The salary bubble at law firms is bursting.
Pay for first-year lawyers soared during the economic boom, with new associates getting $160,000 a year from L.A.'s largest firms.
But downtown L.A. firm Allen Matkins Leck Gamble Mallory & Natsis LLP, which is known for its real estate and land use expertise, cut its first-year associate salaries to $145,000 from $160,000 last month.
Managing partner Brian Leck said the firm concluded that paying first-year associates $160,000 was no longer a sustainable compensation model.
"Looking at our firm, clients and services we render, we think that $145,000 is probably a better base salary for first-years," Leck said. "We are comfortable with it."
The deflation in pay could be seen as a mirror of the real estate bubble, but slightly delayed.
In 1996, the starting salary in Los Angeles was $75,000. The rate remained steady at $125,000 during the early 2000s. However, the fierce competition for talent and the thriving economy saw law firms increase the starting salary to $135,000 in 2006, $145,000 in 2007 and $160,000 in 2008.
Allen Matkins is the sole L.A.-based firm to cut first-year associate salaries so far. However, eight out-of-state law firms with an L.A. office have taken the ax to their starting rates since March, most back to $145,000.
Leck isn't quite sure if Allen Matkins' cut will prompt other L.A. firms to follow suit.
"Our purpose wasn't to take a leadership position," Leck said. "We did what we thought was best for our law firm, and good for our first-year and incoming classes of young attorneys."
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