Law Firms NAICS 541110

Jun 29, 2026 - Competition and High Turnover is Driving Up Legal Base Salaries

• Competition for top legal talent is driving salary increases at the nation's largest law firms, underscoring the industry's strong profitability despite ongoing questions about AI's long-term impact. Milbank recently raised starting associate salaries to $235,000, with eighth-year associates earning up to $455,000 in base pay, and Sullivan & Cromwell quickly matched the new scale. The pay increases reflect years of consolidation, rising billing rates, and growing profits concentrated among a smaller group of equity partners. According to legal consultant Kent Zimmermann of Zeughauser Group, compensation for a handful of top partners now exceeds $30 million to $40 million annually. At the same time, firms are contending with higher turnover, with the National Association for Law Placement reporting that a record 83% of associates who left firms in 2025 did so within their first five years, prompting firms to recruit promising law students earlier than ever.
• US law firms are raising rates as demand for specialized legal expertise remains strong while attorney salaries, regulatory complexity, and billing rates continue climbing. According to the Bureau of Labor Statistics’s Producer Price Index, law firms prices climbed 7.55% YOY in April. In corporate law, clients are paying more for legal services tied to litigation, cybersecurity, AI regulation, compliance, and complex transactions - areas where clients are less sensitive to price increases because the legal risks are so high. At the same time, competition for experienced attorneys has pushed compensation sharply higher (up 4.4% YOY in March to an average of $52.48 per hour), especially at large firms, costs that practices have largely passed on through higher hourly rates. Unlike many industries facing pricing pressure, law firms often maintain strong pricing power because legal services are viewed as essential rather than discretionary spending.

• Sullivan & Cromwell, one of Wall Street's most prestigious law firms, apologized to a federal bankruptcy judge after submitting a court filing riddled with AI-generated errors - including fabricated case citations and misquoted law. The mistakes were caught by opposing counsel, Boies Schiller Flexner, and Sullivan admitted its AI policies and secondary review process had both failed. The incident illustrates a broader and growing danger in the legal profession: as AI tools become embedded in legal research and drafting, even elite firms with formal oversight protocols can submit fiction as fact to a court. Unlike most industries, law carries a unique accountability burden; attorneys are ethically obligated to verify every submission. US judges have already sanctioned lawyers in dozens of similar cases. Sullivan & Cromwell's stumble is a warning that AI hallucinations are not just a technology problem, but a professional liability crisis quietly spreading across the legal industry.
• Four prominent law firms (Jenner & Block, Perkins Coie, Susman Godfrey, and WilmerHale) urged a federal appeals court in late March to uphold rulings blocking executive orders Trump issued against them. The orders sought to restrict the firms' lawyers from federal buildings and cancel government contracts held by their clients, accusing them of weaponizing the legal system against him. Four federal judges found the orders violated First and Fifth Amendment protections and permanently blocked them. The DC Circuit Court of Appeals will hear oral arguments in May. The case also exposes a troubling divide within the industry: nine other major firms, including Kirkland & Ellis and Skadden Arps, chose to settle rather than fight, collectively pledging nearly $1 billion in free legal work to causes Trump supports, raising questions about the profession's commitment to constitutional principles.