Law grads add up cost of higher pay

Concerns about stress, bitterness and its effect on clients follows a trend toward more pay that has reached the bay area.

By SCOTT BARANCIK

© St. Petersburg Times, published May 16, 2000

TAMPA -- Law-school graduates have seen entry-level salaries in the Tampa Bay area skyrocket over the past few months. But the rookies may be too swamped with work to celebrate.

In a trend that began in December in Silicon Valley and swiftly migrated eastward, law firms in many cities are paying first-year associates far more than ever before.

In April, for example, Holland & Knight raised its base salary in Tampa and St. Petersburg for first-year lawyers from $60,000 to $76,000 a year. The firm, Florida's largest, still pays an additional starting bonus of $6,000.

Piper Marbury Rudnick & Wolfe has raised bay area salaries twice this year. The firm regularly boosts pay in January, but when competing firms began raising wages this spring, Piper came through with a second round of increases. A partner said he could not immediately provide salary figures.

In Miami, White & Case has raised starting salaries from $84,000 to $105,000, and Greenberg Traurig has raised them from $72,000 to $85,000.

For young lawyers burdened by student loans and eager to cash in on three painful years of study, the higher salaries are a welcome surprise. But as the associates and their new bosses are finding out, the wage increases won't come for free.

Piper-Marbury has spread out the pain of paying those increases among its associates, partners and clients. Senior partners at the firm will earn lower profits. In selected practice areas, clients will pay higher rates for legal help. Associates, the grunts of the legal world, will be expected to work longer hours than before.

"We're asking everybody to pull the oars a little harder," said Piper-Marbury chief operating officer Jeffrey Liss. "But it's not a sweatshop."

Holland & Knight's partners also will take a pay cut, though the firm said it will not raise client rates. Associates at all levels will be expected to spend more time under the fluorescent lights.

"In exchange for paying these higher salaries, we expect that the average billable hours for those associates will increase somewhat," said Jim Groh, who chairs Holland's associate evaluation committee.

Recruitment specialists are urging young lawyers to examine the whole package before choosing a law firm. That means not just salary but other quality-of-life factors, including hours, mentoring and corporate culture.

"The money is nice, but the strained relationships, the heightened expectations for performance and the loss of any semblance of personal life colors the joy of it all," warned the National Association for Law Placement in a special report titled "The Salary Wars and Their Aftermath." The non-profit's membership includes law firms and schools.

Similar sentiments are being echoed by associates on lawyers' Web sites such as www.greedyassociates.com and www.infirmation.com. "Two raises since January and I am more miserable than ever," wrote one anonymous writer. "The increase has resulted in more work and made it harder to attract clients. I wish I could have voted on the raise issue, because I would have voted no . . . way."

Future law school grads may be hurt, too. Some firms are adjusting to the higher wage structures by hiring fewer associates. They're pushing more work into the laps of cheaper hires, including contract lawyers, staff lawyers not on a partner track, and paralegals.

"The money is nice, but the strained relationships, the heightened expectations for performance and the loss of any semblance of personal life colors the joy of it all."

-- Report by the National Association for Law Placement

Law firms trace the current wage craze to a 90-lawyer California firm called Gunderson Dettmer Stough Villeneuve Franklin & Hachigian. After losing nine associates to Internet start-ups in 1999, the firm based in Menlo Park decided in December to raise first-year salaries 45 percent.

What followed has been dubbed the "Gunderson effect." Shortly after Gunderson initiated its wage increase, local competitors began doing the same. Soon, national firms followed suit. Because of intense rivalries within those national firms, partners found it necessary to make commensurate wage increases elsewhere, including offices in New York, Washington, D.C., and Chicago.

Over the weeks, the "Gunderson effect" made its way to Miami and later to the Tampa Bay area.

"It is very bizarre," said Brian Lewis, assistant dean for career services at the University of Florida's Levin College of Law. "I do think the law firms overreacted, but once a few of them got on the bandwagon, I think a lot of other firms didn't have a choice."

Some industry observers are worried about the long-term effects of boosting associates' salaries. One casualty may be partner-to-associate mentoring. Not only are partners' profits being cut, but some senior associates are now being paid more than the junior partners who are supposed to mentor them.

"Something's gotta give," said David M. Corry, a partner at Bricklemyer, Smolker & Bolzes in Tampa. "You're either going to make a rough work environment, or you're going to make it very rough on your clients, or you're going to starve out your partners. . . . There's no free lunch."

- Times researcher John Martin contributed to this report, which also includes information from the Miami Herald.

© St. Petersburg Times. All rights reserved.