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Cravath joins rush to raise salaries, bringing more NY firms along

Cravath joins rush to raise salaries, bringing more NY firms along
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Signs on the outside of the building where the law firm Cravath, Swaine & Moore LLP is located in Manhattan, New York City, US, August 17, 2020. REUTERS/Andrew Kelly

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  • Law firms compete for talent, as New York firms lose out to tech-savvy competitors
  • Big companies have lost partners in the most promising work-life balance

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(Reuters) – Cravath, Swaine & Moore, a leading compensation firm in a traditional New York law firm, raised the salaries of its assistants in a move that sparked a flurry of similar advertisements from its competitors on Thursday.

Another New York company, Milbank, started the compensation battle last Thursday when it raised salaries for its current and incoming first-year employees to $200,000. Davis Polk & Wardwell upped the ante Friday, offering $202,500 to partners for the upcoming first year, the 2021 class, and $205,000 for the current first year, the 2020 class.

While companies, including Chicago-based Baker McKenzie and Philadelphia-based Dichert, quickly matched Davis Polk, elite New York firms have, so far, been largely reluctant.

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Cravath is increasing the salaries of its current first-year partners from $190,000 to $205,000. The legal industry blog Above the Law first reported the news late Wednesday. The company declined to comment.

According to an internal memo seen by Reuters, Paul, Weiss, Rifkind and Wharton & Garrison all matched that rate shortly after Cravath.

New York-based Willkie Farr & Gallagher said Thursday that starting salaries for the 2021 Associates class and its current first-year class of 2020 will be $205,000, and Simpson Thacher & Bartlett is also offering the same.

Kramer Levine Naftalis and Frankel match Kravath’s salary for the 2020 class, according to an internal memo.

Debevoise & Plimpton have confirmed that they are raising their upcoming first years salaries to $202,500 and current first years salaries to $205,000.

The companies also raised senior associate rates, but they varied in which semester they topped their range. The Cravath scale finished at $350,000 for the 2014 class while Debevoise finished at $375,000 for the 2012 class and above.

Salary increases may not be enough to stem the wave of associates leaving New York’s elite firms, they come as major law firms struggle over how to retain colleagues. Deal volume remains high, the job market is hot, and the coronavirus pandemic has increased the risk of burnout.

The 10 most profitable companies in New York — including Cravath and Davis Polk — lost hundreds of employees in 2021.

Throwing money on a retention case was a popular solution. Elite New York companies were among dozens of companies in the spring that announced special bonuses in two payments of up to $64,000 to partners who continued to operate until later this year.

But it may not prevent junior lawyers from leaving. Data from LinkedIn and lateral due diligence provider Decipher Investigative Intelligence shows that partners are leaving New York’s elite firms for newer cities, smaller companies, or companies more connected to Silicon Valley than Wall Street.

Colleagues who left said they wanted closer to the family, to a larger living space and to a company that offered more work-life balance, and were willing to cut wages or leave bonus money on the table.

Correction: An earlier version of this story incorrectly stated that Cravath set the salaries of the upcoming first-year fellows, class of 2021, at $202,500. This story has also been updated to add information on more companies matching salary increases.

Read more:

Elite companies in New York are fighting a battle for talent. Can they all lose?

Some companies rush to match employee increases while others watch and wait

Beating Milbank, Davis Polk raised first-year pay to $202,500

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Caroline Spezio

Caroline Spiezio covers legal industry news, with a focus on law firms and in-house consulting. She resides in New York. You can reach her at Caroline.Spiezio@thomsonreuters.com.

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