Predictions following the salary bump

Has anyone missed the news about the recent salary bump?  Somehow, I doubt it.

Plenty of questions remain, such as to what extent salaries increases will spread to other parts of the country and what increased expectations, if any, will be imposed on the anointed associates.  I’d like to make several predictions about what’s likely to happen following the raises:

1. In-house hiring will go up.  I’ve talked with several in-house lawyers who’ve been a part of strategy meetings on how to cope with the trickle-down effect (or the anticipated trickle-down) of the bump.  The consensus seems to be that it’s time to bulk up in-house, since it may be cheaper for corporations to keep their routine legal work rather than sending it to highly priced outside counsel.

2. Midsized and smaller firms will be even more competitive with large firms.  Again, clients will expect (with good reason) to see higher legal bills from large firms following the salary increase.  Associates will likely need to bill more hours, hourly fees will likely go up, and so on.  Midsized and smaller firms may feel a need to raise salaries a bit, but the chance of starting salaries coming even close to $160K in these firms is remote.  Accordingly, clients may be interested in retaining these firms for the same reasons that they will be bringing more work in-house: to reduce legal bills.  This is a real opportunity for midsized and smaller firms.  Those firms can capture additional work, and they’ll have a chance to wow the client and perhaps increase the range of services to the client.

3. More senior lawyers (i.e. partners, especially those who experienced the market bubble and burst of the 1980s and late 1990s/early 2000s) may brace for a market drop.  What that tendency may mean is anybody’s guess, but it’s reasonable to expect that this will happen.  They may also resent the associates making these stratospheric salaries, making office camaraderie somewhat dicey.

4. Significant increases in lateral moves.  Given these huge salary increases, associates may be more easily tempted to jump ship.  Will the bumps stem associate attrition?  Doubtful, since the increases have been fairly well-matched within markets.

So, those are my predictions.  What do you foresee?  Comments welcome, as always.

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