Wednesday, November 11, 2009

Young Lawyers Salaries Cut 20%

Do you hear the sound of newly minted lawyers crying? The Wall Street Journal is reporting that the sounds being heard by young lawyers are "cut, drop, slash." Unless you are practicing bankruptcy law, young lawyers need to adjust their expectations regarding professional compensation.

While bankruptcy law is booming, and bankruptcy legal training is available from National Bankruptcy College (see ), non-bankruptcy areas of the law are struggling. This has a direct effect on compensation for newly minted lawyers.

I found the following report regarding the woes of young lawyers. I thought you would be interested. The Wall Street Journal On Line filed the following report:

"Cut, drop, slash. Those are the verbs emanating from Reed Smith, which on Tuesday announced it was slashing associate salaries and billing rates and dropping its associate hour requirements from 1900 to 1700 hours. (1700 hours! Reed Smith attorneys, time to take up a hobby!)

According to a press release, the firm will reduce its hourly billing rates by 20 percent and also cut annual salaries for first-year associates in 15 U.S. offices by 20 percent. These changes will apply to the 51 new lawyers joining the firm in January 2010.

"In response to our clients' feedback and concerns about driving down the cost of legal services, we wanted to send a clear message that we are listening. So, we have therefore reduced both the rates and the salaries of our incoming first year associates" said Gregory B. Jordan, Reed Smith's Global Managing Partner. "We have also launched a new competency based development program to better prepare our new lawyers to meet the needs of our clients."

Annual starting salaries for the new associates beginning in January 2010 will range from $130,000 in major markets such as New York City, Chicago, California, and Washington, D.C. (down from a high of $160,000 in 2008), to $110,000 in Pittsburgh, PA. These actions solely involve the new associates entering the firm's U.S. offices. Salary levels for 2010 newly qualifying lawyers in the firm's European, Middle Eastern and Asian offices will be determined in the normal course of business during 2010.

"Our new U.S. starting salaries represent a reasonable and appropriate reset based on today's economic environment," said Eugene Tillman, the firm's Global Head of Legal Personnel. "We believe this will put Reed Smith in a stronger business position in a changing marketplace while still providing fair compensation to our new associates."

In conjunction with the new compensation, Reed Smith has also reduced the first-year associate annual billable hour expectation from 1,900 to 1,700 hours, allowing additional time and opportunity to take advantage of the training and development programs associated with CareeRS, the firm's newly launched talent development initiative."
Warmest Regards,

Bob Schaller

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