Well, not quite.

“New York To $190!” was, of course, the long-running headline Above The Law printed frequently in more innocent and/or palmier days, with (we suppose) a combination of hope and bemusement. Well, Cravath’s pre-emptive strike of going to $180 today didn’t quite get us there. Welcome to the New Normal—or the New Mediocre, the version I’m fond of because of its pith.

Now, here at Adam Smith, Esq. we have a long-standing policy of not reporting or commenting on breaking news, but we view it as a metaphysical question whether something that hasn’t happened for a decade can be characterized as “breaking news.” Shark attacks and tornados descending on trailer parks are breaking news. Rather, we see it more as an opportunity to provide a bit of background and informed speculation. In any event, cut the publisher here some slack and read on.

First, let’s start with the number. I wasn’t kidding when I called this “the new mediocre.” Actually, if you adjust for inflation since the last hike, to $160K, in early 2007, associates are losing ground—especially if you focus on changes in the cost of living in the New York metropolitan area, which is presumably the only locale Cravath cares much about. Courtesy of the BLS, to achieve the same purchasing power as $160,000 would have gotten you in 2007 would require about $189,500 in 2016. Maybe “New York To $190″ was more accurate than anyone realized.

BLS.Gov.CPINYC

Second, might there be unintended consequences in the form of higher performance expectations of associates? Understanding that “performance,” a/k/a “productivity,” translates to one and only one thing: Billable hours. Alas, this is the kind of “known unknown” we’ll never be able to figure out. But just a thought.

Third, consider the disparate impact bumping every associate up by $20,000—$35,000/year has on partners personally depending on how highly leveraged a firm is. If the blended average $$ increase/associate works out to, say, $30,000/year, Wachtell’s roughly 1:1 ratio means this “costs” Mr./Ms. Equity Partner…$30,000. At a firm with a 5:1 ratio, say, you can do the math.

Fourth, is this enough of an increase to quell the siren songs of investment banking, private equity, sexy in-house positions (Google, anyone?), or Silicon Valley/Flatiron District startups? Even putting aside that all those players can offer equity and law firm’s can’t: Not a chance.

Finally, and this may be in the back of the minds of some of the super-elite firms who will follow Cravath with no questions asked (if they haven’t already by the time we hit “publish” on this column): Might there not be an element of “I dare you,” or “Take that,” to slightly less prestigious firms? Of course, no one would ever breathe a word along these lines, but lawyers are clever in general and positive prodigies when it comes to inferring that suspect motives must lie behind others’ behavior—so we know people will be thinking this.

I’ll leave you with an economic and not a psychological extrapolation of that final observation. At the ends of the spectrum of associate pay which Cravath has just shifted out and to the right, we know there is a subset of firms, most of whom we can identify in our sleep, who will match this dollar for dollar as fast as they can polish a press release. At the other end of our spectrum is a group of firms who wouldn’t match this in a million years. The antipodal cases are not of much interest.

The interesting sector to watch will be the firms on the cusp, inbetween: Who will match and who won’t? Will everyone who’s now on the bus stay on the bus? In terms of law firm performance, quite a lot has changed in the decade since the last New York Bump. Many firms there in the middle are now face to face with an unwelcome and unavoidable decision. That’s the group I’d keep my eye on.

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