On Sunday, The New York Times reported that Skadden, Arps, Slate, Meagher, and Flom, a prominent New York law firm, is paying one of its associates $80,000 to take a year off. The announcement, which highlighted the incredibly high salaries enjoyed by New York lawyers, prompted an outpouring of protests on the newspaper's online site.
The associate, 36-year-old Heather Eisenlord, plans to spend her free year traveling the world. She hopes to teach English to Buddhist monks in Sri Lanka, bring solar power to the Himalayas, and possibly spend a little time lying out on a few forgotten beaches. What she probably won't be doing, however, is worrying about her job: she has a guarantee that it will be waiting for her when she gets back.
Suffering from a drop in available legal work, Skadden, Arps has offered all of its 1,300 associates the opportunity to take a year-long vacation at one-third their basic pay. Employees who accept this deal will be immune from layoffs that occur while they are gone, and will be able to continue their advancement in the firm upon their return.
It's hard for people outside the New York legal arena to imagine the salaries that are standard at prominent "White Shoe" firms. For example, the starting pay for a lawyer at Skadden, Arps is $160,000, and employees receive bonuses for passing the bar, taking federal clerkships, and other criteria. By comparison, federal district judges earn $174,000 per year, while Associate Supreme Court Justices make $208,000. For that matter, pediatricians with seven years of training start at $135,000 per year.
When contacted about this story, one former Skadden, Arps employee immediately asked, "Did she get to keep the insurance?" In addition to base salary and bonuses, employees at New York's top legal firms get an impressive slate of extras; in the case of Skadden, Arps, these include on-site childcare, health club memberships, generous relocation expenses, college savings plans, and (of course) very generous health insurance coverage.
In some ways, Skadden, Arps' salaries are understandable. Top lawyers in New York firms can command up to $1,000 per hour. When asked to explain these wages, one lawyer commented that, correcting for the pound, top barristers in London were making comparable amounts of money. The justification was thin, given that the actual buying power of top London salaries was significantly below $1,000 per hour. However, the real reason hardly required explanation: with Wall Street honchos pulling down multimillion dollar bonuses, New York lawyers could hardly be expected to accept significantly lower wages.
One could easily argue that the outrageous salaries of Skadden, Arps lawyers say a lot more about big business than they do about the legal profession. With thousands of lawyers accepting low-paying document review positions and large amounts of legal work being outsourced to India, it's clear that lawyers are suffering from many of the same problems that are plaguing the rest of the business world. This, incidentally, helps explain why Skadden, Arps offered its employees a year off in the first place.
As America reconsiders the way that it does business, maybe it needs to extend its consideration beyond the boundaries of Wall Street and Detroit. Viewing legal salaries, or hedge fund paychecks, or CEO bonuses in isolation only tells a fraction of the story; in an environment where paychecks are how professionals keep score, out-sized salaries are a natural progression.