Starting salaries are rising behind the M&A spree
Back in mid-1980’s, my undergraduate classmates had a very clear goal in mind for their career path. The path is crystal-clear for them. They are going to either law school or medical school. As young as they were turning to twenty-years old, the goal of rigorous study in Ann Arbor, Michigan, was set for life. Those Jewish American friends studied the subjects for good grades, which passed on to the admissions for good law schools in America. I wonder if they were so passionate about law schools for years.
As usual, a story of elite law firm came to my attention last July, 2021. The Economist magazine illustrates a booming trend of America’s elite law firm in New York City behind M&A spree. The coverage sends the earning bonanza to the legal readers, describing “Big law, White shoes are made for earning’ “ in the upper left hand corner of the weekly newspaper. The message is clear enough.
During the first six months of this year, M&A deal has reached a record high at 16,000 cases with at least one American entity involved in the deal, up nearly 50% from the same period in 2016 to 2020. The industry journal, American lawyer, reports that the top 100 firms boosted their profits by 7% to $111bn. Profits per partner reached a record high at $2.2m. Partners are in demand. So are young legal professionals from law schools in America.
To match a growing demand for due diligence on a deal, partners of top firms in New York bid law students with astonishing starting salaries. The industry standard for new associates offers $190,000 to $200,000 for M&A lawyers. Among elite firms, Davis Polk offered a freshman $202,500. Other firms need to bid higher to add special spring bonuses in the competitive market.
Here is the list of law firms described in the story of the British magazine.
Most of my classmates became professional lawyers, especially those from New York City. Time has passed so quickly and a sudden disconnection with those lawyers to this day was inevitable. There was no facebook or instagram at that time. Since they were typical family people, I would ask them if their children have gone to law schools. My question would be, “Do any of your children work for one of these law firms in New York?” If answer is yes, I will be smiling at them.