In a struggling economy, reduced levels of legal work and rising costs tempt law firm partners to cut associates. But the money they save by doing so now may result in associate salary increases later, if history repeats itself.
In 2002 and 2003, the number of associates employed by the country’s 250 largest law firms dropped, following the dot-com debacle. The next year, though, these law firms had to hire more associates and their salaries began to shoot up, reports the National Law Journal in an article reprinted in New York Lawyer (reg. req.). Between about 2005 and 2007, top first-year salaries at major U.S. law firms rocketed up from about $125,000 to $160,000.
Meanwhile, these firms not only had to pay more for associates, they had a shortage of third- and fourth-years to handle their legal work, says Keith Wetmore, the chairman of Morrison & Foerster.