Skip to content
Business
Link copied to clipboard

Salary cuts at Phila. law firms

Amid ongoing pressure from clients over costs, Reed Smith L.L.P. said yesterday that it would reduce starting salaries of first-year lawyers about 20 percent along with rates charged to clients for their work.

Amid ongoing pressure from clients over costs, Reed Smith L.L.P. said yesterday that it would reduce starting salaries of first-year lawyers about 20 percent along with rates charged to clients for their work.

The firm had earlier deferred the start dates of its first-year lawyers from September to January. When the new lawyers arrive after the first of the year, starting salaries in Philadelphia will go from $145,000 to $117,000 a year. Compensation for first year lawyers in New York, Washington and other major markets will go from $160,000 to $130,000.

Reed Smith is not the only firm to have reduced compensation for junior lawyers. Center City's Schnader Harrison Segal & Lewis announced earlier this year that it was cutting salaries for its associates. Partners took a pay cut, too. Ballard Spahr also cut salaries of associate lawyers.

Eugene Tillman, Reed Smith's global head of personnel, said the move was in response to clients who said that they were charged too much for the work of junior lawyers with little experience.

"One of the things that we have been hearing for a long time is that they were concerned about the amount that they were paying for really smart law school graduates who don't have a lot of experience in delivering legal services," Tillman said.

Reed Smith, a 1,500 lawyer firm, was founded in Pittsburgh; its Philadelphia office has about 150 lawyers.

In addition to cutting associate salaries, Reed Smith introduced a new compensation system earlier this year in which associates will be paid based on their mastery of core skills such as legal writing, witness examination, and other areas. Only a few years ago, when the legal market was booming, associates at large firms typically received annual increases based largely on longevity at the firm.

That had irked clients who objected to lawyers receiving automatic increases without necessarily having to demonstrate that they had become better lawyers, Tillman said.

In addition to the salary cut for first year associates, Tillman said, the firm had decided to lower expectations for chargeable hours for first year lawyers from 1,900 to 1,700. That would enable new lawyers to devote more time to the training and development programs offered by the firm, he said.