September 20, 2005
Law Firm Salaries
Posted by Gordon Smith

Danny Sokol, who is here at Wisconsin as a Hastie Fellow, pointed me to this interesting passage from Marc Galanter & Thomas Palay, Tournament of Lawyers 24 (1991):

Starting salaries at the largest New York firms were uniform; the ‘going rate’ was fixed at a luncheon, attended by managing partners of prominent firms, held annually for this purpose.  Salaries rose from $4,000 in 1953 to $7,500 in 1963.  The era of the arranged ‘going rate’ and incremental raises ended abruptly in 1968 when the Cravath firm unilaterally raised salaries to $15,000 from a scheduled going rate of $10,500.

Just for fun, Danny adjusted the value of $4,000 in 1953 to present-day dollar using the Consumer Price Index and came up with $27,840.02 (or $29,423.22 here). Kaimi Wenger, who just left Cravath for academe, tells me that associates at Cravath now start at roughly $125,000 per year and receive a bonus of around $15,000.

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Comments (3)

1. Posted by Jack Roy on September 20, 2005 @ 13:00 | Permalink

Yes, and yet if you took your benchmark by which to measure inflation to be the tuition of law schools rather than the consumer price index....

2. Posted by Dave! on September 20, 2005 @ 17:16 | Permalink

Can we see the stats comparing the billable hour requirements at Cravath in 1968 vs. 2005?

3. Posted by Tom Bozzo on September 21, 2005 @ 13:44 | Permalink

Dave asked one of my questions.

From the size of the '68 increase at Cravath, the collusion among the firms to suppress starting salaries looks to have been quite successful.

Regarding the real value of the salaries from ancient times, it's interesting to note that the real value increased a lot more from '53 to '68 than from '68 to the present. The $15K is now worth $84,600 using the BLS CPI inflation calculator. So "real" starting salaries increased an average of 4.8% per year until Cravath broke the cartel, then took a one-time 43% jump, and since have increased less than 1.4% annually -- less still if you exclude the signing bonus.

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