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DLA Piper, one of the largest law firms in the United States, has recently announced significant salary increases and bonuses for its associates, matching the generous compensation system of Cravath, Swaine & Moore LLP. This move comes amidst a highly competitive legal labor market, where firms are battling to attract and retain top talent.
A Generous Compensation System
DLA Piper, the No. 3 law firm in America according to the most recent Am Law 100, with about $3.1B in 2020 revenue, has upped salaries for associates once again. The firm was quick to match the Milbank money back in January, but since then, has remained quiet concerning more cash. Now, the mega-firm has adopted the Cravath scale.
DLA Piper’s US associates will see their raises reflected in their paychecks on April 8, retroactive to January 1. The firm is also offering additional year-end payments ranging up to $150,000 apiece. This is a significant change from the previous year, when associates described the firm’s year-end bonuses as “absolute horseshit.”
In addition to matching the Cravath scale, DLA Piper is offering even more money on top for associates who really went above and beyond during 2021. The firm is decreasing its “production hours” threshold from 150 to 100 hours and making adjustments to its incremental hours bonus increases, upping them from 2020 levels and escalating them on a cumulative basis.
As co-managing U.S. partners Jackie Park and Rick Chesley note in the firm’s bonus memo, “The net effect of these modifications are potential bonus awards for our highest-rated and most productive associates of up to 50 percent or more overmarket.”
A Competitive Legal Labor Market
The legal labor market has become increasingly competitive, with firms vying for the best talent. This competition has led to a rise in salaries and benefits offered to associates. Firms are now more than ever focused on creating attractive compensation packages to lure in and retain top talent.
DLA Piper’s move to match the Cravath scale is a clear indication of this trend. By offering competitive salaries and bonuses, the firm is positioning itself as an attractive option for associates looking for generous compensation packages.
The competition in labor markets has been a topic of discussion within the competition community on monopsony and labor market power retained by employers. In June 2019, the OECD held a hearing aimed at discussing the anticompetitive concerns in labor markets. The session focused on the factors contributing to the creation of monopsony power and its effects on workers and consumers. It explored why cases involving monopsony power have been relatively rare, and what use competition authorities could make of their enforcement powers to prevent the creation of monopsony power, for example through mergers or no-poaching agreements, and the abuse of that power.
DLA Piper’s recent announcement of salary increases and bonuses is a strategic move designed to attract and retain top talent in a highly competitive legal labor market. By matching the Cravath scale, the firm is sending a clear message to associates about its commitment to offering competitive compensation.
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