Edited September 25, 2021 by Rashabon

[asparagus4444]

1 hour ago, Rashabon said:

… I think the only category in which Cassels was a true market leader was mining, which was going through bust times for most of the 2010s.

Goodmans has its market leading REIT and insolvency practices, along with being a firm that practices in some niche areas (entertainment/sports) that some others don’t, along with the Lastman connection, and Torys has Brookfield among others, to help bolster it (since I believe its Calgary is small and its Montreal practice is new).

First off, just want to say that I completely agree that Sisters are a thing. The old forum made no sense on halting those conversations. Of course, obvious disclaimer: pound for pound, an equity partner in corporate, FS or restructuring at a smaller shop would likely out-earn a general litigation or insurance equity partner at a larger one (hence why department matters so much). But you’re totally right to note that Sisters often dictate market control. (That being said, I’ve also seen a few interesting moves from senior and mid-level big firm associates choosing to lateral to smaller shops, along with the regular jumps to Sisters or America. Goes to show different approaches to careers/partnership prospects and the whole “big fish small pond” concept.)

I will say that prestige only goes so far. And a firm is only as strong as its rising juniors. At the end of the day, personally, I would take the extra 20k at Cassels and better partnership options than a firm with neither of those. Some of the more ‘prestigious’ firms actually have pretty low retention rates on associates (to partners) and unless you’re just putting in one or two years to go in-house, it can be a consideration for some laterals who want to one day start their own book (and are debating against astronomical American signing bonuses for similar hours). At the end of the day, Cassels is a leading Canadian firm. If the remaining firms don’t match, it will create a tier.

 

[BlockedQuebecois]

16 minutes ago, asparagus4444 said:

At the end of the day, Cassels is a leading Canadian firm. If the remaining firms don’t match, it will create a tier.

I think you have to have an unreasonably high opinion of Cassels to say that Cassels and BJs paying more than the street will create a tier, while BJs alone paying more than the street didn't. 

[asparagus4444]

1 minute ago, BlockedQuebecois said:

I think you have to have an unreasonably high opinion of Cassels to say that Cassels and BJs paying more than the street will create a tier, while BJs alone paying more than the street didn't. 

To clarify - I think there was a monetary recruitment tier before this move, and Cassels now joining that tier makes it more pronounced. I don’t think prestige can ward off indefinitely against money. Especially for students and juniors with debt, most will understandably follow the cash. 

[BlockedQuebecois]

My experience has not been that people are choosing BJs over Blakes/Torys/Osler/etc. just because they pay $20k more, despite them doing so for the entire time my class and the years above/below me were going through the formal recruits. 

[Rashabon]

Yeah I broadly agree with your post, but BQ has it right, or at least the way a lot of the bigger firms are thinking of it. Yes, they'll lose some juniors to Cassels for the extra 20-25K, possibly. Cassels also only hires 13-16 students/associates. That's Aird and Berlis numbers. The Sisters aren't just market leaders in work. They are bigger and able to support bigger student classes.

http://ultravires.ca/2021/05/toronto-summer-2021-2l-recruit-numbers/

Blakes = 32
Osler = 34
McCarthy = 25
Stikeman = 26
Torys = 20

Goodmans and Davies are outliers (alluded to above). Cassels can't just soak up everybody and the firms aren't, at least yet, worried all that much about talent drain directionally to Cassels. We'll see what happens this recruit (which may also have been a shrewd timing decision on Cassel's part) and whether it has an impact. But if those big 5 (+ Goodmans and maybe Fasken/NRF/McMillan - we can debate their inclusion another time) don't make a move, then Cassels ends up as a BJ outlier.

I agree students and juniors will follow the cash - to New York. Cassels isn't big enough to just start poaching everybody. The other way to think of the Cassels raise is not them staking their claim to a better "tier" but them acknowledging that they have a harder time with retention than maybe some of those other firms, which aren't worried about losing talent to other Bay Street firms. Losing talent in-house isn't necessarily solved by cash - Bay Street firms can't offer the lifestyle or completely different work that in-house offers. They also will never raise salaries or bonuses to compete with New York.

Cassels is raising salaries probably because the other big firms are circling like vultures over their associates, not the other way around.

[asparagus4444]

Hmm, I understand what both of you are saying but maybe I just have seen different market movement. I would argue that BJs regularly fights with the Sisters for students, laterals and clients. Sure, Cassels is mid-market - competes with A&B, BLG, Weirfoulds, Miller, whoever. But this movement pushes them up a tier for talent, in my opinion. I do agree that absolutely they are doing it for retention as well and those are great points.

I guess what I’m saying is personally I would take a 20k pay raise and a better partnership track over a loose concept of prestige - those articling classes of 30 students to maybe 5 partners also have a pretty tough burn rate. Again, totally a personal decision, but I can’t see prestige outweighing 20k in the long run. That’s a lot of money for the average Canadian and I can see many students and lawyers being swayed by that. Granted, I might be driven more by cash but at the end of the day I would like to make as much as possible for my job.

As a disclaimer: I obviously hope all firms match Cassels. I just think the concept of “Sisters” would become pretty weird if a mid-market firm was now out-bidding them on salaries. It would be a super strange market. 

[asparagus4444]

25 minutes ago, Rashabon said:

Yeah I broadly agree with your post, but BQ has it right, or at least the way a lot of the bigger firms are thinking of it. Yes, they'll lose some juniors to Cassels for the extra 20-25K, possibly. Cassels also only hires 13-16 students/associates. That's Aird and Berlis numbers. The Sisters aren't just market leaders in work. They are bigger and able to support bigger student classes.

Also, a minor pushback, because I would like to hear your thoughts - I don’t agree that numbers of articling students on their own (Cassels/A&B vs Stikes/Blake’s vs Davies/Goodmans) have any relation to firm rankings. They also actually in some cases seem to have an inverse relationship to partnership chances.

My point is just that these bigger Bay firms will lose talent wars if their competitors pay more, which is creating a market tier. Cassels’ pay hike certainly interested me. Mid-market client base or not, they just established themselves as a market front-runner for salary. All of these firms have great lawyers - and as I mentioned before, I don’t know how much working the same hours for less pay at a shop that is ‘prestigious’ would interest me personally. I might be more focused on salary though and that’s totally fair if it’s a personal preference. I would take partnership track and increased salary any day.

Again, I will be disappointed if the other Bay firms don’t match, and it would make me look harder at my own options.

[Rashabon]

49 minutes ago, asparagus4444 said:

Hmm, I understand what both of you are saying but maybe I just have seen different market movement. I would argue that BJs regularly fights with the Sisters for students, laterals and clients. Sure, Cassels is mid-market - competes with A&B, BLG, Weirfoulds, Miller, whoever. But this movement pushes them up a tier for talent, in my opinion. I do agree that absolutely they are doing it for retention as well and those are great points.

I guess what I’m saying is personally I would take a 20k pay raise and a better partnership track over a loose concept of prestige - those articling classes of 30 students to maybe 5 partners also have a pretty tough burn rate. Again, totally a personal decision, but I can’t see prestige outweighing 20k in the long run. That’s a lot of money for the average Canadian and I can see many students and lawyers being swayed by that. Granted, I might be driven more by cash but at the end of the day I would like to make as much as possible for my job.

As a disclaimer: I obviously hope all firms match Cassels. I just think the concept of “Sisters” would become pretty weird if a mid-market firm was now out-bidding them on salaries. It would be a super strange market. 

BJs fights with them because it pays more. It's forced to pay more, to get them. BJs is a weird model and kind of unique in Toronto at least - it opened up shop and started poaching small groups from the other shops. In doing so, they had to pay more. But it's also created a sometimes toxic environment from what I've heard from friends who left. That being said, yeah, lots of firms compete with the Sisters. None do so all that consistently across all the various metrics. If cash paid to associates was the big differentiator, then BJs would be top of the market by now - they've been paying above market average rates for years. Hasn't done much.

Not to go all big firm apologist but the burn rate is not exclusively because making partner is "hard" but because making partner is not the goal for a lot of folks, and the exit opportunities from firms like the Sisters are amazing. There are a lot of associates that left my firm in the last two years that were on partnership track, including one that would probably have been offered partnership this year or next - they chose to leave because they wanted a different career than Bay Street partner. 30 > 5 isn't because the firm is forcing them out. Of my articling class, there's maybe a third or just under a third left. Most of them left for in-house or similar positions that had nothing to do with pay or partnership track.

Sisters is also not based on associate talent - getting good new associates is great. But a great associate is still an associate and it is rare for an associate to be a rainmaker within their first few years of practice. Most Bay Street lawyers generate business from a bit of inertia and luck if we're being honest with each other. And Cassels is still Cassels at the top end - if you have a large mandate that needs top of market competition advice, you're still going to a Blakes, McMillan, Davies, whatever, and it's irrelevant that associates their got paid more.

Lastly, not all that strange. The Sisters aren't the Sisters because they pay the most. It's because the clients pay them the most. And clients don't necessarily care what the firms pay their associates (and in fact, might actually think the opposite, although that should be none of their business really).

29 minutes ago, asparagus4444 said:

Also, a minor pushback, because I would like to hear your thoughts - I don’t agree that numbers of articling students on their own (Cassels/A&B vs Stikes/Blake’s vs Davies/Goodmans) have any relation to firm rankings. They also actually in some cases seem to have an inverse relationship to partnership chances.

My point is just that these bigger Bay firms will lose talent wars if their competitors pay more, which is creating a market tier. Cassels’ pay hike certainly interested me. Mid-market client base or not, they just established themselves as a market front-runner for salary. All of these firms have great lawyers - and as I mentioned before, I don’t know how much working the same hours for less pay at a shop that is ‘prestigious’ would interest me personally. I might be more focused on salary though and that’s totally fair if it’s a personal preference. I would take partnership track and increased salary any day.

Again, I will be disappointed if the other Bay firms don’t match, and it would make me look harder at my own options.

Yes, but the point is that the Sisters don't view Cassels as a competitor. If Osler and Torys started paying more than Stikes and Blakes, you better believe the latter two are raising salaries. But as is, it's like if A&B or Torkin Manes or someone paid more. Indicative not of trouble with retention at the Sisters but trouble with retention at the smaller shops, who are forced to raise salaries to match.

The point wasn't students = quality. It's that so what if Blakes and Osler lose, what, 4 students between them to Cassels? Cassels doesn't have room to poach all the top talent that exists, and not all the top talent are going to want to work there just because they pay slightly better. If they did, the top 40 students each year would have gone to BJ and Davies with the rest fighting for the next. That's not what happens. So if Cassels hires 5-10 students that maybe wouldn't have worked there previously because they pay more, that averages to 1-2 less students available to the Osler, Torys and Stikeman of the world. Or like 5% or less of their student class.

You also have to keep in mind this is an associate salary bump. What does Cassels pay its partners? Is that enough to poach partner talent from the law firms? I'm an associate and pretty high on my abilities but the vast majority of my work isn't sourced by me. Getting "better" junior associate talent only goes so far.

[Rashabon]

The impact the firms need to worry about is not really losing talent to Cassels. It’s losing talent to in-house and New York or other cities because the lack of reaction to the Cassels bump causes a perception of either the firms not caring/being too slow to react or that it causes talent to say, I’m not being valued if someone at Cassels is making more than me so I’m leaving to a shop where if I’m going to work this hard I’ll at least get paid more. Question is will 20K over 4-6 years be enough? Who knows. Do associates want to gamble on the extra 100 to 140K they might make in 5-7 years at Cassels compared to what they make when they turn partner? Who knows.

But for example, what does Cassels pay its income partners (assuming it has, I don’t know). Is it less than what comparable partners make at another firm? If so then you might lose money by year 10 compared to another firm.

[asparagus4444]

Yeah, this is great food for thought. Thanks for sharing your points.

I still disagree with you on some topics but it might be, again, personal reasons for being on Bay:

1. The Sisters are the Sisters because their clients pay the most, yes - but they attract their talent because they have historically rewarded their workers the most as well, especially with bonuses. I do think that there are associates who will be attracted to higher salaries, like me. If larger firms expect high hours for a Canadian salary but are not market front-runners, I can see there being issues. At the end of the day all these firms have excellent lawyers. What is the point of being at a Sister if your buddy at Cassels makes more than you? I can understand BJs, but Cassels just took a pretty big swing at old firm notions of prestige and mid-market status (good for them). I would rather be making more but again, fully a personal choice. Cassels also probably is trying to recruit frustrated mid-levels from larger shops.
    
2. Great point about partnership profit. But if you get burned out for hours before you even get to that stage at an income level in Canada … are people lateraling out to in-house or firm exits from these larger shops because of exhaustion or because it’s what they’ve always wanted? It’s definitely a consideration when shopping for an employer.
    
3. Both Sisters and mid-markets have had brutal retention crises. NY has been poaching both.
    
4. I don’t know that I agree with you that in-house exit opportunities are all that different between the Bay St firms. It seems more departmental than anything. I would agree generally that if you want to go in-house that spending a few years at a Sister is a sure thing, but so is the other firms.

At the end of the day, my only point is that I’m still hopeful that the market will need to eventually react. Otherwise it will create a talent shift in juniors - even if not seismic, one will still form. We might disagree but I really do stand by my point that people follow money. Good on Cassels for upping the pressure and I hope others follow.

[Pantalaimon]

30 minutes ago, Rashabon said:

What does Cassels pay its partners?

There was a Globe article about the gender pay gap at Cassels last year. If the gap was 25% or 200k, the inferred average equity partner pay is 800k for men and 600k for women. Since 75% of partners are men that's an average partner pay of 750k.

Not sure how that compares to the rest of the street. The wiki article (I know, I know) on the sisters, citing American Lawyer, pegged McCarthy at 768k per equity partner, Blakes at 837k, and Osler at 1272k. So other than Osler it seems comparable.

But returning to the main point, my thought is: so few associates stay where they start. Why not take an extra 60k over a few years and then lateral to wherever you want to make partner? Maybe Calgary is different but if a firm paid more here I'd take their offer for sure.