As legal consultant Jim Cotterman explains on the Altman Weil blog:
[A]ssociate compensation still appears out of line. The reductions announced so far are about half of what is probably required (i.e. going from $160,000 to $145,000 should probably go much further to $125,000 or even $100,000); thus resetting the wage scale by a decade. This is a painful reality and one that surely will fire up emotions. But the tide has changed; clients are moving quickly and assertively to reduce legal spend. This goes beyond alternative fee arrangements (AFAs). Costs of outside legal bills are going to come down, and from the early signs — down dramatically. Services will be competitively bid, outsourced, off shored, converged, internalized, re-engineered, and even forgone. Now add the AFAs to create greater certainty regarding total cost along with a healthy measure of risk transfer from the client to the law firm. All of this will bring the major line item in any law firm — the cost of people — under assault. This will affect total employment, wage scales and job expectations. The pace of the salary change is directly affected by the pace of change in what clients will pay for legal services.Thoughts?