By Aebra Coe | 2023-05-17 16:28:57
The calculus for associates is shifting when it comes to the age-old debate between joining a small firm or BigLaw, according to legal recruiters, and one major factor that's muddying the math is a narrowing of the historic gap in compensation between the two. Data released recently by the National Association for Law Placement shows that small law firms have, on average, outpaced the largest law firms when it comes to increasing their compensation between 2019 and 2023. Even as BigLaw handed out what were by all measures substantial raises, law firms with 250 or fewer attorneys as a group increased base pay at an even faster rate, according to the data released by NALP. That means the gap in pay between small law firms and the giants, which for decades was massive, has narrowed. And associates have taken notice, according to recruiters. Eliza Stoker, an executive director at recruiting firm Major Lindsey & Africa, said that as the industry watched compensation at a number of smaller firms go up, the calculus began to shift for candidates who once may have considered BigLaw as their only option. "[Salaries] were coming up enough to where a certain kind of associate was more willing to have that conversation," Stoker said. Michelle Fivel, a partner at recruiting firm Hatch Henderson Fivel, said that for a long time associates were attracted to a number of the perks of working at a small law firm, such as substantial roles on matters and a clear path to equity partner, but that for many the discrepancy in pay was too large for a move to a small law firm to make sense. "It's that compensation piece that has been a stumbling block," Fivel said, particularly among junior associates still working on paying off large student loans. "The shrinking of that delta is definitely something that's very interesting to associates." In 2019, average base pay for first year associates at law firms with 100 or fewer lawyers was $110,000, compared to the $180,000 average for law firms with more than 700 lawyers, according to the NALP data. That means small law firms were offering about 61% of BigLaw pay. In 2023, however, that average starting pay rate rose to $155,000 at the small firms, compared to $215,000 at BigLaw firms. With the change, small firms' starting pay rose 11 percentage points, to 72% that of large firms.
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