Nonpartner track jerb? Damn Forum

[AreJay711]

Some people actually prefer rural areas over concrete shitholes that require an hour+ commute every day. I know this may be a difficult concept for some of you to understand--not everyone wants to live in NYC/DC.

True but TBF in that case taking out a lot of debt for law school probably isn't a good idea. WV is pushing it but I wasn't that impressed living in NYC (I was poor though).

[A'nold]

Doesn't it still go on your resume as a biglaw firm?

[09042014]

Doesn't it still go on your resume as a biglaw firm?

With your title as something that isn't "Associate."

[Renzo]

Quote from article:
“Everyone acknowledges that $160,000 is too much, but they don’t want to back down because that signals they’re just a midmarket firm,” said Mr. Henderson. “It’s a big game of chicken.”

That quote is the biggest pile of self-serving bullshit ever. You know how they could afford to pay associates higher salaries? Pay partners less. So by "everyone" he means "everyone who is a law firm partner and would be richer if they could cram down associate salaries."

It is a big game of chicken, though--he's right about that. But the game is "how hard can we work these associates, and for how little money, before they just won't work here anymore?"

[Rock-N-Roll]

But firms are making money hand over fist.

I don't understand. I thought it was pretty much a fact that firms were not making what they were pre-economy-crash, and thereby, less money trickling down to associates?

Go look at firm revenue and firm profit per partner. Firm revenue took a 5-15% dip on average for one year. And have been growing again.

The problem was that when the crash happened, they had too many attorneys and not enough work. So they fired a bunch and now it's back to being even. This entire ITE was a reaction to over hiring the years immediately preceding the crash.

The entire big law layoff is just a problem of the leverage model they use, combined with the partnership model. These firms need 500K/partner every single year or they implode. 400K this year, 600K next year isn't good enough.

TL;DR; shockingly lawyers run their business like retards.

Well, based on this article, I'm not as cynical about the business savvy of big law partners.

As I understand it, ITE clients are aggressively pushing law firms to lower their hourly billing rates. And so I believe that this new in-sourcing model may be an experiment in which big law firms try and see if they can optimize total billing hours versus the cost of associate labor while maintaining the prestige-level of incoming associates (one of the associates mentioned in the article was a NW grad). If my interpretation of the article is correct, and this experiment works out, it could well mean a cut-back on partner-track hiring.

[Rock-N-Roll]

[quote="Renzo"]
That quote is the biggest pile of self-serving bullshit ever. You know how they could afford to pay associates higher salaries? Pay partners less. /[quote]

Based on my experience, this is just not how things work.

[Rock-N-Roll]

It is a big game of chicken, though--he's right about that. But the game is "how hard can we work these associates, and for how little money, before they just won't work here anymore?"

This.

[Renzo]

That quote is the biggest pile of self-serving bullshit ever. You know how they could afford to pay associates higher salaries? Pay partners less.

Based on my experience, this is just not how things work.

I realize that it's not how it works, but I am offended when biglaw partners act like someone else controls how much associates make, and how much they work. If they wanted to pay them less, they could. If a half-decent firm cut salaries by a third, but guaranteed a 45hr work week, top students would be killing each other for the job. But they won't do that, because it would mean the partners would skim less profit off the associates, and that would just be unthinkable.

[DAJ_Summer]

now that firms are no longer taking in money hand over fist.

Have you even bothered to look up the stats? There are a large number of firms where the current revenue per lawyer is over a million dollars.

[Kohinoor]

http://www.nytimes.com/2011/05/24/busin ... ner&st=cse

Opinions?

If the hours and demands are really lower, seems quite nice for people that make it through LS without too much debt and know they don't want the partner-track grind.

[Rock-N-Roll]

now that firms are no longer taking in money hand over fist.

Have you even bothered to look up the stats? There are a large number of firms where the current revenue per lawyer is over a million dollars.

It was a gestalt sense I took away from various reports in popular media. I don't have hard data.

Your data seems anecdotal too in all fairness...

If you have hard data showing that the economic downturn has not adversely affected a large number of firms, I am (genuinely) interested. What you posted is not the impression I had, and I guess if you were right it would strongly go against my take on the NYTimes article.

[DAJ_Summer]

now that firms are no longer taking in money hand over fist.

Have you even bothered to look up the stats? There are a large number of firms where the current revenue per lawyer is over a million dollars.

It was a gestalt sense I took away from various reports in popular media. I don't have hard data.

Your data seems anecdotal too in all fairness...

If you have hard data showing that the economic downturn has not adversely affected a large number of firms, I am (genuinely) interested. What you posted is not the impression I had, and I guess if you were right it would strongly go against my take on the NYTimes article.

http://www.law.com/jsp/tal/PubArticleTA ... 2489360701

Here's one that isn't behind a paywall:

http://www.law.com/jsp/tal/PubArticleTA ... hbxlogin=1

My point isn't that firms are all doing great, it's that a legitimate large number of them are (still) so profitable that a $160K starting salary is easily justifiable. That's 16(!) large law firms with RPL of over $1,000,000, 53 have an RPL over $800,000, and 99 of the 100 firms they track have an RPL over $500,000.

Those numbers are probably down from the booms of 2007, but they're still objectively enormously.

[Stoic]

Some people actually prefer rural areas over concrete shitholes that require an hour+ commute every day. I know this may be a difficult concept for some of you to understand--not everyone wants to live in NYC/DC.

I don't get why everyone who disagrees with an opinion on here has to be a jerk about it. But not wanting to live in WV has a lot more to do with than just a lack of an urban lifestyle.

[Rock-N-Roll]

Here's one that isn't behind a paywall:

http://www.law.com/jsp/tal/PubArticleTA ... hbxlogin=1

This data is really interesting and I appreciate you showing it to me. But could it not also be interpreted as the glass being half empty (i.e. what I thought originally)? Looking at the RPL measure across these 100 firms shows that more than half took some degree of loss (ranging from -0.5% to -19.1%).

[Rock-N-Roll]

My point isn't that firms are all doing great, it's that a legitimate large number of them are (still) so profitable that a $160K starting salary is easily justifiable. That's 16(!) large law firms with RPL of over $1,000,000, 53 have an RPL over $800,000, and 99 of the 100 firms they track have an RPL over $500,000.

Those numbers are probably down from the booms of 2007, but they're still objectively enormously.

I totally hear what you're saying. In terms of absolute numbers these RPLs are high. But as I understand it a big law firm is run as a for-profit business. Thereby a year in which there is either a loss or even a non-gain in earnings is considered a negative.

If partners at a big law firm were to decide to cut overhead in response to a negative earning year (regardless of their absolute earning), I would expect one of the first places that they would do that is at the associate level. The trick for them would be to then still maintain billing hours and firm prestige. I am still therefore wondering, like I wrote in my earlier posts, whether this insourcing thing (as described in OP's article) is a big cost cutting experiment for big law firms.

[bdubs]

My point isn't that firms are all doing great, it's that a legitimate large number of them are (still) so profitable that a $160K starting salary is easily justifiable. That's 16(!) large law firms with RPL of over $1,000,000, 53 have an RPL over $800,000, and 99 of the 100 firms they track have an RPL over $500,000.

Those numbers are probably down from the booms of 2007, but they're still objectively enormously.

I totally hear what you're saying. In terms of absolute numbers these RPLs are high. But as I understand it a big law firm is run as a for-profit business. Thereby a year in which there is either a loss or even a non-gain in earnings is considered a negative.

If partners at a big law firm were to decide to cut overhead in response to a negative earning year (regardless of their absolute earning), I would expect one of the first places that they would do that is at the associate level. The trick for them would be to then still maintain billing hours and firm prestige. I am still therefore wondering, like I wrote in my earlier posts, whether this insourcing thing (as described in OP's article) is a big cost cutting experiment for big law firms.

They did that, but by cutting people and not salaries. It's funny but wages in every industry are sticky and tend not to be adjusted downward in times of hardship. It's a lot easier to just fire your bottom 10% of associates by billed hours.

[Rock-N-Roll]

They did that, but by cutting people and not salaries. It's funny but wages in every industry are sticky and tend not to be adjusted downward in times of hardship. It's a lot easier to just fire your bottom 10% of associates by billed hours.

Sure. But what is holding firms back from the next step?

Suppose you have two attorneys working at one of these insourcing centers each earning $50,000/yr and expected to work 50 hrs/wk while billing 40 of those 50 hours.

Those two attorneys would combine to give a consistent 80 billing hours/wk for the cost of $100,000/yr versus a traditional associate who could max bill out (what?) 60 - 70 hours/wk consistently at a cost of $160,000/yr.

If clients were happy with this new system, firms might take things further turning the traditional associate system into a type of residency (like for medical school grads) where you start at one of these insourcing type positions when you graduate LS and have to work your way up to the $160,000/yr partner-track positions.

[bdubs]

They did that, but by cutting people and not salaries. It's funny but wages in every industry are sticky and tend not to be adjusted downward in times of hardship. It's a lot easier to just fire your bottom 10% of associates by billed hours.

Sure. But what is holding firms back from the next step?

Suppose you have two attorneys working at one of these insourcing centers each earning $50,000/yr and expected to work 50 hrs/wk while billing 40 of those 50 hours.

Those two attorneys would combine to give a consistent 80 billing hours/wk for the cost of $100,000/yr versus a traditional associate who could max bill out (what?) 60 - 70 hours/wk consistently at a cost of $160,000/yr.

If this insourcing experiment worked out for firms they could take it further turning the traditional associate system into a type of residency (like for medical school grads) where you start at one of these insourcing type positions when you graduate and have to work your way up to the $160,000/yr partner-track positions.

They don't bill at the same rates, the entire point is to provide a source of cheap labor for tasks that don't require a great deal of sophistication.

[Rock-N-Roll]

They don't bill at the same rates, the entire point is to provide a source of cheap labor for tasks that don't require a great deal of sophistication.

Absolutely a good point, but hopefully you'll grant me that it need not remain that way.

In general, I know I'm being totally alarmist, but I look at this current system and I wonder what are the pressures that drive partners to keep paying new associates $160,000/yr when there is information out there that claims that these firms are not earning as much as they were before and clients are now bucking hard to lower billing rates?

[bdubs]

They don't bill at the same rates, the entire point is to provide a source of cheap labor for tasks that don't require a great deal of sophistication.

Absolutely a good point, but hopefully you'll grant me that it need not remain that way.

In general, I know I'm being totally alarmist, but I look at this current system and I wonder what are the pressures that drive partners to keep paying new associates $160,000/yr when there is information out there that claims that these firms are not earning as much as they were before and clients are now bucking hard to lower billing rates?

The rates are all relative, having expensive resources means that partners get to justify even higher rates for themselves.

Remember that this market is one where you are paying for prestige, not necessarily for services rendered. Most clients have no idea how to gauge the quality of the legal representation that they get, so they seek out the firm with THE REPUTATION that meets their perceived level of need. Dropping associate salaries would tarnish that reputation and ability to bill at exorbitant rates.

You can actually thank the salary transparency of most law firms for this, other industries have much more closely guarded pay practices.

[09042014]

They don't bill at the same rates, the entire point is to provide a source of cheap labor for tasks that don't require a great deal of sophistication.

Absolutely a good point, but hopefully you'll grant me that it need not remain that way.

In general, I know I'm being totally alarmist, but I look at this current system and I wonder what are the pressures that drive partners to keep paying new associates $160,000/yr when there is information out there that claims that these firms are not earning as much as they were before and clients are now bucking hard to lower billing rates?

The rates are all relative, having expensive resources means that partners get to justify even higher rates for themselves.

Remember that this market is one where you are paying for prestige, not necessarily for services rendered. Most clients have no idea how to gauge the quality of the legal representation that they get, so they seek out the firm with THE REPUTATION that meets their perceived level of need. Dropping associate salaries would tarnish that reputation and ability to bill at exorbitant rates.

You can actually thank the salary transparency of most law firms for this, other industries have much more closely guarded pay practices.

It's hard to justify 200 dollars an hour billed if you are only paying that associate 50K a year.

[laborday]

If clients were happy with this new system, firms might take things further turning the traditional associate system into a type of residency (like for medical school grads) where you start at one of these insourcing type positions when you graduate LS and have to work your way up to the $160,000/yr partner-track positions.

The problem is that every medical resident will become a physician. In the nonpartner track system that you proposed, most of the non-partner track associates will not become a partner. The difference is that there is a lack of medical school grads, but too many law school grads.

[bdubs]

It's hard to justify 200 dollars an hour billed if you are only paying that associate 50K a year.

It's a lot easier if the firm you are billing has no idea what you are paying the associate.

In my consulting firm the consulting level staff only make 10-15% of their bill rates in salary.

[bgdddymtty]

I can't get over how someone can say $160,000 is too much when many law students are forced to take on $120,000+ debt to cover tuition.

You're showing a bit of economic ignorance here. Associate salaries aren't based on tuition costs. In fact, they're only affected by them inasmuch as the cost of the input (education) reduces the number of willing suppliers (JD's) of the output (associate work) at the offered price. And we all know that hasn't happened yet. As long as there are droves of law students willing to sell their lives for $160K, firms are paying "enough" (or perhaps even "too much").

Also, BigLaw services are quite possibly, as many have pointed out here (in not so many words), a Veblen good.

[spinecho202]

I can't get over how someone can say $160,000 is too much when many law students are forced to take on $120,000+ debt to cover tuition.

It has nothing to do with what lawyers 'deserve' based off of the work/risk/up-front capital required to attend law school... Fortune 500's or medium-to-small businesses simply cannot afford to pay law-firms to train their associates @ 160k a pop