Where will it end? It's hard to say. As the industry shifts through these massive changes in associate compensation, there is inevitable grumbling from partners, clients, and even the associates who are the beneficiaries of the increases. No matter what one's perspective is on the effects of these industry raises, one thing is true: as compared to a mere two years ago, associates have gotten more expensive. At the largest firms in New York, first-year (class of 2007) associates are now 20% more expensive than their 2005 counterparts were upon graduation.
Large law firm associates are today's newest luxury goods. To be clear, there are many good reasons associates are paid as well as they are. Generally speaking, associates entering large law firms have excelled academically. They have devoted countless hours to their performance throughout their graduate and undergraduate careers. They have often incurred debts reaching into the six-figure range to do so. Associates are frequently expected to be on call, eat dinner at the office, and keep their BlackBerrys at the ready. At New York's largest firms, even junior associates may be tasked with responding to questions and demands from some of the most powerful people in the corporate and banking worlds.
I will be the first one to tell you that I believe associates should believe their own hype. (In the interest of full disclosure, I was a law firm associate in a previous life, so I do have a bias.) I do believe that because the bar is so high for entry into law firm life and continued performance at a law firm requires a great deal of persistence, dedication, and intellect, associates deserve to be well compensated. In New York, even associates making $160,000 may not have much discretionary income after paying Manhattan rent and student loan payments. Although I know some people would disagree with me, I tell associates, "You are worth your price tag."