Pokemon wrote:Monochromatic Oeuvre wrote:bruinfan10 wrote:rpupkin wrote:Anonymous User wrote:The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.
The bolded isn't true.
Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.
Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.
While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.
800k seems really high in my opinion. A lot of ny law firms have economies of scale (it and a lot of support is firm wide and based in lower cost locales). Rent is an expense but there seems to be other businesses with lower margins based in NYC A Office space and doing ok. Also, rent is a relatively fixed costs that does not expand with attorney numbers.
Even a few years ago, S&C was already over $800k per lawyer and Cravath was at something like $775k. Factor in the salary bump and generalized inflation and you'll get a few more approaching those numbers, although of course more would be in the $600k-700k range.
Rent is only really a fixed expense within a given tranche. When you lease by floor, obviously it's fixed within the capacity for what you have, but after you've filled the 50 attorneys and 25 support staff or whatever the capacity that your prescribed level of flexibility demands, you need to lease more space. If you're a bigger office like Skadden or Paul Weiss in NYC, that might be just a year or two of headcount shifting. If you're too inflexible with respect to space, you have to either cram people tighter (which everyone hates) or risk not having enough people to do work/overworking people (which are both bad). It's not fixed in a meaningful sense because your space needs might be very different in 2007 than they are in 2009.