Why You Need to Ask for a Raise, and How to Get It Like These NYC Lawyers
When New York’s Cravath, Swaine & Moore announced plans to increase first-year associate lawyer salaries from $160,000 to $180,000 annually beginning on July 1, it ended a near decade-long drought during which the cost of living in New York City and student loan debt skyrocketed.
While economic conditions appear to have contributed to delaying entry-level raises at the firm, there’s little doubt that the increase is the result of associates speaking up and tipping the scales in their favor. According to legal website Above the Law, first-year associates presented good arguments and evidence in support of a raise at a series of partner lunches.
Most of Manhattan’s “biglaw” firms have since matched the jump, revealing an important truth about employment: raises go to those who know how to ask for them.
It hasn’t always been this way, however.
A Big Raise That Could Have Been Bigger
Quinn Emanuel Urquhart Oliver & Hedges raised the base rate for first-year associates to $135,000 in late 2005, in what partner William Urquhart told The New York Times was an attempt to set his firm apart. It didn’t. As the war for talent continued, the going rate climbed to $145,000 in mid-2006, before reaching $160,000 a few months later. It had remained at that level until now. Why?
The 2008-2010 recession took a toll, according to The New York Times, leaving fewer clients willing to pay a premium. Those that were willing asked for not only billing discounts, but also more time with top attorneys. Bumping salaries for first-year lawyers didn’t make sense in that climate. But now that partner profits are once again in the seven digits, there’s less reason to hold back.
Meanwhile, associates had strong arguments for raising base pay. New York City housing was and remains costly. Manhattan’s median rent per square foot in May of this year was a whopping $65.63, up 16.4% from May 2015, according to the May 2016 Elliman Report. Student loan debt is also up sharply, rising nearly 300% over the last eight years, and healthcare premiums and deductibles are on the rise, according to money management site MainStreet. Even if today’s associates adjust for these increases and other forms of inflation, it’s likely they’re still struggling to make ends meet given their high cost of living and the amounts still owing on their education. And they’re not alone.
Recommended reading – The Ins and Outs of Negotiating
For example, ManagementConsulted.com reports that first-year MBA management consultants can expect $140,000 annually in base salary in 2016, but for some that won’t mean an increase. Both McKinsey and Accenture offered up to $145,000 in base pay last year. These firms and others like them still draw top talent because of yearly bonuses that can range from $30K to over $40K.
How to Get the Raise You Want
Forget for a moment that most of New York’s first-year lawyers remain underpaid, and instead focus on how we got to this point: Cravath, Swaine & Moore associates made their case in a series of Town Hall meetings with the firm’s presiding partner. There’s a lesson in that. Regardless of your industry or role, if you want a raise, learn how to ask for one—and stand out from 57% of your peers who don’t have the nerve to do the same.
Start by asking yourself this question: Should I stay, or should I go? Your pay should be high enough to make you want to stay.
“Enough” is different for all of us, of course. For the unemployed, enough is sometimes the minimum needed to pay bills. But for currently employed job hunters, enough may be a fair market rate that covers bills and allows for accumulating savings and paying for vacations. For the happily employed who are getting job offers, enough is usually at least 20% above what they’re currently making.
Knowing your fair market rate is key in helping you determine if your current pay works for you; and it’s not difficult to find that info. Start by looking for average earnings data for those who share your functional role in your region. The Bureau of Labor Statistics is a good source for this sort of information. Also look at Salary.com, PayScale, Glassdoor, and SoFi, if you’re a member. You can also ask the recruiters in your field. Forge relationships with trustworthy search firms in your sector and they’ll help you to find the market rate and decide if it’s worth asking your employer for more.
Once you’ve decided to ask for a raise, start the conversation with your immediate superior. Make your pitch compelling, and focus on the future results you’ll bring to your team. If your expertise includes patent law and your firm is chasing a number of tech clients, position yourself as a potential contributor to the patent team and account for the extra value you’ll be providing. Highlight past accomplishments, too, as evidence of your ability to achieve success in a new role.
You can also team up with peers if your argument would be made stronger by doing so. Rising cost of living is a good example. One lawyer complaining about rent is annoying and won’t go over well; a whole class of associates bringing evidence of hardship is evidence of a widespread problem that needs addressing, and likely why Cravath’s young lawyers were able to secure raises when they did.
You might also ask for indirect cash incentives, such as student loan repayment contributions. High-profile employers, including Pricewaterhouse Coopers and Fidelity Investments, offer this benefit, which can be just as sweet as a bigger paycheck. Why? The average interest rate on student loans ranges from 4.29% to 6.84% annually. Putting more dollars toward student loans faster can result in more savings and wealth over a lifetime. Finally, whatever strategy you pursue, don’t wait until your annual review to speak up. If you do you’ll be asking for funds that have already been allocated.
Believe In Your Value
That, in a nutshell, is how New York’s big law firms got away with keeping a lid on raises for nine years despite operating in a competitive market. You needn’t suffer the same fate, especially if you learn to make a case for a raise. Position yourself as willing and able to deliver more value, and you just might get the compensation you’re seeking.
Are you getting all that you could? What about your friends and colleagues? Share this story with anyone you think would benefit.
Want to learn more? On June 23, I’ll be hosting a detailed webinar on the topic of business conversations. Regardless of your industry, role, or skill level, you’ll benefit from tuning in.Sign up here.