I have been in the legal industry helping lawyers and clients build teams that generate mutual benefit for over 20 years. I am accustomed to the quirkiness of how growth, profits, and mergers are reported. I no longer am surprised firms when they brag about their art collections and show pictures of their multimillion dollar lobbies on their web site. It does not shock me at all when they take out ads costing tens of thousands of dollars to show about how they are best/super/top something-or-other to no one that really cares (except their parents or the person who stares at them from the mirror while they brush their teeth).

However, I have never been so taken aback as I have the past week over the orgasmic reaction I have seen in the media, social media groups, and tweets from industry insiders about the recent NYC associate pay raises. In case you haven’t seen it, highly educated, new associates at top firms will receive $190,000 per year the day they walk in the door. Most of those who will be affected this Fall have not passed the bar yet. Some have great potential. All have never worked for a client on their own.

Here are some of the headlines:

Cravath Hath Spoken– And Beats Milbank for Senior Associates

New York To $190K — No, Cravath Didn’t Make The First Move

Some Law Firm Staff See Pay Gap Widen as Associate Salaries Soar

In addition, here are some classy tweets and comments from the people who benefitted at the “groundbreaking” firms:

  • “Put some respeck on my name”
  • “summer of 190”
  • “I am as shocked as you are.”

I am all for capitalism and the concept of rewarding those who generate value for others. However, make no mistake: this decision to offer new employees 704% of the US per capita average annual income. Here are some of the things that were not mentioned in these discussions that could have used some of this funding:

  • Improvement in diversity recruiting beyond the “top 10% of the top 10% of schools” that only reinforces the status quo
  • Paid paternity leave and the ability to actually take it
  • More resources to help people manage their health, stress, and career
  • Bonuses for those people (the majority) who keep the firm running all day
  • Technology and analytics to make costs and projects more predictable for clients
  • Changes in structure to create a culture of collaboration instead of the cult of the individual
  • Pro bono work
  • Reducing the costs and time it takes to complete a matter

Look at that last bullet closely, because it is very important. Clients will be footing the bill for this. Firms will be pressuring associates to bill more hours at higher rates for the same work and results while clients are clearly asking for the opposite.

Large firms are not in danger of losing the “best and brightest” by not matching the pay hike. Yes, that one recruit might hop across the street, but is that you build a culture? By attracting employees who will only say yes for that extra 3% pay? Nonsense. In fact, it is what perpetuates the culture that creates things like The Mommy Track, lack of diversity, and burn out. What if there was a system like what hospitals use for a period of residency? If Harvard medical school grads get about $50-55K per year (and sometimes LESS from prestigious schools because students are willing to take a hit to go there), doesn’t that blow out of the water this theory of “that’s what you have to pay to stay competitive”?

How about we tie compensation to the financial results of the clients they serve? What if we try to use technology to make costs of matters go down, and they will give more of them to the firm? How about we tie compensation to teams instead of individuals, so we can solve business issues for clients instead of only caring about how engaging and interesting a lawyer finds their piece of the work?

As mentioned by a GC recently:

“The tone deafness is astounding. We as purchaser of legal services keep asking our firms to bill based on value because that is what we want to buy, not hours. They respond by raising rates across the board. It is no wonder that the largest-growing segment in the legal industry over the past few years has been the role of in-house counsel. You can keep living in your ‘reality distortion field’ and pay a first-year associate $190,000. You certainly will attract lawyers to come work for you but we are firing you everyday….”— An anonymous in-house legal operations director, commenting quite candidly about the new $190K salary scale for first-year Biglaw associates, in an interview with Corporate Counsel.

I find the glee and self-servedness of bathing in a big pile of money in the midst of clients almost in open rebellion about the current law firm pricing and value structure astounding. One only has to look at organizations like CLOC to see that a reckoning is coming.

In short, it is disgusting. And, it surprises even me.