Chalk it up to the increasing cost of a dot-com society.
West Coast law firm
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian
announced it was increasing the starting salary for its first-year associates by a whopping 44% to $145,000 a year, including a $20,000 guaranteed minimum bonus.
The squeals of joy you hear are from Silicon Valley real estate brokers and
dealers who've heard the news.
Gunderson Dettmer, one of the legal boutiques that serve the Valley's growing population of Internet start-ups and tech companies, made the compensation move as the West Coast legal industry sees increasing defections to Net companies.
The sizable increase for the first-year associates, who are currently making $96,000 a year with a $4,500 guaranteed bonus, was reported Thursday morning in
, a San Francisco legal trade newspaper.
The pay hike affected associates in their first through seventh years, although the increases weren't always the same percentage. For example, the fourth-year associates' base pay will rise 35%, to $195,000 from $144,000, including a guaranteed bonus. The pay increases go into effect Jan. 1. Stephen Franklin, a partner at Gunderson Dettmer, didn't immediately return phone calls seeking comment.
The legal profession is seeing the same squeeze as the
investment banking industry as Net and tech companies, both start-ups and established concerns, pillage them in search of chief executives, presidents, chief financial officers and legal counsels. For example, the general counsel of
, Mike Jacobson, left a partnership post at West Coast law firm
to join the Internet auction site.
It was unclear at this time if the larger West Coast firms, such as industry heavyweight
Wilson Sonsini Goodrich & Rosati
, would also hike salaries, a move that could prove expensive for the larger firms. Wilson Sonsini has 550 lawyers, compared to Gunderson Dettmer's 75.
It's doubtful that a single move by a relative small fry on the West Coast could spur bigger national firms to action. But that could happen, says Claude Johnston, a partner at
Pearl Meyer Partners
, an executive compensation firm. "The major New York corporate law firms are extremely competitive," Johnston explains. "If one of them followed suit, it would send them all into a tizzy."
Nonetheless, the West Coast does have a ways to go to catch up in the salary department. Most New York law firms pushed past the $100,000 mark for new associates in 1998.