Would Lower-Margins Make BigLaw Partnership More Enjoyable?

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Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 12:59 pm

Hello,

I was talking to a junior litigation partner at my big-law firm recently (V80-100). He frankly did not seem to like his job at all. He complained that because the firm charges such a high price point, he has had to turn away a lot of low-value work that included many interesting and emotionally satisfying cases. He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that partners get to pocket more money in the end (i.e. high-margin work)?

ETA: Is it different in mid-law or small-law? Do they charge less money? Or is it the same price point just fewer lawyers?

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deepseapartners

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby deepseapartners » Mon Jun 26, 2017 1:32 pm

It is different at smaller firms, because you can't bill out at $1000/hour as a partner so you don't need to take or seek out cases where the client will accept that (ludicrous) hourly rate. Is that what you were asking?

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 1:34 pm

deepseapartners wrote:It is different at smaller firms, because you can't bill out at $1000/hour as a partner so you don't need to take or seek out cases where the client will accept that (ludicrous) hourly rate. Is that what you were asking?


Yes, that's exactly it. Thanks.

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Monochromatic Oeuvre

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Monochromatic Oeuvre » Mon Jun 26, 2017 2:42 pm

Anonymous User wrote:What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that partners get to pocket more money in the end (i.e. high-margin work)?


(Guy who doesn't know how businesses work)

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby malibustacy » Mon Jun 26, 2017 3:25 pm

Anonymous User wrote:Hello,

I was talking to a junior litigation partner at my big-law firm recently (V80-100). He frankly did not seem to like his job at all. He complained that because the firm charges such a high price point, he has had to turn away a lot of low-value work that included many interesting and emotionally satisfying cases. He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that partners get to pocket more money in the end (i.e. high-margin work)?

ETA: Is it different in mid-law or small-law? Do they charge less money? Or is it the same price point just fewer lawyers?


Hello,

I was talking to a junior sales person at my fancy jewelry job (think Tiffany's). He frankly did not seem to like his job at all. He complained that because the shop charges such a high price point, he has had to turn away a lot of customers. He would much rather take on many sales, so he can spend most of his time actually, you know, being a jewelry salesperson, rather than have to do what he does now: spend 95% of his time trying to land a large buyer.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that owners get to pocket more money in the end?

ETA: Is it different in other jewelry stores? Do they charge less money? Or is it the same price point just fewer salespeople?

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Bobby_Axelrod » Mon Jun 26, 2017 3:52 pm

Monochromatic Oeuvre wrote:
Anonymous User wrote:What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that partners get to pocket more money in the end (i.e. high-margin work)?


(Guy who doesn't know how businesses work)


Really helpful comment, not at all useless. Well done.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby rpupkin » Mon Jun 26, 2017 4:19 pm

Anonymous User wrote: Is it different in mid-law or small-law? Do they charge less money? Or is it the same price point just fewer lawyers?

There are a few elite litigation boutiques that charge roughly the same rates (and take the same kinds of cases) as big law firms. Those exceptions aside: yes, mid-law and small-law firms charge (and make) less money.

It's not a coincidence that the typical senior associate at a big law firm makes about $400K between base and bonus while an associate counterpart at a mid-law firm probably makes a third of that. Mid-law firms have lower revenue and lower expenses.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 4:23 pm

malibustacy wrote:
Anonymous User wrote:Hello,

I was talking to a junior litigation partner at my big-law firm recently (V80-100). He frankly did not seem to like his job at all. He complained that because the firm charges such a high price point, he has had to turn away a lot of low-value work that included many interesting and emotionally satisfying cases. He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that partners get to pocket more money in the end (i.e. high-margin work)?

ETA: Is it different in mid-law or small-law? Do they charge less money? Or is it the same price point just fewer lawyers?


Hello,

I was talking to a junior sales person at my fancy jewelry job (think Tiffany's). He frankly did not seem to like his job at all. He complained that because the shop charges such a high price point, he has had to turn away a lot of customers. He would much rather take on many sales, so he can spend most of his time actually, you know, being a jewelry salesperson, rather than have to do what he does now: spend 95% of his time trying to land a large buyer.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that owners get to pocket more money in the end?

ETA: Is it different in other jewelry stores? Do they charge less money? Or is it the same price point just fewer salespeople?


The snarky analogy doesn't work because the junior sales person will do the same type of work whether he is selling to small or large buyers: in both cases he is selling.

Whereas in the law firm context, the amount of time the junior partner has to spend "selling" depends on the structure of the client base. If the firm allowed him to take on low-value cases, which are more readily available, the junior partner could spend most of his time litigating those cases. But if the firm requires him to take on only high-value cases, which are very difficult to find, the junior partner must spend most of his time trying to find a high-value case.

Sorry if that went over your head the first time.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 4:28 pm

It's funny because I have been interviewing in smaller markets (tertiary markets) and partners that were interviewing me make less money than I do as a 4th year associate. Point being though, most lawyers I meet are miserable in my firm and city, but these guys and girls were all happy, engaging, and pretty much said they couldn't ever imagine being a NYC corporate lawyer. Lower margins seem to equal better quality of life on the whole from what I've seen, but that's not how people get rich.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby rpupkin » Mon Jun 26, 2017 4:28 pm

Anonymous User wrote: He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

Another thing: the above doesn't really reflect any reality I'm aware of. The difference between big law and mid law isn't generally about the difference between litigating one big case versus litigating lots of cases. In fact, it would say it's more common for a small or mid-sized firm to have most of its chips in one case at any given point of time.

Because smaller law firms charge lower rates ("rate flexibility" is the euphemism you'll find in the industry), they take on different types of clients and/or different types of cases. But mid law firms still have to pitch cases and and find clients. I don't think the business-generation pressures are really all that different than big law.

I will say this for mid-law: because the clients are smaller and/or the matters are less important, it can be easier for a junior attorney to develop relationships with (and bring in) potential clients.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 4:30 pm

Anonymous User wrote:It's funny because I have been interviewing in smaller markets (tertiary markets) and partners that were interviewing me make less money than I do as a 4th year associate. Point being though, most lawyers I meet are miserable in my firm and city, but these guys and girls were all happy, engaging, and pretty much said they couldn't ever imagine being a NYC corporate lawyer. Lower margins seem to equal better quality of life on the whole from what I've seen, but that's not how people get rich.


OP here. Thanks. Did you have any sense of what percentage of the partners' time was spent on business development, versus actually doing legal work?

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby rpupkin » Mon Jun 26, 2017 4:33 pm

Anonymous User wrote:
Anonymous User wrote:It's funny because I have been interviewing in smaller markets (tertiary markets) and partners that were interviewing me make less money than I do as a 4th year associate. Point being though, most lawyers I meet are miserable in my firm and city, but these guys and girls were all happy, engaging, and pretty much said they couldn't ever imagine being a NYC corporate lawyer. Lower margins seem to equal better quality of life on the whole from what I've seen, but that's not how people get rich.


OP here. Thanks. Did you have any sense of what percentage of the partners' time was spent on business development, versus actually doing legal work?

I bet the typical junior partner at small/mid-size law firm spends significantly more time on business development than a junior partner at a big law firm. That's not necessarily a bad thing, though.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 4:33 pm

rpupkin wrote:
Anonymous User wrote: He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

Another thing: the above doesn't really reflect any reality I'm aware of. The difference between big law and mid law isn't generally about the difference between litigating one big case versus litigating lots of cases. In fact, it would say it's more common for a small or mid-sized firm to have most of its chips in one case at any given point of time.

Because smaller law firms charge lower rates ("rate flexibility" is the euphemism you'll find in the industry), they take on different types of clients and/or different types of cases. But mid law firms still have to pitch cases and and find clients. I don't think the business-generation pressures are really all that different than big law.

I will say this for mid-law: because the clients are smaller and/or the matters are less important, it can be easier for a junior attorney to develop relationships with (and bring in) potential clients.


OP here. Thanks. Very interesting.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Mon Jun 26, 2017 4:37 pm

Anonymous User wrote:
Anonymous User wrote:It's funny because I have been interviewing in smaller markets (tertiary markets) and partners that were interviewing me make less money than I do as a 4th year associate. Point being though, most lawyers I meet are miserable in my firm and city, but these guys and girls were all happy, engaging, and pretty much said they couldn't ever imagine being a NYC corporate lawyer. Lower margins seem to equal better quality of life on the whole from what I've seen, but that's not how people get rich.


OP here. Thanks. Did you have any sense of what percentage of the partners' time was spent on business development, versus actually doing legal work?


I'm not really sure, but business development is really important and they wanted associates to get into development early. I really like this approach because it helps build other skills and makes you learn about the industries you are covering. As a big law associate, I've seen most of my soft skills erode to the point where I actually feel like I've regressed professionally and emotionally.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Yea All Right » Tue Jun 27, 2017 1:25 am

Price point is also used as a signal of quality. Generally speaking, people usually assume that products and services which are more expensive are also better-quality. Thus biglaw firms will charge high rates in part to convey the message that they have the most credentialed lawyers and do the best legal work to attract the major clients. Those companies (i.e. Goldman Sachs, Chevron, etc.) have money to burn and are more focused on getting deals done and winning their litigation. In their minds, why pay for the $500/hour midlaw firm when they can afford the $1,000/hour biglaw firm and presumably get better results?

All that being said, general counsel nowadays are being more resistant to the high billing rates charged by biglaw firms (which have been pushed up partially because of last summer's salary increases, see https://www.wsj.com/articles/companies- ... 1466029554). This has led to more alternative fee arrangements and other adjustments to billing. Businesspeople want to keep their companies profitable, and cutting costs is one way of doing so; it's just bad for lawyers which are considered a cost.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby A. Nony Mouse » Tue Jun 27, 2017 6:02 am

Anonymous User wrote:
malibustacy wrote:
Anonymous User wrote:Hello,

I was talking to a junior litigation partner at my big-law firm recently (V80-100). He frankly did not seem to like his job at all. He complained that because the firm charges such a high price point, he has had to turn away a lot of low-value work that included many interesting and emotionally satisfying cases. He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that partners get to pocket more money in the end (i.e. high-margin work)?

ETA: Is it different in mid-law or small-law? Do they charge less money? Or is it the same price point just fewer lawyers?


Hello,

I was talking to a junior sales person at my fancy jewelry job (think Tiffany's). He frankly did not seem to like his job at all. He complained that because the shop charges such a high price point, he has had to turn away a lot of customers. He would much rather take on many sales, so he can spend most of his time actually, you know, being a jewelry salesperson, rather than have to do what he does now: spend 95% of his time trying to land a large buyer.

What is the point of the high price? Is it necessary for the firm to cover its costs, or is it just so that owners get to pocket more money in the end?

ETA: Is it different in other jewelry stores? Do they charge less money? Or is it the same price point just fewer salespeople?


The snarky analogy doesn't work because the junior sales person will do the same type of work whether he is selling to small or large buyers: in both cases he is selling.

Whereas in the law firm context, the amount of time the junior partner has to spend "selling" depends on the structure of the client base. If the firm allowed him to take on low-value cases, which are more readily available, the junior partner could spend most of his time litigating those cases. But if the firm requires him to take on only high-value cases, which are very difficult to find, the junior partner must spend most of his time trying to find a high-value case.

Sorry if that went over your head the first time.

Isn't the point that you're making assumptions about what the job actually is?

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby arklaw13 » Tue Jun 27, 2017 8:02 am

At my V20 I'm working on a case that will probably only gross $1m in fees by the end of it. We have cases that spend that per month. But the latter cases have 30 people staffed on them, while our case has three. I don't understand why he can't bring in those smaller matters and just staff them leaner. Doesn't work when there's $1m in dispute, but you could probably get away with it for the $5-10m cases.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Tue Jun 27, 2017 9:26 am

rpupkin wrote:
Anonymous User wrote: He would much rather take on several cases each with $1 - $10 million in dispute, so he can spend most of his time actually, you know, being a lawyer and litigating these cases, rather than have to do what he does now: spend 95% of his time being a salesman trying to land one case with $100 million in dispute.

Another thing: the above doesn't really reflect any reality I'm aware of. The difference between big law and mid law isn't generally about the difference between litigating one big case versus litigating lots of cases. In fact, it would say it's more common for a small or mid-sized firm to have most of its chips in one case at any given point of time.

Because smaller law firms charge lower rates ("rate flexibility" is the euphemism you'll find in the industry), they take on different types of clients and/or different types of cases. But mid law firms still have to pitch cases and and find clients. I don't think the business-generation pressures are really all that different than big law.

I will say this for mid-law: because the clients are smaller and/or the matters are less important, it can be easier for a junior attorney to develop relationships with (and bring in) potential clients.


I work at a Midlaw firm and we have a ton of small to medium sized cases (Usually only 3 total attorneys on each case). I have no knowledge of how many cases attorneys at Biglaw firms have at one time, but it seems to me that our midlaw firm and others like it deal with a higher volume of cases than the bigger firms.

Also, on the business aspect, the Junior Partners are much more concerned with generating business than the senior partners. Once you hit senior partner, you likely already have a solid book of business that you are trying to maintain and then grow organically

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby gregfootball2001 » Tue Jun 27, 2017 10:26 am

My experience at a mid-sized firm vs my friends at bigger firms is the opposite of what you describe. At the big firms, they have a number of large, institutional clients. The key to making partner isn't necessarily bringing in a new institutional client, but making the big client (and your bosses) happy. At my mid-size, bringing in at least some new work is pretty much required to make partner. I'm pretty sure I spend more time on business development than my friends at larger firms do.

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Re: Would Lower-Margins Make BigLaw Partnership More Enjoyable?

Postby Anonymous User » Tue Jun 27, 2017 11:19 am

I think the danger is assuming that associates at bigger firms bill a lot more than the associates at regional biglaw firms.

This is definitely not the case. I've done biglaw and midlaw and my billable hours were only 10-20% lower while my pay was A LOT lower. Another lateral had a similar experience as well.



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