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Why Is Associate Pay So High?
Why are associates paid so much at large law firms? At Adam Smith, Esq., Bruce MacEwen, prompted by Saturday's Wall Street Journal op-ed, "Cut My Salary, Please!," looks for answers to this question. He begins his search in the world of economics and looks to the "efficiency-wage theory":
"the novel insight of which is that paying higher wages, even above-market wages, will be profitable if it makes workers disproportionately productive. "
As an explanation, this theory is plausible, MacEwen says, but he also notes the existence of non-economic explanations, including this one:
"[T]here may be an entirely appropriate, fitting, and survivability-testing aspect to paying people a lot and asking them to work like crazy: That's exactly what partners' lives are. If you don't take to it as an associate, you won't as a partner. Firms could be cannier than we give them credit for."
Will this issue go away in the foreseeable future? "For my money, scarcely a chance," MacEwen says.
Posted by Robert J. Ambrogi on April 3, 2006 at 11:02 AM | Permalink
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» Associates Salaries: from ALMResearchBlog
First the Wall Street Journal weighed in on the “new arms race” among law firms not to be the last among their peers to raise the starting salary for first-year associates. (WSJ is a subscription-only site; the story was written [Read More]
Tracked on Apr 10, 2006 9:36:06 AM