© 2018 The Texas Lawbook.
EDITORS NOTE: The Texas Lawbook is providing continuous coverage as more firms announce associate raises. For previous articles about the case, please scroll down.
By Mark Curriden
(June 28) – Two more Texas business law firms – Dallas-based Thompson & Knight and Houston litigation boutique Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing – announced Thursday that they are increasing the money they pay associates.
Both firms officially matched the compensation schedule set by New York-based Cravath two weeks ago. Annual compensation for first year associates will be $190,000 with a guaranteed $5,000 bonus. Eighth year associates will be paid $340,000, not including bonuses.
Two other Texas headquartered law firms – Baker Botts and Vinson & Elkins – announced last week that they matched the Cravath pay schedule. More than a dozen national law firms with operations in Dallas or Houston also increased their compensation this month.
Three major corporate law firms that have still not announced their decision on associate pay are Bracewell, Haynes and Boone and Winstead.
Two weeks ago, AZA partners publicly criticized other firms for increasing associate compensation because it could raise the cost of litigation. But founding partner John Zavitsanos said that the firm had decided to match the Cravath salary schedule, but he said the expense will come out of firm profits and will not be charged to clients.
“We need the best and brightest lawyers here,” Zavitsanos said. “But we do not want to compromise our clients’ ability to afford us. We want them to have the means to go to trial when that’s what a case demands.”
Baker Botts Joins $195K Associate Comp Hit Parade
By Mark Curriden
(June 25) – Baker Botts informed its lawyers in a memo late Monday afternoon that firm leaders have voted to increase associate compensation to match the raises announced at other large corporate firms during the past two weeks.
First year associates will get $190,000 in salary and a minimum $5,000 bonus. Eighth year base comp will jump to $340,000.
Baker Botts is the third Texas-based firm to increase associate compensation. Vinson & Elkins made the move one week ago. Late last week, Susman Godfrey informed its associates, whose first-years were already making $190,000 as a base salary, that they would get a $5,000 raise effective July 1, according to the Texas Lawyer.
More than a dozen national law firms with offices in Texas, including Akin Gump, have announced they have increased compensation for associates.
The big question now is whether the regional corporate law firms like Haynes and Boone, Bracewell, Locke Lord and Winstead, will match.
For more details on other, earlier firm increases in lawyer pay, please keep reading below.
Akin Gump Joins V&E in Texas Boosting Associate Comp
By Mark Curriden
(June 21) – Another large corporate law firm in Texas has boarded the $195,000 associate compensation gravy train.
Akin Gump, which was founded in Dallas and now headquartered in Washington, D.C., announced Thursday in a memo to its lawyers that it is matching about a dozen other firms operating in Texas in the amount of money it pays associates.
First-year associates will make $195,000 ($190,000 base salary and $5,000). Eighth-year associates will earn $340,000 plus about $25,000 in bonuses.
Since V&E announced its raises on Monday, several more national firms with a Texas presence have announced their associate pay hikes as well: Baker McKenzie, Gibson Dunn, Orrick and Shearman & Sterling.
For more details on other firms that have increased lawyer pay, please read the article below.
V&E Matches National Law Firms Raising Associate Pay to $195K
By Mark Curriden
(June 19) – Houston-based corporate law firm Vinson & Elkins announced late Monday afternoon that it has raised the amount it is paying its first-year associates to $195,000.
V&E, which is one of the largest and most profitable law firms in Texas, informed its associates it is matching the compensation increases that national law firms operating in Dallas and Houston implemented last week.
Legal industry analysts predict that other Texas law firms, including Houston-based Baker Botts and Dallas-based Akin Gump, are likely to do the same later this week.
In a memo to its associates V&E Chairman Mark Kelly and Managing Partner Scott Wulfe said that the firm is increasing the base salary of it newbie lawyers from $180,000 to $190,000. In addition, the firm is providing first year associates $5,000 bonuses.
The memo, obtained by The Texas Lawbook, shows that paychecks for associates in their eighth year – the year before the lawyers are up for partnership – will jump to $340,000. Those associates also will receive incentive bonuses starting at $25,000.
The pressure on Texas law firms to boost compensation to younger lawyers intensified late last week when several national law firms with large presences in Dallas and Houston – Jones Day, Kirkland & Ellis, Morgan Lewis, Sidley Austin, Simpson Thacher, Winston & Strawn and Weil, Gotshal & Manges – announced that they were increasing the amount they paid associates.
Other national firms with a Houston outpost that have bumped their associate salaries include Skadden, White & Case and Willkie Farr.
Legal industry analysts tell The Texas Lawbook that the decision by these elite corporate legal practices, which employ hundreds of young business lawyers in Austin, Dallas and Houston, likely set in motion a domino effect that will lead several Texas-based law firms to match part or all of the compensation increases because the competition for high-level legal talent is stiff.
“Most sophisticated law firm leaders understand they need to be market-competitive for the most sought after legal talent,” says Kent Zimmermann, a law firm consultant at Zeughauser Group in Chicago. “The Texas firms that regularly compete for the same lawyers as the national elites will match.”
Houston-based Baker Botts issued the following statement Monday afternoon: “As with many firms we are reviewing the recent increase in Associate compensation announced by several firms. While we have not made a final decision we will, as we have in the past, remain competitive in terms of compensation packages.“
Dallas legal headhunter Randy Block of Performance Legal Placement says he thinks many Texas firms will increase compensation, but he thinks some will wait until later this summer to make the move. But he says that most associates are not going to make a career move just over this single compensation increase.
“If you are happy at your law firm, you are not going to jump to another firm for just $5,000 or $10,000 more,” Block says.
Many Texas law firms last increased first-year associate pay in June 2016 from $165,000 to $180,000 a year. In 2000, newbie lawyers were paid $80,000 in Texas.
The jump in associate compensation means several million dollars in additional expenses for law firms, which pay for it through increased hourly rates they charge to business clients. First-year associates at most of the large corporate firms in Texas are billing at rates ranging from $325 to $450 an hour. That will now go up.
At least one Houston law firm leader pushed back last week.
“We pay well at AZA and we want to compete for the best and the brightest. But I am troubled when I see Big Law upping the ante yet again,” says John Zavitsanos, managing partner of Houston litigation boutique Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, also known as AZA.
“I’m concerned for the clients. It’s worrisome to see the cost of litigation climbing so high that citizens can’t afford to use their own courts,” Zavitsano ssays. “We could price ourselves right out of the Seventh Amendment right to a civil jury trial.”
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