OCI- Post mortem results?

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XxSpyKEx
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Re: OCI- Post mortem results?

Postby XxSpyKEx » Sun Nov 01, 2009 10:56 pm

toaster2 wrote:i don't think it's reasonable to expect top law school to reduce "costs." what are they going to do? cut faculty, cut financial aid, increase class size, shrink clinical programs, etc.? any of that will negatively impact the quality of education received.


Do you honestly think it costs the school $45K a year per person to educate them? So take the 1200 person law school, multiple that by $45K a person, and you get roughly $54 million in revenue generated just from tuition. So in other words, do you honestly think it does costs the school $54 million a year to educate you? (Yeah I know it's high because it doesn't take into account scholarships, but it also doesn't take into account the people that live on-campus where the school banks another $15K /year per person for "rent." Also, that doesn't include the billions of dollars in endowments the school gets.) Not to mention all the 1st year courses and a good amount of the upper level courses are in class sizes of around a 100 students (meaning hire a whole 4-6 professors total per 100 person section at most).

This almost makes you want to say fuck practicing law and just start a law school, call it "Cooley 2," and get accredited.

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Re: OCI- Post mortem results?

Postby toaster2 » Sun Nov 01, 2009 11:12 pm

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Last edited by toaster2 on Tue May 25, 2010 1:32 am, edited 1 time in total.

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Matthies
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Re: OCI- Post mortem results?

Postby Matthies » Sun Nov 01, 2009 11:18 pm

toaster2 wrote: additionally, i can't imagine that any top firm is going to begin some "apprenticeship" program that (as you have described) is clearly not in the best interests of law students. how will they attract top talent that way?


Why would firms care what’s in the best interest of students? Firms hold all the cards here, not the students. If firms want to switch to an aprectiniceship model they can and students will do nothing about it but apply like they have been. There are far more want to be big lawyers than there are biglawyer jobs. If the firms switch then the students will follow. Obs is right, what are you going to do with 200k debt out of Harvard, say I don’t like your apprectiship model so I’m going to protest by taking a 45k PD job? The firms won’t even notice you’re missing. If Cravath showed up at Harvard today and said to get a screening interview you have to stand on one leg, bark like a dog and juggle flaming machetes there would still be a line out the door.

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Re: OCI- Post mortem results?

Postby ScaredWorkedBored » Mon Nov 02, 2009 12:21 am

Matthies wrote:Why would firms care what’s in the best interest of students? Firms hold all the cards here, not the students. If firms want to switch to an aprectiniceship model they can and students will do nothing about it but apply like they have been. There are far more want to be big lawyers than there are biglawyer jobs. If the firms switch then the students will follow. Obs is right, what are you going to do with 200k debt out of Harvard, say I don’t like your apprectiship model so I’m going to protest by taking a 45k PD job? The firms won’t even notice you’re missing. If Cravath showed up at Harvard today and said to get a screening interview you have to stand on one leg, bark like a dog and juggle flaming machetes there would still be a line out the door.


Yeah, there was a large assumption people made here, that the school-firm link was natural and unbreakable. It's really not; the degree of sucking up to the talent that went on in Big Law recruiting for the past decade is unheard of in any other industry (or any other section of the legal profession...) Once you get past that, you are an at-will employee that is supposed to make money for the employer. This isn't an inherently friendly relationship and most people who actually have worked as Big Law associates or who know people who have wouldn't consider it that for an instant.

Firms also have a, shall we say, less than glowing opinion of the quality of legal education provided by any law school. The T14 recruiting never had anything directly to do with that; it had to do with how much they could get for that resume. If clients won't pay $400/hour for some kid regardless of where he went to school, things are going to change.

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Re: OCI- Post mortem results?

Postby observationalist » Mon Nov 02, 2009 12:36 am

toaster2 wrote:i don't think it's reasonable to expect top law school to reduce "costs." what are they going to do? cut faculty, cut financial aid, increase class size, shrink clinical programs, etc.? any of that will negatively impact the quality of education received. i would imagine that the top firms are going to want people with the best education possible. additionally, i can't imagine that any top firm is going to begin some "apprenticeship" program that (as you have described) is clearly not in the best interests of law students. how will they attract top talent that way? and if they aren't attracting top talent, are legal consumers going to be comfortable spending less money for admittedly less than top talent?


Just bringing the news from what one biglaw partner says is going on... not saying it's an accurate prediction by any means, but it does make sense given what we're actually worth to them. Tuition was only able to increase substantially because starting salaries were going up (though Matthies is quick to point out that tuition also depends on what they can get away with charging, so demand from people willing to go to law school regardless of the actual job prospects is a huge problem as well).

The same partner also joked about how his big firm job coming out of law school back in the 70's paid him $13,000 and how crazy it is to pay us over ten times that much. He said people were lucky back then if they could afford to buy a house a full five years after law school because of how little they made as new associates. What he seems to miss entirely is that his $13,000 salary only cost a fraction of that in tuition and living expenses for three years, and that for many of us it will be a lot longer than five years before we're in any position to start owning things. I would bet a lot of partners out there are equally not cognizant of what 200K in debt means to recent law graduates. If I were going to be really skeptical I'd point out that all the debt means to them is that you're not going anywhere for at least ten years because your debt payments are too high. Sure we want lower debt but there's not a whole lot of incentives out there for either schools or employers to want the same thing. Matthies is right in that if the elite firms can pull it off the rest of them will as well.

And tuition-dependent law schools absolutely will need to cut costs if they're going to reduce tuition. Things would at least be more reasonable if they moved to a two-year program instead of three and had people working an apprentice salary for the third year.

You are right that any metric currently used in the USNews methodology needs to be reconsidered if we want to incentivize schools to make legal education less expensive. Either that, or endowments have to become Yale-sized across the board to subsidize education and return tuition to where it used to be while keeping per-student expenditures high.

Oblomov wrote:
Matthies wrote:but it was not until the 2000s that many firms started immolating them and raising their billings according


Yeah, well there is a lot of immolation in these firms.


Matthies would probably not have the time to post on this board if he had to go back correcting all of the spelling errors his brain makes... dyslexia gives him a unique 'native tongue,' as he used to call it over on lawschooldiscussion. I actually like trying to figure out what he's saying sometimes... makes things interesting.

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M51
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Re: OCI- Post mortem results?

Postby M51 » Mon Nov 02, 2009 12:44 am

Transition costs.
Collective action problem.
The inevitable endgame of capitalism (firm-side, and client-side).

Three (four) arguments why the fundamental nature of biglaw (at least for the top 20 or so firms) will not change in the near future and why salary reductions will not happen the way observationalist's school's presentation suggests. (A salary stalemate resulting in loss of real salary due to inflation may occur). The reasons range from extremely practical to extremely theoretical, and I think I've covered all of my bases here.

Keep in mind: the fundamental structure of banking, investments, and lending has not changed in response to the economic collapse. All signs are that the fundamental structures are essentially the same as they were pre-collapse. Momentum is a powerful force, and everyone's underestimating it. To top it off, lawyers are nothing if not risk-adverse.

I just don't see how massive change can realistically happen in a short period of time.

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Re: OCI- Post mortem results?

Postby observationalist » Mon Nov 02, 2009 12:58 am

An interesting thought: as it is now, law firms hire you after one year of grades to return the following summer for a few months, during which they can evaluate your work and decide if they want you back a year and a half later. They don't really care much about your second or third-year performance in school. Why not have them hire you for 2L summer and all of 3L year? They can pay you an annual salary equal to what they used to pay for 10 weeks of work, to the tune of 30-40K over one year's time. This saves you about 75-80K (45K in a year's less tuition plus the 30-40K salary, assuming you wouldn't otherwise work parttime as a 3L.) It's a steal for them and it still isn't bad for you, at least not compared to your current position.

If tuition were just capped at where it currently stands, people would look at 90K plus 2 years of living expenses to get a JD. Saving 20K or so prior to attending law school would keep the debt below six figures. It doesn't quite get the debt down to a comfortable level but it does cut a chunk off the total bill... schools can then pinch pennies from there to get it down to what could be considered reasonable or just all provide loan repayment assistance for people makings less than the necessary amount to pay off that debt.

Again, there's some problems with this... but it's not really crazy. Not saying it's going to happen, but it could. M51, I don't think 3 or 4 years is a short period of time to see fundamental changes in how the legal market operates. Even a 'correction' would still see starting salaries dropping by a good 40-50K. Clearly the perspective we heard last week was suggesting we're in for more than a correction, but you can't really think that salary reductions won't occur.

Also, what exactly is a one-year public interest stipend other than a way to pay someone a reduced salary until they're a little better at being a lawyer? There's a lot of talk that a move like that is going to become common... and the only major difference between that scheme and this proposal is that there wouldn't be a guarantee of a job at the end of the year. Call it a fellowship or a temp-to-hire position but it's still the same thing: law firms can no longer justify the costs of paying a recent law graduate a mid-six figure salary. We are very seldom worth that kind of change.

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Re: OCI- Post mortem results?

Postby Kohinoor » Mon Nov 02, 2009 1:02 am

observationalist wrote:
Kohinoor wrote:
observationalist wrote:The presentation we had last week from partners at two different firms (one biglaw one midlaw) was that the billable hour and the large starting salaries are both going away. Their general take was that firms are going to move back to the apprenticeship model, at various degrees of leverage. Some firms could have each partner with one or more associate apprentices. New openings would open up only as apprentices either get promoted to partner or as through attrition/forced attrition. To get to the one-to-one apprentice model, small firms will basically continue hiring the way they do now (and some midsized firms). But for the ones who typically have large summer classes, we're going to see a shift towards large first-year classes, working for what the partners called "significantly reduced rates," and then partners could pick and choose their apprentices from the large first-year class. Everyone else would be sent packing.

If this model picks up steam it will at least keep the % employed at graduation higher than it would be without the model. But starting salaries will be a lot lower, and job security will be worse, and new lawyers will essentially spend a year after law school competing with each other for a few permanent positions. Those who make it through the one-year trial period will benefit from close partner-associate mentorships and the knowledge that the firm views them as being potentially valuable.

We asked our Career Services dean what the shift to this hybrid apprenticeship model means for law schools that charge tuition... I think she understood where this is heading. Schools will have to find ways to cut costs and lower tuition if they want to stay competitive in this model.

What's odd is that the 3-year JD program originally came into being to replace the standard apprenticeship model. Seems to me the new model should look something like W&L's 2-year in class, 1-year in work program. Students would then only be paying for two years of schooling and would receive the reduced salary 3L year. A JD would cost more than 1/3 less than it does currently (1/3 + apprenticeship salary).

A lot of kinks to work out, but there's at least some appeal to this shift. Where it leaves those of us in the middle is anyone's guess... maybe an expiring amendment to let a bunch of us discharge loans in bankruptcy??
Interesting. Did they give you a timeline?


One of them said he expects the market will be like it is now (reduced total hiring numbers at six-figure salaries) for at least the next 3-4 years, until firms figure out how to change their business model and incorporate the change into their recruiting. He mentioned looking to the large NY firms to be the first movers... once they do it, so can everyone else without having to worry about a loss in talent. I certainly don't think Howrey is a first mover but they're doing something similar right now for the folks in my year (2010). The difference would be that they plan on hiring everyone after the reduced first-year, and this partner was saying it's more of a temp-to-hire position.

Regardless, he said the idea of paying a recent graduate a lot of money before they've proven they will add value and with no guarantee they'll stay with the firm is ridiculous from a business perspective, even if the person's working a lot of hours. Hours that are actually billed to the client will matter in evaluating new hires; hours billed will not. So his advice to us was figure out how to make ourselves valuable to the firm. In-house counsel now require efficiency in their legal costs, which means firms must add value and do it faster than other firms. At the same time, most new associates leave before firms realize a profit on the first two-three years of their salary. (I know this is up for debate and firms might claim that new associates aren't profitable until 3 or 4 years out even if it's false, but it's at least possible he's on the mark). Realistically, the only way large firms can get value out of new law graduates in the first year is to pay them a lot less, make them work the same hours, and label it a 'trial' period. If they bill enough to the client to make a profit, then a partner can pick them up and start feeding them work and paying them a higher salary. The new recruits who are the best at getting things done quickly and making the clients happy will stick around, and might actually see a much higher chance of making partner than the current system. Neither partner mentioned what happens to the 'others' but I suppose that's not their call.

Both partners viewed this shift as a good thing for the legal profession. I don't disagree with them, but the one thing they didn't address was the pressure schools now have to make legal education affordable so that any of us would want to work for them as opposed to doing public interest or government work at the same salary (at least in the first year). Tuition reduction has to come next.

The plan:
1) Corporations put pressure on inhouse counsels to lower their legal costs
2) inhouse counsels put pressure on biglaw to charge less through value-added fee schedules
3) biglaw decides to pay new law graduates less money to make it worth their while
4) law schools figure out how to charge less money for their JDs by cutting costs
5) profiTTT.
I've seen the billing process (hours billed/hours cut/hours downrated/hours paid out by client) and it's definitely BS that an attorney billing 2000 hours is costing the firm money. The majority of invoices will never even be contested by the client. Of those that are reviewed, they tend to check for red flags like 12 hours billed in a single day or small time increments billed by an attorney that has never worked on the case before. Even when someone bills 12 hours on a single matter, the only time I've ever seen it be an issue is when someone lazy writes something like: Reviewed X memo (12.00).

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Re: OCI- Post mortem results?

Postby wiseowl » Mon Nov 02, 2009 3:12 pm

seems like the mantra is the same as it is in every phase of our society - until the baby boomers are out of the picture and the X/Y/Millenials are in, we will continue to get porked.

current biglaw partners have absolutely no understanding of the costs of education and costs of living today.

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Re: OCI- Post mortem results?

Postby toaster2 » Mon Nov 02, 2009 4:30 pm

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Last edited by toaster2 on Tue May 25, 2010 1:32 am, edited 1 time in total.

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Re: OCI- Post mortem results?

Postby Kohinoor » Mon Nov 02, 2009 8:16 pm

wiseowl wrote:seems like the mantra is the same as it is in every phase of our society - until the baby boomers are out of the picture and the X/Y/Millenials are in, we will continue to get porked.

current biglaw partners have absolutely no understanding of the costs of education and costs of living today.

cr. and I quote "paralegals are making good money, right?"

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Re: OCI- Post mortem results?

Postby XxSpyKEx » Mon Nov 02, 2009 8:51 pm

Matthies wrote:There is a bit more to it then better schools produce better talent and the clients know about it. What we have seen over the last decade was the rise of the Cravath model. Under this model firms hired the best talent from the best law schools then billed their clients MORE because of it. Clients responded by saying they bill more, they have top talent, they must be the best. Other firms lower on the prestige level soon saw the success of this model and you began to have a run on the top law schools with firms going deeper into the classes at top law schools than they had before the advent of the Cravath model to fill up their firms with top law students and thus increase the amount they could bill for that talent. It became the standard billing model for big law in major markets.

This is why we saw, in the heyday, starting salaries going up every year, firms had to pay more than the next firm to attract the top talent from top school so they could continue to bill clients more. Clinets were willing to pay the high fes for training new associates because the standard model was best law students do best work, so we have to pay to have the very best. It was a law students dream, firms fighting over their pedigree to be able to keep the Cravath model alive and justify what they charged clients.

The meltdown killed much of that. A few top firms can still justify the Cravath model , but most have found it unworkable in today’s economy. Likewise clients have becomes wise to this and no longer want to pay top dollar just to train top talent. They just are not demanding that X lawyers work on their projects because they are not willing to pay the premium for name brand talnt anymore in this economy.

The legal billing model is moving towards “value added” leagal services, flat fees, and discounts for large clients. None of that works to law students advantage anymore. We are seeing a twofold decline in OCI at top schools: One – fewer demand for legal services, Two – the death of the cravath model as the standard model meaning less demand to fill up entire firms with talent base on the name of the degree alone. There is still a demand for top students from top schools, but that demand is not going as low in the ranks as it did before because the Crvath model just does not work in most firms in today’s economy, so those firms that are ditching it can be more picky about who they do hire because they don’t need as many lawyers now, and they can’t bill more just because of the name of the lawyers degree. Ultimintly it is what the cleints demand and are willing to pay that is moving todays new market, firms are resonding to that by hiring less and being more demanding of who they hire and triming the fat in frims of those that don't produce becuase they have less vaule as a name now that cleints are expeting more in the way of vaule for thier legal services.


So a grad from my school (from about 10 years ago), who is a partner v10, came in to teach my bankruptcy class today (as a substitute for the normal prof) and was talking about how when he graduated firms where literally trying to sell students to go to their firm and sell them on their city and how everyone would get lot of offers to try and pick from. After this year it's almost hard to imagine that (I mean it was literally the polar opposite of having to try and sell yourself to firms and show that you have strong ties to their city and only ending up with 2-3 offers to choose from (at best)). Must have been awesome to have graduated in the 90s.

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Re: OCI- Post mortem results?

Postby keg411 » Mon Nov 02, 2009 9:41 pm

XxSpyKEx wrote:So a grad from my school (from about 10 years ago), who is a partner v10, came in to teach my bankruptcy class today (as a substitute for the normal prof) and was talking about how when he graduated firms where literally trying to sell students to go to their firm and sell them on their city and how everyone would get lot of offers to try and pick from. After this year it's almost hard to imagine that (I mean it was literally the polar opposite of having to try and sell yourself to firms and show that you have strong ties to their city and only ending up with 2-3 offers to choose from (at best)). Must have been awesome to have graduated in the 90s.


That's pretty much been the point of OCI programs up until this year. But the BigLaw hiring model has been pretty much around forever and I don't see it going extinct any time soon. I would bet in the next 10 years or so, the "wine-and-dine" model will be back and going strong. I'm sure they want to restructure for financial reasons, but law is conservative as a profession (hell, they still use the partnership model even though it's fairly poor as a choice of business organization compared to a Corporation or LLC) and I don't see them going through with it.

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Re: OCI- Post mortem results?

Postby bahama » Mon Nov 02, 2009 9:59 pm

Matthies wrote:Why would firms care what’s in the best interest of students? Firms hold all the cards here, not the students. If firms want to switch to an aprectiniceship model they can and students will do nothing about it but apply like they have been. There are far more want to be big lawyers than there are biglawyer jobs. If the firms switch then the students will follow. Obs is right, what are you going to do with 200k debt out of Harvard, say I don’t like your apprectiship model so I’m going to protest by taking a 45k PD job? The firms won’t even notice you’re missing. If Cravath showed up at Harvard today and said to get a screening interview you have to stand on one leg, bark like a dog and juggle flaming machetes there would still be a line out the door.


In the current market the firms hold the cards. Two years ago this wasn't the case. What will it be in 2, 5, 10 years? I don't know, but I think incremental change and different firms trying different things are a lot more likely than a wholesale revamping of the business model.

At least for the grads of the very top schools, there are (and will be) options other than BigLaw (with a new business model) or 45K doing PD. Furthermore, the firms at the top of the heap are not just competing with other law firms for the top graduates but also Investment Banking, Consulting, and other places where you can make 6 figures right out of school. So the top law firm salaries can't get too far away from those professions either.

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Re: OCI- Post mortem results?

Postby XxSpyKEx » Mon Nov 02, 2009 10:01 pm

keg411 wrote:
XxSpyKEx wrote:So a grad from my school (from about 10 years ago), who is a partner v10, came in to teach my bankruptcy class today (as a substitute for the normal prof) and was talking about how when he graduated firms where literally trying to sell students to go to their firm and sell them on their city and how everyone would get lot of offers to try and pick from. After this year it's almost hard to imagine that (I mean it was literally the polar opposite of having to try and sell yourself to firms and show that you have strong ties to their city and only ending up with 2-3 offers to choose from (at best)). Must have been awesome to have graduated in the 90s.


That's pretty much been the point of OCI programs up until this year. But the BigLaw hiring model has been pretty much around forever and I don't see it going extinct any time soon. I would bet in the next 10 years or so, the "wine-and-dine" model will be back and going strong. I'm sure they want to restructure for financial reasons, but law is conservative as a profession (hell, they still use the partnership model even though it's fairly poor as a choice of business organization compared to a Corporation or LLC) and I don't see them going through with it.


Actually all large law firms are LLCs. The "partnership" really just reflects ownership, but it's not a true partnership in the sense that all owners of the firm are personally liable (i.e. the attorney's can't be personally sued for when an associate messes up, and the most they can be sued for is the value of the LLC).

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Re: OCI- Post mortem results?

Postby XxSpyKEx » Mon Nov 02, 2009 10:08 pm

bahama wrote:At least for the grads of the very top schools, there are (and will be) options other than BigLaw (with a new business model) or 45K doing PD.


PD jobs are actually really competitive right now, so that's not something that is just a given for top schools grads (at least not right now)

bahama wrote:Furthermore, the firms at the top of the heap are not just competing with other law firms for the top graduates but also Investment Banking, Consulting, and other places where you can make 6 figures right out of school. So the top law firm salaries can't get too far away from those professions either.


I don't know why so many people think that a JD will open all kinds of doors. It's doesn't. Maybe for someone who goes to Harvard, but outside that I don't see it. I mean just look at law students--most of them can't even do math, and most of law school doesn't touch math so I-banking is out (not to mention how super competitive it is to get those jobs since their isn't a lot of investing going on right now).

Also, consulting is out as well because law school doesn't touch anything remotely close to management.

EDIT- that's not to say that no one has ever left law school and gotten in banking or consulting, but it's not like those firms are "competing" to take law students. There are plenty of b-school students to pick from with backgrounds (i.e. work experience) in banking or consulting to pick from.

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Re: OCI- Post mortem results?

Postby keg411 » Mon Nov 02, 2009 10:31 pm

XxSpyKEx wrote:
keg411 wrote:
XxSpyKEx wrote:So a grad from my school (from about 10 years ago), who is a partner v10, came in to teach my bankruptcy class today (as a substitute for the normal prof) and was talking about how when he graduated firms where literally trying to sell students to go to their firm and sell them on their city and how everyone would get lot of offers to try and pick from. After this year it's almost hard to imagine that (I mean it was literally the polar opposite of having to try and sell yourself to firms and show that you have strong ties to their city and only ending up with 2-3 offers to choose from (at best)). Must have been awesome to have graduated in the 90s.


That's pretty much been the point of OCI programs up until this year. But the BigLaw hiring model has been pretty much around forever and I don't see it going extinct any time soon. I would bet in the next 10 years or so, the "wine-and-dine" model will be back and going strong. I'm sure they want to restructure for financial reasons, but law is conservative as a profession (hell, they still use the partnership model even though it's fairly poor as a choice of business organization compared to a Corporation or LLC) and I don't see them going through with it.


Actually all large law firms are LLCs. The "partnership" really just reflects ownership, but it's not a true partnership in the sense that all owners of the firm are personally liable (i.e. the attorney's can't be personally sued for when an associate messes up, and the most they can be sued for is the value of the LLC).


I'm pretty sure they are LLP's (Limited Liability Partnerships). Different from LLC's.

Take a look at these:
http://www.cravath.com/Cravath.html
http://www.cov.com/
http://www.kirkland.com/
http://www.whitecase.com/

Some law firms are PC's (professional corporations) and some are corporations, but very few are LLC's (Limited Liability Companies).

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Re: OCI- Post mortem results?

Postby XxSpyKEx » Mon Nov 02, 2009 11:13 pm

keg411 wrote:
XxSpyKEx wrote:
keg411 wrote:
XxSpyKEx wrote:So a grad from my school (from about 10 years ago), who is a partner v10, came in to teach my bankruptcy class today (as a substitute for the normal prof) and was talking about how when he graduated firms where literally trying to sell students to go to their firm and sell them on their city and how everyone would get lot of offers to try and pick from. After this year it's almost hard to imagine that (I mean it was literally the polar opposite of having to try and sell yourself to firms and show that you have strong ties to their city and only ending up with 2-3 offers to choose from (at best)). Must have been awesome to have graduated in the 90s.


That's pretty much been the point of OCI programs up until this year. But the BigLaw hiring model has been pretty much around forever and I don't see it going extinct any time soon. I would bet in the next 10 years or so, the "wine-and-dine" model will be back and going strong. I'm sure they want to restructure for financial reasons, but law is conservative as a profession (hell, they still use the partnership model even though it's fairly poor as a choice of business organization compared to a Corporation or LLC) and I don't see them going through with it.


Actually all large law firms are LLCs. The "partnership" really just reflects ownership, but it's not a true partnership in the sense that all owners of the firm are personally liable (i.e. the attorney's can't be personally sued for when an associate messes up, and the most they can be sued for is the value of the LLC).


I'm pretty sure they are LLP's (Limited Liability Partnerships). Different from LLC's.

Take a look at these:
http://www.cravath.com/Cravath.html
http://www.cov.com/
http://www.kirkland.com/
http://www.whitecase.com/

Some law firms are PC's (professional corporations) and some are corporations, but very few are LLC's (Limited Liability Companies).


I didn't even know there was such a thing as a LLP. I think I must have fell asleep for that part of the lecture in UG, lol.

keg411
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Re: OCI- Post mortem results?

Postby keg411 » Mon Nov 02, 2009 11:16 pm

You'll learn about it in Business Organizations (or whatever the Corporate Law equivalent class is called at your law school).

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ainzabo7
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Re: OCI- Post mortem results?

Postby ainzabo7 » Tue Nov 03, 2009 12:36 am

XxSpyKEx wrote:
ToTransferOrNot wrote:The 2L summer job search is considered, by many, to be a defining moment of a person's legal career. Few UG people (though certainly some) are in that position. The emphasis that people put on 2L OCI is not without merit, because moving vertically after you're practicing is extremely difficult. The ability to knock out the $150k+ of law school debt in 3-4 years as compared to 20-30 has a defining impact on peoples' lives, not to mention the doors that the biglaw pedigree opens--either through partnership, or with firms/agencies that largely only hire biglaw "grads."

2L OCI this year dashed a lot of expectations that people had coming in to law school. The Class of 2012 was put on notice everywhere but HYS, the Class of 2011 was on notice about the risks associated with schools lower on the totem poll. However, the folks in the Class of 2011 who took out massive loans on the expectation that a majority of their class was going to get some kind of employment in biglaw post-graduation--an expectation that really wasn't outlandish for people in and around the T14--have been hit very hard. It is likely to have a permanent impact on their lives; contrary to the feel-good crap that Career Services Offices are putting out, the people who missed the Biglaw boat because of the economy could very well have missed it permanently.

$180k is hell of a debt to pay off without a very high salary--hell, isn't the standard recommendation "don't take out more debt than you'll make in the first year"? I'm not surprised at all that the topic is taboo under these circumstances.


You should be a career services counselor. Just imagine this guy telling students that didn't get offers this to there faces :lol:


This is not unheard of. Students tend to underestimate the importance of timing on their career prospects. Check out the following study. The biglaw equivalent to MBA grads is investment banking. Should you miss that bull market upon graduation, the deck is stacked against you. It's one of life's cruel learning lessons and an expensive one at that!

Based on the salaries provided by thousands of MBAs in this self-reported survey, Oyer calculated the present value of lifetime income of an MBA who went into investment banking to be $2 million to $6 million higher than an MBA who went into a non-banking career. "Thus the classes of 1988 and 1989 could expect significantly lower lifetime income due to the timing of their graduation than the classes of 1985 and 1986," said Oyer.

http://www.hr-topics.com/wire-usa/stanford-mba.htm
Last edited by ainzabo7 on Tue Nov 10, 2009 10:57 pm, edited 1 time in total.

ToTransferOrNot
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Re: OCI- Post mortem results?

Postby ToTransferOrNot » Tue Nov 03, 2009 12:59 am

Eh, you can only really take advantage of IBR if you can find a qualifying public interest gig. Easier said than done--I know plenty of people who always wanted to go in to PI, IBR or not, and have been shut out because of the economy.

There are no PI gigs for an MBA that qualify for the 10-year plan? Non-profits don't hire managers/advertising people/etc. (honest question, not trying to be sarcastic)? That said, MBA folks do have the advantage of having 33% lower cost than law folks, so there isn't quite as much room to complain. Edit: And your average top-flight MBA guy has an industry to fall back on--not making good money, necessarily, but still better than the relatively useless liberal arts background that the majority of law students come from.

Everyone can "take advantage" of the 30-year IBR, although I'm not entirely sure how anyone would be able to handle the discharge-of-indebtedness income taxes that would queue up at the 30-year mark (I'm pretty sure the exemption from DOI that applies to the 10-year PI discharge doesn't apply to the 30-year; correct me if I'm wrong.) That said, "taking advantage" is an odd way of looking at a 7+% loan on a principle balance of 150k+.

Pretty sure that LLMs generally take longer than a year to obtain, and they don't particularly make you more marketable (with a few exceptions, e.g. Tax LLM from Columbia.) Adding the MBA to the law degree doesn't make you much more marketable as a lawyer, and it is terribly difficult to be accepted to the MBA programs that are "attached" to the better law schools. Now, doing either one might be worth it just to delay entrance to the job market--however, that would assume that such a delay would result in better hiring prospects. I doubt that the delay would result in better prospects, because the biglaw hiring is handled 2L year. My understanding--and correct me if I'm wrong--is that 3rd year MBA/JD folks are expected to summer in an MBA-type job their 3rd year, and/or they are treated like 3Ls in OCI, which is bad news. LLMs do about as well in OCI--if they are even allowed to participate (varies by school)--as 3Ls.

bahama
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Re: OCI- Post mortem results?

Postby bahama » Tue Nov 03, 2009 1:56 am

XxSpyKEx wrote:
bahama wrote:At least for the grads of the very top schools, there are (and will be) options other than BigLaw (with a new business model) or 45K doing PD.


PD jobs are actually really competitive right now, so that's not something that is just a given for top schools grads (at least not right now)

bahama wrote:Furthermore, the firms at the top of the heap are not just competing with other law firms for the top graduates but also Investment Banking, Consulting, and other places where you can make 6 figures right out of school. So the top law firm salaries can't get too far away from those professions either.


I don't know why so many people think that a JD will open all kinds of doors. It's doesn't. Maybe for someone who goes to Harvard, but outside that I don't see it. I mean just look at law students--most of them can't even do math, and most of law school doesn't touch math so I-banking is out (not to mention how super competitive it is to get those jobs since their isn't a lot of investing going on right now).

Also, consulting is out as well because law school doesn't touch anything remotely close to management.

EDIT- that's not to say that no one has ever left law school and gotten in banking or consulting, but it's not like those firms are "competing" to take law students. There are plenty of b-school students to pick from with backgrounds (i.e. work experience) in banking or consulting to pick from.


There is a link between salaries in law/banking/consulting at the highest levels (such as top ranked vault firms) because to some extent they are looking for the same thing: smart, analytic, driven people, with the right pedigree.

The consulting firms and banks already interview and hire from the top few law schools, and I am sure that if all the BigLaw firms cut their starting salaries by half and shifted to some sort of apprenticeship model a lot of the best students at these schools would look harder at these other options. Due to this, and other factors like inertia and prestige, law firms can only change the career path/compensation structure so much without driving some of the most desirable law school grads away to other fields.

This does not apply to the vast majority of law students (or schools) who are not competitive for these jobs, and certainly not to anyone who can not get an offer in BigLaw.

However, what happens at the top firms and top schools does have somewhat of a trickle down effect on their closest competitors. Even if just the V5 firms stick with the old compensation model ($160k), this will keep a number of the V100 firms close to it (say $100-145k), even if they don't match the salaries the most profitable and prestigious firms.

bahama
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Re: OCI- Post mortem results?

Postby bahama » Tue Nov 03, 2009 1:57 am

XxSpyKEx wrote:
bahama wrote:At least for the grads of the very top schools, there are (and will be) options other than BigLaw (with a new business model) or 45K doing PD.


PD jobs are actually really competitive right now, so that's not something that is just a given for top schools grads (at least not right now)

bahama wrote:Furthermore, the firms at the top of the heap are not just competing with other law firms for the top graduates but also Investment Banking, Consulting, and other places where you can make 6 figures right out of school. So the top law firm salaries can't get too far away from those professions either.


I don't know why so many people think that a JD will open all kinds of doors. It's doesn't. Maybe for someone who goes to Harvard, but outside that I don't see it. I mean just look at law students--most of them can't even do math, and most of law school doesn't touch math so I-banking is out (not to mention how super competitive it is to get those jobs since their isn't a lot of investing going on right now).

Also, consulting is out as well because law school doesn't touch anything remotely close to management.

EDIT- that's not to say that no one has ever left law school and gotten in banking or consulting, but it's not like those firms are "competing" to take law students. There are plenty of b-school students to pick from with backgrounds (i.e. work experience) in banking or consulting to pick from.


There is a link between salaries in law/banking/consulting at the highest levels (such as top ranked vault firms) because to some extent they are looking for the same thing: smart, analytic, driven people, with the right pedigree.

The consulting firms and banks already actively recruit and hire from the top few law schools, and I am sure that if all the BigLaw firms cut their starting salaries by half and shifted to some sort of apprenticeship model a lot of the best students at these schools would look harder at these other options. Due to this, and other factors like inertia and prestige, law firms can only change the career path/compensation structure so much without driving some of the most desirable law school grads away to other fields.

This does not apply to the vast majority of law students (or schools) who are not competitive for these jobs, and certainly not to anyone who can not get an offer in BigLaw.

However, what happens at the top firms and top schools does have somewhat of a trickle down effect on their closest competitors. Even if just the V5 firms stick with the old compensation model ($160k), this will keep a number of the V100 firms close to it (say $100-145k), even if they don't match the salaries the most profitable and prestigious firms.

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ainzabo7
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Re: OCI- Post mortem results?

Postby ainzabo7 » Tue Nov 03, 2009 2:26 am

[quote="ToTransferOrNot"]There are no PI gigs for an MBA that qualify for the 10-year plan? Non-profits don't hire managers/advertising people/etc. (honest question, not trying to be sarcastic)?

Never heard of PI gigs while I was in MBA School. They may exist but uncommon.

Edit: And your average top-flight MBA guy has an industry to fall back on--not making good money, necessarily, but still better than the relatively useless liberal arts background that the majority of law students come from.

Wouldn't an MBA or Tax LLM make these individuals more marketable? I understand your concern that your avg law student w/ minimal work experience might not be able to gain acceptance at the MBA school. Unfortunately there is no silver bullet. You have to show firms that you add value and specializations or work experience can only help. No doubt, a class of 2011 student with minimal meaningful work experience and grades in the lower half of their class is going to have a challenging time securing biglaw.

ScaredWorkedBored
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Re: OCI- Post mortem results?

Postby ScaredWorkedBored » Tue Nov 03, 2009 3:20 am

ToTransferOrNot wrote:Eh, you can only really take advantage of IBR if you can find a qualifying public interest gig. Easier said than done--I know plenty of people who always wanted to go in to PI, IBR or not, and have been shut out because of the economy.


Agree here. This IBR meme needs a sharp dose of reality before people make a very expensive mistake. It's currently designed for public interest. You're not supposed to make a career on it in private practice, and you certainly aren't supposed to use it to try to discharge your debt in private practice.

IRS tax debts are also just as tenacious as student loan debt. Tax and bankruptcy casebooks tend to have stories of people who try some stupid debt gambit, wind up with large tax consequences, and wind up getting chased for the rest of their life.

I'd also agree that anyone who doesn't have PI bona fides is facing some serious competition. There are plenty of people in your class that really want to do public interest work. Their resumes rarely look anything like that of a 2L who got passed over at OCI because the economy sucks. Public interest/government interviews are generally brutal compared to Big Law BS sessions. They're trying to get rid of people they don't want, not recruit, and that's especially true now. Not to mention that state & local government hiring is going to be shitty for at least the next couple years. Those budget problems won't fix themselves anytime soon.




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