Increases up to $30,000 defended as necessary to attract top young talent

04:08 PM CDT on Saturday, April 15, 2006

By BRENDAN M. CASE / The Dallas Morning News

A pay raise of up to $30,000 isn't bad, even for lawyers.

Leading Texas firms have hiked lawyers' salaries over the last month, fattening typical pay levels for first-year associates from the $110,000 range to as much as $140,000. Bonuses can send the total even higher.

That's the first big increase since 2000, when the economic boom was in full swing. Texas firms say they need the extra cash to attract the brightest young legal minds at a time when firms nationwide have also been boosting pay.

"The national market has moved on, and Texas has lagged behind," said John Wander, a partner with Vinson & Elkins in Dallas. "We couldn't compete if we didn't bring our salaries up to those levels that we're seeing in California, New York and Chicago."

Last month, Vinson & Elkins raised Texas associates' base pay from $110,000 to $135,000, though first-year employees typically receive bonuses worth an extra $15,000. Baker Botts increased first-year associates' base salary from $110,000 to $140,000.

Nearly all major firms followed suit, adding tens of thousands of dollars to associates' annual pay.

Some boutique firms pay even more than the big firms do.

Dallas-based Lynn Tillotson & Pinker now offers first-year associates $145,000. Bickel & Brewer, also of Dallas, has offered $175,000 since 2001.

Lawyers in Texas, with a relatively low cost of living, typically receive somewhat less pay than their counterparts in hotspots such as New York or Washington, D.C.

But salaries rise steadily after a lawyer's first year. An eighth-year associate at a leading firm can now take home around $190,000 in base pay, with a chance to earn tens of thousands more in bonuses.

"It's a huge amount of money," said Karen Sargent, assistant dean and director of career services at Southern Methodist University's Dedman School of Law.

Only top Dedman grads land jobs at leading firms – typically 20 percent to 30 percent, Ms. Sargent said. Others end up at other firms, government agencies, nonprofits or in the business world.

Demand for law school graduates hit a lull after the 2001 economic recession, Ms. Sargent said, and some law firms even had to lay people off. More recently, however, the improving economy has buoyed law firms' fortunes.

The downside of the recent pay hikes? Higher salaries for lawyers might translate into steeper legal fees for clients, some analysts say.

Top managers at some law firms acknowledge receiving a cautious response from clients. But market competition will limit fee increases, said Cathy DeWitt, a spokeswoman for the Austin-based Texas Association of Business.

Law firm managers agreed.

"If law firms are, in my opinion, foolish enough to immediately follow raises to associates with higher rates, I think the clients will buck even more," said Patrick Oxford, the managing partner of Houston-based Bracewell & Giuliani.

His firm recently raised its base salary for first-year associates from $115,000 to $135,000.

Managers also downplayed the possibility that the pay increases would force belt-tightening among nonlawyers on their staffs.

Partners could bear some of the burden if expenses rise more than revenue, since partners are paid out of a firm's profits. But at most firms, the healthy business outlook is expected to lead to greater revenue.

"We've continued to grow, and we believe we will continue that trend," said Bennee Jones, a partner at the Dallas office of Andrews Kurth.

Some law firm leaders said the recent round of pay increases took them by surprise.

"If you'd asked me eight months ago, I would have said, 'No, I would think the package for starting attorneys was pretty generous and didn't need to increase,' " said Tom Cantrill, the chairman of Dallas-based Jenkens & Gilchrist.

Still, Jenkens & Gilchrist just raised its first-year associates' pay to $140,000 to keep its recruiting efforts competitive.

"It's not a competitive advantage to do it," said Stephen Good, managing partner at Dallas-based Gardere Wynne Sewell, which raised first-year associates' base salaries from $110,000 to $140,000. "It's a competitive disadvantage not to do it."

E-mail bcase@dallasnews.com