I figured this is the best place to post my question. Does the OP, PKSebben or any other attorneys doing biglaw know how accurate this article is?http://www.lateralattorneyreport.com/2011/04/the-importance-of-law-firm-economics-to-your-legal-career/
It's a really interesting article, and if at least half of it is true, I think everyone aiming for biglaw should read it.
EDIT: The article is really long but it goes into detail on how law firm economics work. The article explains the role of the junior associate, senior associate, and partners. One of the main points is to explain how important the billable hour is for the success of the junior associate and that being successful at one's work does not translate at doing the work as efficiently as possible (e.g. billing less hours).
Here are some of the paragraphs I found most interesting.
One of the most important aspects of your legal career-and almost among the most mysterious to young attorneys and others working both inside and outside of law firms-is law firm economics. The economics of your particular law firm will have profound significance in terms of what happens with your legal career. Many legal careers end up being quite successful in certain law firm economic environments where they might fail in other economic environments. Smart attorneys and law students should have a good understanding of law firm economics before joining any law firm.
Generally-and indeed almost always-the law firm as an institution is almost never guilty of padding its bills and the time its associates work on various matters. I have never personally encountered an episode of this occurring. However, law firms do as institutions push both their partners and associates to pad their bills. Since the client is being charged on the basis of the billable hour, the client will receive an accurate bill for the hours reported by the attorneys who worked on a given matter. Whether or not this bill accurately reflects the amount of time necessary to complete a given task is another story.
The organization of most American law firms is as follows. First, the law firm generally will have a least a few law clerks who are law students or waiting for bar results. In large law firms, most law clerks are called summer associates. Second, the law firm will have junior, midlevel and senior associates. Third, the law firm will have attorneys at a counsel level and partners. At the partner level, there may also be levels of partners such as income partners and equity partners. At each stage of your seniority with a law firm, your value to the law firm will change and the expectations the law firm has of you from an economic perspective will change.
Law Clerk (Summer Associate) $140/hour
1st Year $170/hour
2nd Year $215/hour
3rd Year $265/hour
4th Year $310/hour
In considering the above billing rates you need to consider it from the point of view of the law firm and also the client. I personally hire attorneys all the time for the companies I work for. When you hire a law firm, you are generally working directly with a partner who will figure out the “most efficient way” to get the work done for you. Early on in your legal matter, there are usually a variety of legal matters that can be researched and analyzed. The partner may already understand these issues; however, he or she will generally say something like this to the client:
The work is then handed off to a junior associate. The junior associate knows that they are valued by their firm based on their individual productivity (i.e., how many hours they bill) and they have every incentive to work just as hard as they can and as many hours as they can on the project. The partner then can do more interesting work and rest assured that as many hours as possible will be given to the task and the bill correspondingly increased. None of this is to say anything dishonest is occurring; however, on many levels it may be: