How Do You Define a Mid-Sized Law Firm
A law firm is identified as a mid-size firm when it typically ranges in size from 50 to 100 attorneys. In this range, they can tend to be somewhat localized, yet also have the resources to manage large scale and complex cases. Mid-size firms offer the advantages of a large firm environment, without the drawbacks.
Mid-size firms may have a strong regional or local presence and a diverse list of clients and industries. Since these firms are able to effectively market their services, they are able to charge fair rates, and at the same time from a wide array of clients.
Generally speaking, mid-size firms derive their work from a greater variety of clients than smaller firms, which generally rely on just one or two key clients or funders. This allows mid-size firms to be more adaptable to economic conditions and more agile in their strategic positioning and planning. In recent years, many mid-size law firms have expanded into international practice with over 1000 attorneys located in big cities around the world . A mid-size law firm can be categorized by criteria that includes:
• 50 to 100 attorney employees
• Greater revenue per partner than Am Law 200 firms
• Higher profits per equity partner than Am Law 200 firms
• Practice includes a blend of local, national and global representation
• Locator status of firm and balance sheet assets
Unlike small and boutique firms, where attorneys wear multiple hats and work on varied cases and clients, attorneys in mid-size firms are more likely to be specialized, focusing on a specific sector within the field. That makes these firms an attractive option for top tier law graduates.
When it comes to the size of institutional clients and commercial entities that they service, mid-size firms largely work with privately-held, amply-sized companies. Their clients often include large infrastructure and public sector clients, as well as foreign state-owned enterprises. International-domiciled private equity funds that target domestic investments often partner with mid-size firms to service their investments.
These factors create the distinctive regional centeredness that characterizes mid-size firms. Due to their size, these firms typically have the flexibility to meet the shifting laws and rules concerning accounting, compliance, tax and governance. Such flexibility enables mid-size clients to enhance their technical expertise and offense/defense strategies, especially in the areas of contractual arrangements, including limitations of liability.
Average Compensation at Mid-Size Law Firms
The mid-size firm segment of the legal profession, which includes many thousand firms across the country, continues to be a favorite employment destination for legal professionals. Based on data from the National Association for Law Placement (NALP), the vast majority of first-year associates in the U.S. are employed by law firms of 100 lawyers or fewer. While the largest firms continue to pay the highest salaries overall, according to data released by NALP, the range of average salaries across mid-size firms tends is fairly small. Starting salaries for associates at mid-size firms average approximately $145,000, while the range for starting salaries is typically $110,000 – $185,000. For associates with two years of experience, the range is typically $125,000 – $190,000, and for associates with three years of experience, it is $135,000 – $195,000. This stability in starting pay stands in contrast to the jump in starting pay that mid-size firms usually adopt in June of each year, as the usual practice is for mid-size firms to raise associate pay to fall in line with what the AmLaw 100 firms are paying.
Paralegals working for mid-size firms typically earn between $50,000 – $75,000 a year. Support staff within mid-size firms usually earn between $45,000 – $65,000 annually, while administrative staff averages between $60,000 – $85,000 per year. Depending on the market, size of the firm, and number of attorneys, the total administrative staff within a mid-size firm can vary accordingly. Among the biggest cities in the United States, the total number of administrative staff can be as high as 10, with a corresponding average salary of $85,000 per year. This average shrinks to six administrative staff within the mid-size firm, however in the remaining cities, the average in such cases is $62,000.
Mid-Size Law Firms – What Affects Their Salaries
Salaries in mid-size law firms often depend on a range of factors, and how these factors interact can provide insight into the dynamics of a particular law firm’s salary structure. For example, pay is often determined by geographic location. Lawyers at large firms in metropolitan areas, such as New York, Los Angeles, and Chicago, receiving salaries that are considerably higher than their counterparts at similarly sized firms in smaller cities like Omaha or Rochester. According to CityCareerDesks.com, each of the top ten cities for lawyer salaries according to median salary are Chicago, California, Hawaii, Portland, Seattle, Austin, Minneapolis, Boston, Washington D.C., and New York.
Firm practice areas also affect salary ranges. According to a 2012 survey by ALM Media, many of the largest law firms in New Jersey reported having higher salaries for technology practices than for more traditional practices, as did some firms on Long Island, particularly in their corporate law divisions. Although salaries in new and emerging practice areas are generally higher, compensation plans at midsize firms reflect the level of competition that those divisions receive.
Firm revenue also has an obvious impact on employee pay. Again, ALM Media’s report found that firms with general litigation practices in Green Brook, New Jersey, Tallahassee, Florida, and Philadelphia reported the highest revenues per partner, which translated into the highest salaries for attorneys in those divisions.
Experience is another factor that influences salary. Attorneys with eight or more years of experience are the most likely to see salary increases, while those with between three and seven years of experience are the next most likely to earn raises in their pay. Attorneys with less than three years of experience earned the lowest pay increases in a 2012 ALM Media report.
Experience has another effect on salaries; highly experienced attorneys are also substantially more likely to hold equity partner status than less experienced attorneys. Equity partners earn higher salaries than non-equity partners, and in 2012, equity partner salaries averaged over $100,000 higher than salaries among non-equity partners.
Salaries at Small vs Mid-sized Law Firms, and at Larger Law Firms
Salaries at mid-size firms in most cases are higher that those at small firms, but typically far lower than at larger firms. Differences in salaries at these three types of law firm generally are based on firm profitability, practice area and the market in which the firm is situated (as well as the size of the firm, it goes without saying). At mid-size firms, salaries for experienced partners often are at or near market, particularly those in large firms (in contrast to smaller firms, where salaries at all levels generally are lower than those paid in larger firms). While mid-size firms may be less profitable than their larger counterparts, their management structures are leaner. Also, because they generally have much more modest overhead, they can command premium rates despite the deferred compensation payouts often associated with larger law firms. Although comparable in profitability to mid-size firms , larger firms generally create greater disparity in pay. Salaries at large firms vary widely based upon factors that include competition, economics, geography, practice area(s) and proximity to other large firms as well as the firm, itself. In many instances, the disparity in salaries is due to the differential between the largest and smallest firms. For example, the average salary for a 200-member firm can be approximately $53,000, while the average salary for a 2,000-member firm can reach $161,000. Thus, while the former statistics might indicate that size is held steady at 20 percent margins, the impact of larger firm sizes can be substantial. Indeed, even though the dollar gap between the average salaries at a 200-member firm and a 2,000-member firm is $108,000, that difference is not nearly as significant when expressed as a percentage.
Opportunities to Increase Salary
Mid-size law firms typically offer a myriad of opportunities for attorneys to advance their careers and incomes over time. For more junior attorneys, engagement on particularly high-quality matters and the reputation of the firms can be a strong predictor of salary increases. As associates grow into senior or more nuanced levels, they may become eligible for promotions that come with a salary increase in two ways: from a Junior Associate to a Senior Associate, and then from a Senior Associate to a Non-Equity Partner, and ultimately to Equity Partner.
Performance bonuses also provide opportunities for associates to earn above their base salary. Entire offices in mid-size firms are often awarded performance bonuses during a strong economic year, while some tiers of associates can be eligible for individual performance bonuses. Associate bonuses have become commonplace at many mid-size firms and can range from thousands to tens of thousands of dollars. As junior associates develop their practices and obtain their own work, they will start earning origination credits. Some mid-size firms do not distribute origination credits to associates until they start receiving direct compensation. That is, first-year associates do not receive credit for the work they do; however, as they progress through their careers they will start seeing some of that. As responsible for originating work and building relationships, more senior associates who are seen as "rainmakers" tend to be compensated better than their peers with similar hours, and are targets for becoming equity partners.
Strategies for Negotiating Salaries at Mid-Size Firms
Knowing what salary you are seeking is one thing. But then you have to sell the firm on your value. This, of course, is easier if you’re not networked in and have multiple comparable offers – both of which signal that you are a hot commodity.
But what about those with limited connections? Maybe you’re coming from a foreign law firm and don’t yet have a U.S. bar (yet have experience); or maybe you’ve been working for the past couple of years out of the typical hiring cycle. Your best way of gaining leverage is to do as much research as possible in advance.
Tap into your personal network. Tap into your existing personal network, whether it’s friends, colleagues or law school classmates. You might be surprised by how candidly people will share their salaries with you, especially if you’re within their network — meaning they’re generally friendly to you already and won’t be annoyed by your inquiries. Don’t be afraid to be direct and ask for advice in knowing what you should be seeking.
Additionally, Examples of some of the questions you can ask include:
Determine the market rate for your practice area. Take stock of your professional experience and track record regarding client development and business, as well as the overall profile of your former employer. The more sophisticated firms tend to use compensation surveys to benchmark their associate salaries. Thus, you should inquire of newly hired associates who have just joined your prospective firm what they were making at their former employer. Confirm whether that law firm used surveys to determine compensation. The law school or home country of those new hires is of particular note . Did they work in a City, or even a country, known for significantly higher associate salaries? Do they have five or more years of experience and/or other particularly noteworthy profile-raising credentials?
Meet with a professional recruiter to understand the range of compensation for your profile. The best recruiters are those who have gotten to know their candidates so they are able to give you the most accurate guidance possible. It’s a professional service that most law firms pay a retainer for, and in exchange, you can expect full candor about the compensation landscape for candidates of various backgrounds in relation to the firm you’re interviewing with.
The Recruiter’s Edge
For example, a recruiter can tell you what similar firms are paying for the same profile, which in turn should give you a handle on where your prospective employers might come in on your compensation negotiation. Recall, however, that salaries at mid-size firms vary significantly based on the practice area. As such, while a bi-coastal firm might be offering an associate in M&A $250k and a mid-sized firm in San Francisco is offering the same profile $180k, compensation for a mid-sized firm in tort litigation might be the same or higher than a large firm due to the fact that there is broader agreement among firms in terms of compression of compensation, i.e., the relative value assigned to each year of experience, as well as scarcity of talent in that area.
Thus, the more knowledge you can glean about your prospective firm’s compensation process and how it compares to others, the more leverage you will have in negotiating a salary that meets your requirements.