Cravath Salary Increases Pressure Rivals Who Can’t Afford Match

Cravath Swaine & Moore’s move to raise associate salaries beyond the scale set by its rival Milbank pressures less-profitable firms to ponder pay bumps they can’t afford.

While firms in the top tiers of revenue and profitability are likely to follow Cravath’s lead—and several already have—others in the industry are ill-positioned to do so, said Michelle Fivel , a legal recruiter at Hatch Henderson Fivel. “This could be the year” the pool of firms following Cravath shrinks, she said.

The prospect of Cravath-type raises will “stress a lot of firms,” said Peter Zeughauser , a law firm management consultant at the Zeughauser Group. Some will avoid such raises and suffer the fall-out of “more poaching” from firms that can pay top compensation, he said.

Cravath, the standard-setter for salaries in Big Law, said Nov. 28 it will raise annual pay to a seniority-based scale of between $225,000 and $420,000. The move matched Milbank’s surprise increase Nov. 7 for junior lawyers, though Cravath doubled Milbank’s $10,000 boost for senior associates.

At least seven other law firms—Paul Hastings, McDermott Will & Emery, and Paul Weiss Rifkind, Wharton & Garrison, Baker McKenzie, Dechert, Cleary Gottlieb and Hogan Lovells—said in the aftermath of Cravath’s announcement that they will match the scale.

Law Firms Wrestle With How Much to Tell Clients About AI Use

Generative artificial intelligence promises to make legal work faster and more efficient, but it also poses a quandary for law firms: Should they tell clients they’re using the technology?

Cleary Gottlieb Steen & Hamilton hasn’t reached a definite conclusion on disclosure and will follow what clients want, managing partner Michael Gerstenzang said. But “there’s no circumstance in which I could imagine using it on a not fully-disclosed basis,” he added.

The disclosure question is starting to come up in law firm conversations with clients. It raises other questions for in-house and outside counsel—including whether certain uses of AI need to be disclosed, but not others, and whether an engagement letter is the best place for a firm to make disclosures.

“I’m a little leery of saying whenever I’m using a particular research tool, I have to talk to my client about what I’m using,” said Ron Hedges , a former US magistrate judge and member of the New York State Bar Association AI task force, and principal of Ronald J. Hedges LLC. “It’s more, to me, what data am I feeding into the research tool, does my client know I’m using it, and is my client aware that the training set might be used by others?”

Lawyers’ existing duties of confidentiality and competence sufficiently cover obligations while using AI tools, said Katherine Forrest , a partner at Paul Weiss, a former US District Court judge, and the author of two books about AI and the law.

But disclosing AI use isn’t “necessarily a bad thing, and it may in fact be prudent during this interim phase, while we’re all getting used to this new transformed world with new tools,” Forrest said.

Quinn Emanuel Snags New NYC Space, Doubles Down on Flexibility

Quinn Emanuel Urquhart & Sullivan has signed a 132,000 square-foot lease in New York’s Midtown South Textile Building, where the firm plans to build out a flexible office to match its work-from-anywhere policy.

Quinn Emanuel is rare among Big Law firms for keeping a highly flexible “work-from-anywhere” office policy following the Covid-19 pandemic. Its New York office will be designed with that in mind: The roughly 300 lawyers will be given the option to have traditional “name plate” offices or choose to work out of “hoteling” space depending on how frequently they come into the office, said Jennifer Barrett, co-managing partner of Quinn Emanuel’s New York office..

“We’ve got a great opportunity to take all that we learned about how people work to build a great office that hopefully makes people want to come there in the manner that works best for them,” Barrett said in an interview.

The firm’s work-from-anywhere policy has allowed flexibility for young families and lawyers living in non-traditional Big Law locations, Barrett said. But the New York office still values in-office collaboration, she added. The new space will be designed to foster that, featuring more lounge and café-like areas, Barrett said.

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