Naturally the hot topic at school this morning is Simpson Thacher's announcement that they are raising base salaries for first year associates to $160,000. 2Ls who accepted summer offers for STB are hoping for an email that their weekly salary will go up to $3000, which would be a 15% hike from last summer's $2600. Normally I don't find salary talk very interesting, but some people have mentioned what I thought was a worthwhile point, and reason for other New York firms to follow Simpson's lead but for the raise to stay localized: the increased competition between law firms and other opportunities for reasonably bright and foolishly hardworking young people in NYC.
With the notorious Goldman bonuses having been big news last month, law firms may fear that they are looking like less of a good prospect compared to businesses. Outside New York, though, big firm lawyers are a moneyed class; when the main alternative to a law firm in D.C. is working for the government, why should Washington firms increase salaries? Moreover, the fact that the raise is for the New York office of a New York-based firm also makes it less likely that other cities will follow suit, in contrast to the LA-led raise last year. Even one-salary-fits-all firms tend to make an exception for New York, paying $5-10,000 more due to the higher cost of living, so Armen's calculation that non-NY markets will go to $145,000 seems slightly optimistic.