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Friday, February 15, 2008

Minnesota takes a breather from the big firm salary wars

It hasn't escaped the notice of younger members of the bar that there is a significant lag in starting salaries offered by big Minnesota law firms as compared to their counterparts in larger markets on the East and West Coasts. (See "Big firms in Minn. are surrendering in the salary wars" in Minnesota Lawyer, password required.)

Many might think it's a bunch of whining given that fledgling lawyers can still fetch $120K/year at the largest Twin Cities-based firms. (After hitting the $120K point last year, there has been little upward movement in Twin Cities big firm salaries this year, despite the fact that bigger market firms are up to $160k and, in at least one case, $180K.) The $40K to $60K more new lawyers can make in a bigger market is no doubt a big deal to them. Heck, that's the price of a pretty nice car for every year they work at that other firm. Plus, their salary as second and third-year associates will increase at an exponentially greater rate. By the time they are partner in a big New York City firm, lawyers who opted for the bigger market will be clearing seven figures.

Of course there are tradeoffs. The big New York is more likely to be a meat grinder requiring lawyers to bill every passing breath to make their billable hour requirements. And there are those long commute times. Goodbye PTA meetings or coaching that little league team. Of course, even in Minnesota, the requirements of working at a big firm are no cake walk. There is just a bit more breathing room.

So does it matter that big firms here pay less? I think that it does to a degree. Loan-strapped law students would find the temptation of that extra cash from the large market difficult to pass up. Minnesota was never going to get top talent to come here specifically for the money, but if the differential gets large enough, homegrown top talent that would rather stay here may feel compelled to leave. With four law schools here pumping out grads, there will undoubtedly be plenty of smart folks happy to fill those big firm spots eschewed by those opting out of Minnesota. However, there is a certain stature to being a place that retains some of its very top prospects. We don't want to become the Minnesota Twins of the legal world.

In short, while I don't think we have to offer the same salaries as New York City and L.A. firms here, I think we have to be careful to remain within a competitive range nationally. Fortunately, at present, firms in bigger markets appear poised to take a time out in their salary wars, keeping Minnesota from losing any ground as it takes its own breather.


Anonymous said...

As a law student (OCI next year, so no dog in the race yet), I'm happy to see Minnesota law firms showing some sanity on salaries. First, $120k is a darn good salary in this market. Second, maybe it means that Minnesota firms will be better positioned to ride through a recession. Finally, I agree that higher starting salaries would probably come with higher hours expectations, and I'd rather make $120k and see my family than $160k and live in my office.

Anonymous said...

Top Minneapolis firms are treading on thin ice if they want to compete in a national legal marketplace. Most top students at my law school go either to Chicago and Minneapolis. Top Chicago firms pay out at $160K. Though there are some exceptions in the case of people (like myself) with a strong preference for the city of Minneapolis, most of the best from my (2L) year are going to Chicago. The primary reason I hear time and again is that debt-laden students just can’t justify giving up that extra $40K a year. It may be unreasonable that any brand-new lawyer could expect more than $120K per year, but we do not live in a reasonable world. In the real world, most people follow the money and if the best Minneapolis firms do not match their counterparts in other major cities then they won’t get enough of the top talent to remain competitive.