That’s the moral of a recent "flash survey" of top General Counsel by Altman Weil on the latest round of salary increases for starting associates.  And that’s demand as a noun, not a verb.  Here are the key findings and insightful comments submitted by GC s:

  • 58% of the GCs believe the newest increases are "outrageous".  Only 20% were indifferent to the increases.
  • 100% reported that no panel firms had contacted them to discuss associate salary increases and what they mean for that GC and his or her company.  At the same time, 84% believe that they should have been contacted.
  • Among the comments:
    • Law firms are presently riding high on high utilization rates. It will not always be this way. In economic terms, law firms are causing "demand destruction." Over time, clients will learn how to demand less legal services from the major firms, and they will be left with squadrons of overpriced, under-utilized associates who they will have to surplus. Markets have a way of correcting themselves.
    • May cause us to use second tier firms more aggressively on certain matters.
    • This is just one more factor that goes into the selection of law firms. The big pricey firms are only going to get tapped by us when we absolutely need that kind of lawyering, and we are going to insist on budgets and ridge herd on the process. The tension level just keeps increasing between the outside firms and the inside departments.
    • It’s making us seriously evaluate our outside counsel selection more urgently than we have done in the past.

That’s why I view every announcement of increased starting salaries for new associates as good news:  the firms who march to that beat are putting their client relationships at risk.  And for those of us who view our relationships with clients differently.

The Altman Weil survey is available here.