Making the (Pay) Grade

Barbara Rabinovitz

Published: October 20, 2008

In turbulent economy, salaries seen holding steady

From the receptionist who takes over the front desk each morning to the office manager who turns out the lights at night, support-staff members are important cogs in the machinery of a law firm.
Whether they are accountants or librarians, personnel administrators or information technology experts, secretaries or paralegals, collectively they and other non-lawyer employees of a firm contribute greatly to its smooth operation.
The latter two categories — secretaries and paralegals — stand out as especially important to the attorneys they work for. And if the average salaries of those employee groups are any indication, their employers appear to value highly their skills and services.
“A good legal secretary can be hard to find,” says Marciann Dunnagan, executive director of the Boston office of Special Counsel. “If they work for a partner they like, they tend not to move.”
A strong demand for a limited supply of experienced legal secretaries can translate into sizeable salaries. Dunnagan says it is not unusual for her recruitment firm to receive orders for those secretaries from firms willing to pay a base salary of $55,000 to $70,000.
Derek McKinley, chief operating officer at the staffing firm of John Leonard in Boston, finds that secretaries with experience in certain areas of law practice are not only highly coveted but also highly compensated. (See accompanying chart, “Pay scales for non-lawyers at Boston firms.”)
“An IP secretary would command a higher salary level … more like $55,000 to $65,000 and closer to $60,000 with just a few years’ experience,” McKinley says.
Like Special Counsel’s Dunnagan, McKinley is seeing the supply of secretaries interested in working at law firms diminish.
“There’s no question that there are probably fewer entering and targeting legal secretarial positions as a career of choice,” he says. “My impression is there’s a greater level of interest from new college graduates to break into marketing or public relations or human resources or even business, as opposed to having the legal secretarial role as a career path.”

Attrition as alternative

Longtime Boston legal recruiter Marc Zwetchkenbaum, of Marc Z Legal Staffing, says that base salaries (with no overtime) for legal secretaries with very limited experience (zero to two years) can range from $32,000 to $40,000; $40,000 to $50,000 for two to four years’ experience; $45,000 to $62,000 for four to eight years’; and for eight or more years’ experience, “you’re talking about $50,000 to $70,000.”
While the compensation for some secretaries may seem generous, law firms struggling through lean economic times are not necessarily looking to expand their secretarial ranks.
“If someone leaves, the secretaries who remain are asked if they can spread the work out among them,” Zwetchkenbaum says.
The onset of office automation is also a factor in the reduction of secretarial staff at some firms. As Zwetchkenbaum notes, “attorneys are on the computer now, so they don’t always keep their legal secretaries busy” with scheduling matters, the typing of long documents and other tasks that technology can perform.
Paralegals, on the other hand, are in great demand, and their base compensation, again with no overtime, would seem to reflect that.
“Remember, theirs is billable time,” Zwetchkenbaum says. “Certain work can be delegated to a paralegal, and more and more, clients want it to be delegated to a paralegal because they don’t want to pay the attorney rates.”
By his estimate, a paralegal with a year of experience or less could command an annual salary of $30,000 to $35,000; from one to three years, $35,000 to $45,000; from two to four years, $40,000 to $50,000; from four to eight years, $50,000 to $70,000; and for eight-plus years, $50,000 to $90,000.
And, as McKinley observes, the higher the paralegal’s job level, the higher the pay.
“For senior paralegals or supervisors of paralegals, [compensation] could go up into the high five figures,” he says.
Dunnagan says there is a relatively new job category — that of practice area managers — for which law firms are paying even more than senior-most paralegals earn.
“I have been working with a lot of firms that have set up this role,” she says of the PAMs, many of whom have law degrees and formerly were practicing attorneys.
“They support the partners involved in the management and growth of the firm; it’s more of a business role,” Dunnagan explains. “They might have a starting base pay of $90,000 to $120,000, and that’s with no billable-hour requirement; their hours are standard. … They’re wonderful positions.”
— Barbara Rabinovitz

As the aftershocks from the economic earthquake that rocked Wall and Main streets a month ago continue to reverberate through the financial system, Boston’s State Street and environs, where many a well-compensated downtown lawyer hangs a shingle, is hardly a disaster area.
So say executives at local law-firm recruitment firms when the subject of attorney salaries is raised. None expect the going rate of $160,000 as the starting salary for associates at large firms to go any lower.
“There seems to be a natural law that once associate salaries go up, they never go down,” says Brion D. Bickerton, partner at the legal search firm of Major, Lindsey & Africa in Boston. “Through my years of recruiting through downturns, that’s always the case.”
All the same, those starting salaries may not move upward anytime soon.
“After the dot.com bust [in the early 2000s], there might have been three-plus years where there was almost no change in the base-salary level,” Bickerton recalls.
As for the million-dollar men and women laboring in the partnership ranks of the major firms, they, too, can count on their salaries remaining stable, the legal recruiters report.
The compensation package for partners at Boston’s larger firms is usually based on the volume of client business they bring into their firms, explains Marciann Dunnagan, executive director of the Boston office of legal recruiter Special Counsel. If those lawyers happen to be equity partners, they receive “substantial” bonuses at the end of the year, she says.
However, the recruiters warn that the generous bonuses the big-firm attorneys enjoyed as the good times rolled could be slim pickings by year’s end.
“To be sure, bonuses will be affected,” Bickerton says. “The purpose of the bonus is to benefit in the good times and not to benefit in the bad times.”
But, he adds, “the core base salaries won’t be affected.”

‘They’re going to suffer less’

In some of the largest firms, those salaries are hovering around the low seven-digit mark.
“At some levels, absolutely it’s $1 million,” says Linda J. Kline, managing partner at New England Legal Search in Boston. “Ropes [& Gray], Goodwin [Procter], Wilmer[Hale] … I’ve heard from a lot of firms that their profits are fine. Maybe a finance practice is more a New York practice than a Boston one.”
Still, the reluctance by this region’s financial institutions to delve into the murky mortgage market, which has been the undoing of huge banking businesses elsewhere, may not spare large Boston law firms completely, Kline cautions. Even the expansive technology companies and other booming industries being served by partners and associates at those firms could be buffeted in a turbulent economic climate, she says.
“At what point will the tech companies stop growing because they can’t get credit or their customers are cash-strapped?” Kline asks. “At some point, law firms are likely to feel some pinch from that side. But not so much from the weird financial products; Boston firms don’t do that sort of thing.”
Or, as Bickerton puts it, the Boston client base is “not so capital-oriented. Structured finance, mortgage-backed securities are not centered here. We still have a good broad cross-section of strong industries here, and those companies have a lot of things going on.”
And, echoing Kline’s observation about stratospheric salaries in some firms, Bickerton says, “A good number of partners are continuing to make substantial numbers of dollars.”
But year-end revenues are likely to be down from those of 2007 and reflected in a decline in partner distributions, he says, “although not at the magnitude where people’s income will be halved. People who are making the big dollars are the big revenue producers with the big client relationships, and they’re going to suffer less when compensation is impacted.”
No longer ‘partner for life’

From his post as vice president at Hoffman Recruiters in Boston, Barry A. Freedman expects that, in a wildly fluctuating economy such as this fall’s, large law firms will be putting a premium on the amount of client business would-be partners can bring and the relative speed with which they develop their “books.”
“If you have a national firm bringing in a partner with $1 million in business, the base salary could be anywhere from $250,000 on up before year-end origination credits, which would factor into a bonus,” Freedman says.
Firms in the middle tier, Freedman says, would be looking for “portable business” in the range of $450,000 to $750,000 and would be paying a base salary of $180,000.
“I haven’t heard any issues with those [midsize] firms at all,” Kline says. “I think their compensation levels have become higher. In order to hire quality people, they’ve raised their salaries over the past few years. … The high fees at the big firms have helped those in that middle market.”
Taking note of the gap between large firms’ hourly fees (starting at $550) and midsize firms’ ($375 to $550), Freedman says it is easier for lawyers at the latter to attract small and midsize companies as clients because they tend to be more “cost-sensitive” to firms’ billing rates.
With the smaller firms, “you’re dealing with a smaller book and a smaller requirement to bring over new business,” for which lawyers would be paid a base of $120,000 or $130,000, Freedman says.
Associates with a few years at a firm might see smaller year-end bonuses, “or they might not see any bonuses,” says Freedman, who also raises the possibility of cutbacks in perquisites, firm-wide retreats and administrative staff.
In yet another sign of the times, performance reviews are being conducted in earnest, legal recruiters report. Low-performing associates have reason to be concerned about their livelihood, and partners receiving poor reviews are being “de-equitized,” Freedman says. “They can lose their jobs. … Twenty years ago, you were a partner for life.”

‘Grateful they’re still employed’

As lawyers warily watch for economic indicators signaling that the business community’s fortunes (and their own) have been reversed for the better, Bickerton offers some words of comfort.
“It’s not the end of the world yet,” he says. “I think Chicken Little will be saying the sky is falling for some time to come.” But, he urges, “we need to fast forward to the early part of 2009 to see whether the troubles continue in a significant way.”
Kline, too, seems sanguine about the current situation. “So far at least, as an indicator from me, I’m not getting lots of calls from associates worried about pay cuts or losing their jobs,” she says.
What she is hearing are expectations of smaller bonuses at year’s end.
“I think lawyers accept that there are great years where they make huge sums of money,” she says, “and there are years where they’re just grateful they’re still employed.”