Aeroplane wrote:nealric wrote:I'm no economist, but doesn't it seem like this would work?:
Firm A employs 100 first-year's a year, each required to bill 2000 hrs, each making 160k, thus getting 200k hrs of billable work for $16 million.
Firm B employs 125 first years, each required to bill 1500 hrs, each making 110k, thus getting 200k hrs of billable work for $13.75 million.
Ignores the fixed costs of the associate (which are substantial)
This. Also ignores the inefficiencies & personnel issues that come with managing and delegating to more people. In theory, my pre-law school job could've been done by 4 people, each working 11-12 hours/week. In practice, it would've probably been a mess.
There are a lot of thing wrongs with it. In addition to those mentioned above, it would also make firms more vulnerable to changes in work flow. If a firm goes through a dry spell, you'll more have people doing nothing if more people are employed.
At the same time if people are working too many hours their work becomes less efficient as they become fatigued and disenchanted. By now, I'm sure that firms have worked their business models to maximize profits through the proper equilibrium of hours billed per associate.