Are biglaw associates wildly underpaid? Forum

[mephistopheles]

even among biglawfirms there's an obvious difference in quality, let alone considering Loyola grads

[redsox]

How does (salary + overhead)/billing compare between biglaw/management consulting/IT consulting?

[mephistopheles]

How does (salary + overhead)/billing compare between biglaw/management consulting/IT consulting?

biglaw doesn't get alt-travel

[JamMasterJ]

They're wildly overpaid. Top 25% at Loyola Chicago could hack it just fine at Sidley and would do the job for half as much.

the question is would Sidley or Sidley's clients actually want that person regardless of actual ability level? I mean, we're not the only people prestige whoring, firms and clients want the best so they can say they have the best, not because they could theoretically get a better windfall out of using someone else. These people like to have T14 people in their bullpen as much as posters here would rather work at Sullcrom and Quinn over other places.

[minnbills]

They're wildly overpaid. Top 25% at Loyola Chicago could hack it just fine at Sidley and would do the job for half as much.

the question is would Sidley or Sidley's clients actually want that person regardless of actual ability level?

Do you really think grades are a good indicator of ability?

[sundance95]

They're wildly overpaid. Top 25% at Loyola Chicago could hack it just fine at Sidley and would do the job for half as much.

the question is would Sidley or Sidley's clients actually want that person regardless of actual ability level?

Do you really think grades are a good indicator of ability?

swwwing and a miss

[JamMasterJ]

They're wildly overpaid. Top 25% at Loyola Chicago could hack it just fine at Sidley and would do the job for half as much.

the question is would Sidley or Sidley's clients actually want that person regardless of actual ability level?

Do you really think grades are a good indicator of ability?

Sorry minnbills, I phrased that poorly. I mean that ability level notwithstanding, will Sidley ignore prestige? I don't think that they'd rather take a class full of Loyola 25% than T14ers, because they "need" the big name schools either for their own or for their clients' satisfaction. I mean, if the argument (and I don't mean to put words in Ray's mouth) is that these other students are capable of doing the same work and would be willing to do it for less money, I would question the incentive because I think there's always a market for the Cravaths, and that the prestige-based reasoning for paying for expensive firms is sufficient to keep these rates. Well, I also think that argument trickles down to what the prestige is based in large part on, consistently staffing matters with preftigious people, i.e. top school grads.

I think school level is also a better indicator than grades, for what it's worth.

[sideroxylon]

I don't think associates are underpaid, but I'm surprised some law firms don't raise salaries.

You'd think that some firms would bleed out their competitors by sacrificing some PPP and increasing associate salaries.

I'm guessing the prestige chase makes it so that firms don't really need to do this to attract talent, so they don't.

[09042014]

I don't think associates are underpaid, but I'm surprised some law firms don't raise salaries.

You'd think that some firms would bleed out their competitors by sacrificing some PPP and increasing associate salaries.

I'm guessing the prestige chase makes it so that firms don't really need to do this to attract talent, so they don't.

Lockstep means they don't really have much to fear. The minute you raise pay, everyone else does as well. No benefit.

Though lockstep is pretty much the reason salaries didn't fall during the crash.

[sideroxylon]

I don't think associates are underpaid, but I'm surprised some law firms don't raise salaries.

You'd think that some firms would bleed out their competitors by sacrificing some PPP and increasing associate salaries.

I'm guessing the prestige chase makes it so that firms don't really need to do this to attract talent, so they don't.

Lockstep means they don't really have much to fear. The minute you raise pay, everyone else does as well. No benefit.

Though lockstep is pretty much the reason salaries didn't fall during the crash.

Yeah, but my question is that if S&C/Cravath decided to try to push it to 200k, would firms with lower PPP be able to match that? I get that the expectation is that everyone will match, just like everyone matched after STB moved it last time. But, I have a feeling that some of the profitable firms could push others under at this point.

[Dafaq]

My summer firm claimed they didn't break even on first years until they billed more than 1400 hours. Fun with accounting.

Maybe my math is erroneous, nevertheless. 160K divided into 1400 hours = $144 per hour. If the associate bills another 400 hours @ 144 hourly = $57,600 (firm profit). That would be beyond the worst case scenario (given that $144 is unrealistically low...even for Raccoon Arkansas).

[Tiago Splitter]

My summer firm claimed they didn't break even on first years until they billed more than 1400 hours. Fun with accounting.

Maybe my math is erroneous, nevertheless. 160K divided into 1400 hours = $144 per hour. If the associate bills another 400 hours @ 144 hourly = $57,600 (firm profit). That would be beyond the worst case scenario (given that $144 is unrealistically low).

Thanks man. Makes a ton of sense.

[lacrossebrother]

Partner billing rates is what boggles me. How could a SF IP lit partner demand 1500/hr for the same service that the best in say, Atlanta would charge 750 for? It's a 4.5 hr flight. Local prices shouldn't dictate too much.

[09042014]

I don't think associates are underpaid, but I'm surprised some law firms don't raise salaries.

You'd think that some firms would bleed out their competitors by sacrificing some PPP and increasing associate salaries.

I'm guessing the prestige chase makes it so that firms don't really need to do this to attract talent, so they don't.

Lockstep means they don't really have much to fear. The minute you raise pay, everyone else does as well. No benefit.

Though lockstep is pretty much the reason salaries didn't fall during the crash.

Yeah, but my question is that if S&C/Cravath decided to try to push it to 200k, would firms with lower PPP be able to match that? I get that the expectation is that everyone will match, just like everyone matched after STB moved it last time. But, I have a feeling that some of the profitable firms could push others under at this point.

The higher RPL firms could probably push it way higher than 160, while the lower ones couldn't match. But those firms aren't really in competition for talent at the associate level. How many people are turning down Cravath for K&L Gates?

[Anonymous User]

Don't read too much into your rate. Sometimes the firm really will collect a number of dollars equal to your hours worked times your hourly rate, but other times... yeah not so much. Entire matters go unpaid by deadbeat clients, partners negotiate discounts, partners write off time, etc. I know my firm has on occasion negotiated 7-figure (!) fee discounts for certain institutional clients.

And then for every associate that bills 2,000 hours, there's a dead/slow group, an associate with medical issues, or somebody obsessed with pro bono that manages to avoid other work. While you're feeling smug over your 2,500 hour year the firm's [foreign country of choice] office might be bleeding cash at an alarming rate. Recruiting, rent, support staff, insurance, benefits, etc. make that $300K overhead per lawyer figure likely very realistic.

Also, the firm hires people who know nothing - and then they either train you or (more frequently) let you figure it out yourself. An entry level gig @ 160K is insane; a very real part of your compensation is getting a job with 0 experience and just a little spark of potential and neuroticism.

[kneedrag]

It would seem more sensible to me to have larger pay raises in subsequent years, rather than super high starting salaries.

Leave starting at 160 (or lower) and make the 2/3/4/5 year increases larger as you're producing more.

[PepperJack]

You need to consider that:

1.) Firms don't collect 100% of billed hours.
2.) Partners may give a client a discounted rate if they want the business.
3.) The final price will generally be compared to what the client paid for a similar job at other firms so if one respected firm only bills certain hours, other firms will follow.
4.) Associates are almost always dependent on partners to get the work that they bill so even 50% of your billable rate is pretty crazy.
5.) You need to factor in the cost of your office, secretary, west law, phone support, etc., etc.

How much is the discrepancy out of curiosity?

[PepperJack]

Partner billing rates is what boggles me. How could a SF IP lit partner demand 1500/hr for the same service that the best in say, Atlanta would charge 750 for? It's a 4.5 hr flight. Local prices shouldn't dictate too much.

How is flying billed? Also, hourly rates seem very, very misleading. Some people work faster. Odds are that a first year at 300/hour will wind up being much more expensive than a 5th year at 500/hour.

[Anonymous User]

Attorney at a firm with a pretty high RPL and PPP, but not the very top:

80% of billable hours are actually collected.

We typically discount 10% almost as a matter of due course. But we'll often give another 10% off that. Occasionally there will fixed fee (really more like capped fee) but it's mostly billable still.

Many clients refuse to pay for first and maybe even second years. That doesn't mean the firm will staff them and then cut their hours.

[5ky]

overpaid considering the work that i do.

underpaid considering the amount of $ made for the firm

it must be practice group/client specific, but i've never understood the idea that clients won't pay for first/second years. juniors are often given work that could be done by others because it helps to keep the bill down since it's a cheaper rate.

[Anonymous User]

First year, I know for a fact exactly 10 of my hours in the past year were cut. Might be unique to my practice though.

[sundance95]

My summer firm claimed they didn't break even on first years until they billed more than 1400 hours. Fun with accounting.

Maybe my math is erroneous, nevertheless. 160K divided into 1400 hours = $144 per hour. If the associate bills another 400 hours @ 144 hourly = $57,600 (firm profit). That would be beyond the worst case scenario (given that $144 is unrealistically low).

Thanks man. Makes a ton of sense.

It may make a ton of sense simply because it is far too simplistic. Firms' marginal attorney expenses go beyond just salaries. Rent and benefits are two obvious examples that immediately come to mind.

[Tiago Splitter]

It actually made zero sense but dafaq post so whatever.

[Mal Reynolds]

Yeah dafuq is one of the dumbest posters on TLS.

[sundance95]

It actually made zero sense but dafaq post so whatever.

My b, got chasm'd