Orrick, Heller, Davis Polk Hiking Associate Salaries

Orrick, Heller, Davis Polk Hiking Associate Salaries

By Kevin Livingston

......... R E L A T E D L I N K S .........
+ Pillsbury bumps salaries
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B ay Area firms continued to announce huge associate pay raises Monday, and the ripple effect is beginning to be seen in other markets throughout the country.
In San Francisco, Orrick, Herrington & Sutcliffe set a new benchmark for beginning associate compensation when firm management said first-year associates could earn as much as $160,000 in base pay and bonuses.
Heller Ehrman White & McAuliffe followed, announcing that their first-year associates can now earn up to $150,000.
And Davis Polk & Wardwell became the first major New York firm to raise salaries to Silicon Valley levels -- meeting the base levels already established in Manhattan by the likes of Bay Area-based firms Brobeck, Phleger & Harrison and Morrison & Foerster. That decision may not only start a New York salary war, but may have a drastic impact on large Los Angeles firms, which have been slower to move on pay hikes.
San Francisco legal recruiter Avis Caravello said there is no doubt the Davis Polk decision will force other old-line firms to follow suit. "This means L.A. firms will end up following," she said.
But the question remains: Can anyone top Orrick?
In the largest associate pay jump to date, Orrick management said Monday that first-year associates will earn a base salary of $125,000, with the potential of earning up to $160,000 when bonuses are added. Orrick first-years had been earning $95,000 with bonuses up to $12,500.
Fourth-year associates have the opportunity to take home $220,000, while seventh-years who bill 2,400 hours can pull in $270,000.
While minimum billable-hour requirements will remain at 1,950, bonuses ranging from $5,000 to $20,000 will kick in at 2,100, 2,250 and 2,400 hours. Discretionary bonuses of $10,000 and $15,000 will also be awarded.
"It's supply and demand at work," said Orrick chairman Ralph Baxter Jr., who called the compensation plan "crisp, concrete and predictable."
"Orrick's new compensation structure was determined through a process that stresses fairness and clarity," Baxter said. "It is an effort to recognize that our associates' contributions are critical to our clients' success."
Baxter's announcement prompted cheers from Orrick associates across the country who, for the moment, are the highest paid in the nation.
Orrick's raises -- retroactive to Jan. 1 -- are earmarked for associates in the firm's largest domestic offices. With the exception of Sacramento, Seattle and the firm's overseas branches, the new raises will take effect in San Francisco, Silicon Valley, Los Angeles, Washington, D.C., and New York -- home of Orrick's largest office.
"This is a departure for us," Baxter said, adding that Orrick has always paid salaries based on what each market allowed.
Baxter's words were greeted with applause by associates. "There was a week or two of bitching," one associate said. "People are happy enough now."
The same could be said for Heller associates. Late Monday, the firm announced an updated associate compensation structure that takes into account more than just billable hours.
Base pay is set on a billable hour expectation of 1,900 hours, and bonuses based on three tiers of billable hours have been set in place. Associates will be able to count pro bono hours and up to 100 hours of non-billable hours toward their total.
This means that associates can carry on with their committee work and schmooze with future associates during recruiting sessions without fear of missing out on a bigger paycheck.
"Our view is that some part of that time is critical to the long-term success of the law firm," said chairman Barry Levin.
Bonuses are guaranteed at 2,000, 2,200 and 2,400 hours. First-years hitting the 2,000 mark will receive a $3,000 bonus, and by hitting each of the higher billable-hour levels, they can rake in an extra $4,500 to $11,000 -- depending on the quality of their work and the depth of their involvement in firm management and development activities. The top salary with bonuses for first-years is $150,000.
Fourth-years begin with a base of $150,000 and can top out at $207,000, while seventh-years start with $185,000 and can potentially welcome $250,500 into their wallets.
In an earlier effort to retain associates, Heller implemented an ongoing retention bonus plan in 1999 that rewards associates who have been at the firm for five years. Under the plan, Heller will contribute roughly 3.5 percent to 6 percent of associates' annual compensation -- for a maximum of $25,000 -- to a 401(k) plan, which vests after five years.
Davis Polk will offer a first-year base salary of $125,000, with a fourth-year base pay set at $165,000. Bonuses that are not tied to billable hours are planned.

Reporter Lauren Gard contributed to this story.

......... R E L A T E D L I N K S ......... + Pillsbury bumps salaries ..........................................................			B ay Area firms continued to announce huge associate pay raises Monday, and the ripple effect is beginning to be seen in other markets throughout the country. In San Francisco, Orrick, Herrington & Sutcliffe set a new benchmark for beginning associate compensation when firm management said first-year associates could earn as much as $160,000 in base pay and bonuses. Heller Ehrman White & McAuliffe followed, announcing that their first-year associates can now earn up to $150,000. And Davis Polk & Wardwell became the first major New York firm to raise salaries to Silicon Valley levels -- meeting the base levels already established in Manhattan by the likes of Bay Area-based firms Brobeck, Phleger & Harrison and Morrison & Foerster. That decision may not only start a New York salary war, but may have a drastic impact on large Los Angeles firms, which have been slower to move on pay hikes. San Francisco legal recruiter Avis Caravello said there is no doubt the Davis Polk decision will force other old-line firms to follow suit. "This means L.A. firms will end up following," she said. But the question remains: Can anyone top Orrick? In the largest associate pay jump to date, Orrick management said Monday that first-year associates will earn a base salary of $125,000, with the potential of earning up to $160,000 when bonuses are added. Orrick first-years had been earning $95,000 with bonuses up to $12,500. Fourth-year associates have the opportunity to take home $220,000, while seventh-years who bill 2,400 hours can pull in $270,000. While minimum billable-hour requirements will remain at 1,950, bonuses ranging from $5,000 to $20,000 will kick in at 2,100, 2,250 and 2,400 hours. Discretionary bonuses of $10,000 and $15,000 will also be awarded. "It's supply and demand at work," said Orrick chairman Ralph Baxter Jr., who called the compensation plan "crisp, concrete and predictable." "Orrick's new compensation structure was determined through a process that stresses fairness and clarity," Baxter said. "It is an effort to recognize that our associates' contributions are critical to our clients' success." Baxter's announcement prompted cheers from Orrick associates across the country who, for the moment, are the highest paid in the nation. Orrick's raises -- retroactive to Jan. 1 -- are earmarked for associates in the firm's largest domestic offices. With the exception of Sacramento, Seattle and the firm's overseas branches, the new raises will take effect in San Francisco, Silicon Valley, Los Angeles, Washington, D.C., and New York -- home of Orrick's largest office. "This is a departure for us," Baxter said, adding that Orrick has always paid salaries based on what each market allowed. Baxter's words were greeted with applause by associates. "There was a week or two of bitching," one associate said. "People are happy enough now." The same could be said for Heller associates. Late Monday, the firm announced an updated associate compensation structure that takes into account more than just billable hours. Base pay is set on a billable hour expectation of 1,900 hours, and bonuses based on three tiers of billable hours have been set in place. Associates will be able to count pro bono hours and up to 100 hours of non-billable hours toward their total. This means that associates can carry on with their committee work and schmooze with future associates during recruiting sessions without fear of missing out on a bigger paycheck. "Our view is that some part of that time is critical to the long-term success of the law firm," said chairman Barry Levin. Bonuses are guaranteed at 2,000, 2,200 and 2,400 hours. First-years hitting the 2,000 mark will receive a $3,000 bonus, and by hitting each of the higher billable-hour levels, they can rake in an extra $4,500 to $11,000 -- depending on the quality of their work and the depth of their involvement in firm management and development activities. The top salary with bonuses for first-years is $150,000. Fourth-years begin with a base of $150,000 and can top out at $207,000, while seventh-years start with $185,000 and can potentially welcome $250,500 into their wallets. In an earlier effort to retain associates, Heller implemented an ongoing retention bonus plan in 1999 that rewards associates who have been at the firm for five years. Under the plan, Heller will contribute roughly 3.5 percent to 6 percent of associates' annual compensation -- for a maximum of $25,000 -- to a 401(k) plan, which vests after five years. Davis Polk will offer a first-year base salary of $125,000, with a fourth-year base pay set at $165,000. Bonuses that are not tied to billable hours are planned.