Baker Botts, a former stomping ground of me and my husband (a current firm of husband's brother), just raised associate salaries, in the poker sense of the term. Not content to match Andrews & Kurth's $135k bump, BB raised starting salaries to $140k, with a $10k end of the year kicker. Sigh.
Two factoids of interest. First, in 1993, the starting salary was $54k, with a $4500 "discretionary" bonus. According to my handy dandy calculator, that's a 7.51% rate of growth. I would say that beats inflation. However, in 1993, we all got the bonus, and no one got fired. Now, according to the article and word-of-mouth, the bonus is dependent on an associate's billable hours and the firm is not quite so forgiving of low billers. Life is different.
Second, these salaries seem to be equal to the new starting salaries in California and NY. Hmmm. I bet that $140k stretches a little further in Houston than in L.A., San Francisco, NY or even D.C. So, if I were wanting to work at a big firm and maximize my budget, I'd choose Houston and actually get to buy a house some day. If you were really, really a rational maximizer, here's the gold plan. You are graduating from college on the East/West Coast. All your friends are applying to law schools. Apply to Texas. Not a resident? Move to Houston and be a "legal assistant clerk" for a year at a big firm. It's fun, and guess what? You'll wake up a resident. Go to Texas as a resident and enjoy paying much less for your legal education than your friends. Then, go to work at [name your big firm] in Houston, while your friends go to same big firm in NY. Make the same amount of money as they do, pay smaller student loans, and buy a house. Call them once a month on the day they pay their student loan bill and laugh at them.
UPDATE: CNN reports today that to buy the same basket of middle-income, affluent goods, a couple would need the following amounts in the following cities: $72,237 in Houston; $166,777 in New York; $145,350 in San Francisco; $126,736 in L.A.; $115,198 in the DC area; and $103,049 in Chicago. So, a law firm has offices in all these places with the same starting salary. Which city would I choose?
Of course, if you want to be a law professor, statistics like the ones that Larry Solum compiles may suggest a different, irrational, non-maximizing strategy.
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