'Why settle for the stand-in when you can get the star?' More L.A. firms raise first-year associate pay to $160,000.

While $160,000 was firmly established last month as the standard for first-year associate pay, the raise is filtering down to many second-tier law firms.

Last week Los Angeles-based Sheppard Mullin Richter & Hampton LLP raised its starting associate pay to $160,000, from $145,000. Sheppard's move answered a flurry of raises by Los Angeles firms Latham & Watkins LLP, Gibson Dunn & Crutcher LLP and Paul Hastings Janofsky & Walker LLP all announced the same raise on May 8. O'Melveny & Myers LLP and Morrison & Foerster LLP followed. Pillsbury Winthrop Shaw Pittman LLP announced a bump to 160 last week and Manatt Phelps & Phillips LLP will also match the increase, but not until January.

"To remain competitive and attract top notch legal talent, we decided to raise associate salaries," said Sheppard Mullin Chairman Guy Halgren. "We want our clients in California and elsewhere to be served by the best and brightest attorneys. To use a movie metaphor, in light of our entertainment practice in Century City, why settle for the stand-in, when you can get the star?"

Some industry observers believe that the firms, to offset the higher salaries, will have to hike fees and increase the number of billable hours attorneys will be required to work in order to achieve annual bonuses. None of the firms questioned would say those strategies are in their plans, however.

The flurry of raises started in New York earlier this year. In February, Quinn Emanuel Urquhart Oliver & Hedges LLP, a locally-based firm that is expanding its practice there, followed suit. Global firms Skadden Arps Slate Meagher & Flom LLP and Orrick Herrington & Sutcliffe LLP weren't far behind.

"It's funny to think that $145,000 is no longer market," said Courtney Goldstein, associate practice group leader of Major Lindsey & Africa LLC, "because it was market about a month ago."

Goldstein said that firms that gave raises in the first quarter of 2007 likely did so, at least in part, for the marketing boost. But the recent round of raises caught her by surprise.

"I think it's interesting that the firms that didn't match immediately are matching now," she said.

The frenzy might not be over yet. Some large firms have announced raises to $165,000.

Last year was the first time many firms increased starting pay since 2001. The going rate at that point was $125,000. The new standard was set, by the spring of 2006, at $145,000.

For Sheppard Mullin, which last year reported a 30 percent increase in revenue per lawyer to $1 million, $715,000 in 2005, this all seems part of the firm's rapid growth. Last year's revenues were up 13 percent, to $305 million, from $265 million a year earlier. Sheppard has languished in the white-hot legal market, compared to its competitors, because the firm has opened new offices funded directly from cash flow.

The firm has grown from 287 lawyers in 2000 to its current roster of 500. During that period it has also opened six of its 10 offices, in Century City, Santa Barbara, New York, Del Mar Heights and Washington, D.C. Sheppard also opened its first international office this year, in Shanghai.

Staff reporter Emily Bryson York can be reached at [phone], ext. 235, or at [e-mail].