V25 hiring director: non-T20 hiring to decline permanently Forum

[DerrickRose]

I disagree with a few of the things you've said, but this is the point I most strongly disagree with. Firms are generally not treating new associates as an investment. The whole business model depends on bringing in associates, depleting them of billable hours, and then showing them the door (either voluntarily or not).

I agree. That's still an investment.

Since training isn't free, the more you train your associates, the less it makes economic sense to hire more of them and work them less. Just the opposite, in fact--if you are going to invest in your juniors, it makes far more economic sense to higher fewer, higher the best you can get (by paying a high wage), and working them as hard as you can to offset the cost of investing in their training.

The analogy I would use would be the NFL Draft. You don't have certainty that the associates you hire are going to be any good, I don't care what school they went to or what their grades were. Like in the draft, the logical thing to do is trade down for more picks for less money. This is especially true in talent-rich drafts.

[Renzo]

I dont know how you can argue that hiring is not an investment. Sure, there is the stereotype of placing associates in a dungeon to do doc review and then cannning them, but that is being increasingly outsourced and before the recession the enormous atrophy rate of biglaw associate classes was largely self selection rather than the pure consumption model that you posited.

The system is built to leverage huge amounts of able man power into partner profits all the while systematically figuring out who will take the future partner reins. Ignoring training and nurturing your workforce would not be a good business model.

Associate hiring is definitely an investment, while contract attorneys and outsourcing doc review projects is more in line with the commodity theory.

This is why firms like Orrick have separated the two. They are paying below market, but with far fewer billables expected your first year, and all the doc review, etc. going to a pool of non-associate lawyers. The idea is to higher fewer (not more, as D.R. suggests), and train them better.

It's an interesting idea, and it might work out, but there are two problems that are as-yet unanswered: 1) It negatively effects PPP, and there's no guarantee the partners won't jump ship on the firm if being nice to the juniors costs them too much. 2) It creates even less "good" jobs for lawyers than the current model, essentially making worse the bimodal distribution people around here love to post.

[D. H2Oman]

So how does this all affect my plan of not being forced to live in my van.

[clintonius]

Lol. Associates as "investments". What is this 2006?

I think "peons" was the term he was looking for.

Let's face it: law firms learned a valuable lesson coming out of the downturn - that they don't need to pay nearly as much when the field is so over-saturated with perfectly able and willing attorneys to do associate labor. A lot of the exorbitant starting salary culture was largely a result of inertia and game theory conflict between firms (i.e. afraid to let "good" associates go to another firm to make $5k or $10k more at the same amount of hours). Now that they've ALL been able to trim their ranks and cut salaries, it will take far longer for hiring numbers or starting salaries to go up, since it simply isn't necessary for the business model to work.

As long as schools are pumping out J.D.s left and right, and the transactional costs of running of firm steadily decrease due to outsourcing and technology, law firms are going to coast along quite nicely. So why would any firm, in its right mind, start hiring candidates at lower-ranked schools? Or hire anyone at all, for that matter, other than the minimum to replace those who leave from attrition?

Wait, since when the hell did all firms trim ranks and cut salaries? There are lots of firms that still pay $160k starting and have not conducted layoffs. Whether they're a majority in V25/100/whatever, I don't know.

[imisscollege]

Can we agree it'd be idiotic to pick UT $$ over BC $$ (now has dropped to 28) if I want to practice in Boston in light of this article?

[D. H2Oman]

Can we agree it'd be idiotic to pick UT $$ over BC $$ (now has dropped to 28) if I want to practice in Boston in light of this article?

We can agree that it would be idiotic with or without this article.

[sumus romani]

Can we agree it'd be idiotic to pick UT $$ over BC $$ (now has dropped to 28) if I want to practice in Boston in light of this article?

Of course. The article is talking about biglaw only, and it is suggesting a general trend, they might be very slow-moving (take decades).

[DerrickRose]

This is why firms like Orrick have separated the two. They are paying below market, but with far fewer billables expected your first year, and all the doc review, etc. going to a pool of non-associate lawyers. The idea is to higher fewer (not more, as D.R. suggests), and train them better.

It's an interesting idea, and it might work out, but there are two problems that are as-yet unanswered: 1) It negatively effects PPP, and there's no guarantee the partners won't jump ship on the firm if being nice to the juniors costs them too much. 2) It creates even less "good" jobs for lawyers than the current model, essentially making worse the bimodal distribution people around here love to post.

I hope you can see that that is an attempt to do exactly what I am proposing, only it fails because the entire proposal is predicated on the fear of losing talent.

You have to take the "zOMG Firm X is lowering salaries!" plunge if you want to get at this problem. There is no substitute.

[romothesavior]

So how does this all affect my plan of not being forced to live in my van.

It doesn't. I think you're going to live in your van either way.

[rando]

I dont know how you can argue that hiring is not an investment. Sure, there is the stereotype of placing associates in a dungeon to do doc review and then cannning them, but that is being increasingly outsourced and before the recession the enormous atrophy rate of biglaw associate classes was largely self selection rather than the pure consumption model that you posited.

The system is built to leverage huge amounts of able man power into partner profits all the while systematically figuring out who will take the future partner reins. Ignoring training and nurturing your workforce would not be a good business model.

Associate hiring is definitely an investment, while contract attorneys and outsourcing doc review projects is more in line with the commodity theory.

This is why firms like Orrick have separated the two. They are paying below market, but with far fewer billables expected your first year, and all the doc review, etc. going to a pool of non-associate lawyers. The idea is to higher fewer (not more, as D.R. suggests), and train them better.

It's an interesting idea, and it might work out, but there are two problems that are as-yet unanswered: 1) It negatively effects PPP, and there's no guarantee the partners won't jump ship on the firm if being nice to the juniors costs them too much. 2) It creates even less "good" jobs for lawyers than the current model, essentially making worse the bimodal distribution people around here love to post.

I think we can agree that orrick is a damn mess right now and grasping at straws. Yet Howrey for instance is doing the above for all first years. They are basically trying to appease clients. Obviously beneficial if they can get more business from it. And obviously helpful if they can actually train attorneys at the same time. Short term loss, possibly long term benefit?

I can see a major problem though if they end up being the morons spending a ton of money on training just for associates to jump ship and lateral.

[AngryAvocado]

Why is competition bad from the firm's perspective? Gotta cull the herd somehow.

Because there's already competition now. Associates already fight for assignments (especially ITE), and there comes a point where additional competition actually creates more problems than it solves.

A little bit of a strawman there. I'm not saying a firm should take on a class of 200 first-years. But firms that used to be just fine with taking 50 are all the sudden taking 10. There is room to maneuver there.

How is it a strawman to say "more Associates= more costs from benefits/training/handling/managing"? If anything, your counterexample is a bit of a strawman since those 50 associates were operating under the "bill a shitload of hours" model, offsetting at least a portion of the additional costs. That wouldn't the case under the "bill less but get paid less" model--firms would be devoting many of the same resources, but getting far fewer billed hours out of the associates.

Very true, and if you take my idea out to the nth degree, over the course of several years, you start running into problems. But ITE the talent surplus is ridiculous.

I don't doubt the talent surplus ITE, but I don't think reformatting a model just to mitigate a recession's effect on talent is necessarily a good idea.

Put up a poll. It won't be close.

Even if I did, and even if it wasn't even close, I don't think that's necessarily reflective of the desirability of the two models. Just like plenty of TLSers plan to go into public interest, stats show that only a small fraction of T14 graduates traditionally take that route. 200k debt just sort of has that effect on people. A more accurate poll would be to ask 2Ls or 3Ls at/above median at top schools which they'd prefer, but unfortunately that is tough to do logistically. Like I said, though, I highly doubt that most biglaw Associates would jump at the chance to make 90k but work less hours (especially in markets like NYC where 90k is lower middle class).

[Renzo]

I agree. That's still an investment.

The analogy I would use would be the NFL Draft. You don't have certainty that the associates you hire are going to be any good, I don't care what school they went to or what their grades were. Like in the draft, the logical thing to do is trade down for more picks for less money. This is especially true in talent-rich drafts.

For the draft analogy to work, you have to assume that the current starters are doing the drafting, and that they keep all the money from every game, so expanding the roster takes money out of their pockets. Oh, and every player has to ride the bench for years before he can ever start in a game, no matter how good he is. And, if you do make the starting team, one of the current starters loses half his paycheck to you, unless you bring in enough endorsements to make the difference.

Last of all, no one has ever seen any of the draftees play before, the teams can only pick based on the season win-loss record of the draftee's college team.

[Renzo]

I hope you can see that that is an attempt to do exactly what I am proposing, only it fails because the entire proposal is predicated on the fear of losing talent.

You have to take the "zOMG Firm X is lowering salaries!" plunge if you want to get at this problem. There is no substitute.

Your missing my point. It's not the incoming talent that anyone is afraid to lose. It's the partner talent, and the way to keep partners is to keep profits very, very high. You can't do that by working associates less, no matter what. Regardless of what you pay them, working associates more means more profits. Paying them less AND working them more is double win for partners.

[T14_Scholly]

Can we agree it'd be idiotic to pick UT $$ over BC $$ (now has dropped to 28) if I want to practice in Boston in light of this article?

How would this article counsel against picking a top 20 school over BC?

[imchuckbass58]

Yikes. The full story is available here: --LinkRemoved--.

One thing I thought was very interesting was this is almost entirely focused on litigation and how hiring in litigation is constricting, fewer partner track hires in litigation, etc.

By implication, that seems to suggest corporate will be relatively fine (relatively, not absolutely).

[DerrickRose]

Paying them less AND working them more is double win for partners.

Paying them less and working them more, in aggregate, is exactly what I am proposing.

Listen, if the structural costs associated with having 50 associates per class rather than 35 is so high that the increased billable hours (and higher quality per hour) that you would get ends up being a money loser, then I'm wrong.

But I appeal to math:
35 associates billing 2100 hours a year, making $160k a year gets you 73,500 billed hours for $5.60 million.

49 associates billing 1500 hours a year, making $90k a year gets you the same number of billed hours for $4.41 million

So with plan #2 the firm gets:
$1.19 million dollars.
A higher per-hour level of productivity (I'm surprised no one has tried to argue this point yet)
14 more lottery tickets on a potential rainmaking, multi-millions per year partner.

I refuse to believe that the cost of training and staffing 14 more people outweighs that.

[itsmytime10]

official T20:

1. Yale
2. Harvard
3. Stanford
4. Columbia
5. Chicago
6. NYU
7. Cal-Berkeley
7. Penn
9. Michigan
10. Virginia
11. Duke
11. Northwestern
13. Cornell
14. Georgetown
15. UCLA
15. Texas
17. Vanderbilt
18. USC
19. WUSTL
20. GW/Illinois/BU/Emory/Minnesota/Notre Dame

[DerrickRose]

official T20:

1. Yale
2. Harvard
3. Stanford
4. Columbia
5. Chicago
6. NYU
7. Cal-Berkeley
7. Penn
9. Michigan
10. Virginia
11. Duke
11. Northwestern
13. Cornell
14. Georgetown
15. UCLA
15. Texas
17. Vanderbilt
18. USC
19. WUSTL
20. GW/Illinois/BU/Emory/Minnesota/Notre Dame

Reprehensible anti BC trolling.

[hoopsguy6]

Paying them less AND working them more is double win for partners.

Paying them less and working them more, in aggregate, is exactly what I am proposing.

Listen, if the structural costs associated with having 50 associates per class rather than 35 is so high that the increased billable hours (and higher quality per hour) that you would get ends up being a money loser, then I'm wrong.

But I appeal to math:
35 associates billing 2100 hours a year, making $160k a year gets you 73,500 billed hours for $5.60 million.

49 associates billing 1500 hours a year, making $90k a year gets you the same number of billed hours for $4.41 million

So with plan #2 the firm gets:
$1.19 million dollars.
A higher per-hour level of productivity (I'm surprised no one has tried to argue this point yet)
14 more lottery tickets on a potential rainmaking, multi-millions per year partner.

I refuse to believe that the cost of training and staffing 14 more people outweighs that.

I obviously don't know how the numbers work in law firms, but in most businesses firms are going to prefer hiring fewer workers at a higher salary. Salary is only a small part of how much a worker costs. Some overhead to consider: bonuses, health insurance, the way payroll taxes are structured, training, physical space for workers, resources allocated to each workers, and a hundred other things might very well make the "35 associates at 2100 hours" better for firms.

[jmhendri]

Is there a plausible scenario that anyone can come up with that doesn't suck giant balls?

[09042014]

Is there a plausible scenario that anyone can come up with that doesn't suck giant balls?

T18+ students won't steal my job when I finish below median at NU?

[Stringer Bell]

Can we agree it'd be idiotic to pick UT $$ over BC $$ (now has dropped to 28) if I want to practice in Boston in light of this article?

How would this article counsel against picking a top 20 school over BC?

I was scratching my head at that as well.

[DerrickRose]

Paying them less AND working them more is double win for partners.

Paying them less and working them more, in aggregate, is exactly what I am proposing.

Listen, if the structural costs associated with having 50 associates per class rather than 35 is so high that the increased billable hours (and higher quality per hour) that you would get ends up being a money loser, then I'm wrong.

But I appeal to math:
35 associates billing 2100 hours a year, making $160k a year gets you 73,500 billed hours for $5.60 million.

49 associates billing 1500 hours a year, making $90k a year gets you the same number of billed hours for $4.41 million

So with plan #2 the firm gets:
$1.19 million dollars.
A higher per-hour level of productivity (I'm surprised no one has tried to argue this point yet)
14 more lottery tickets on a potential rainmaking, multi-millions per year partner.

I refuse to believe that the cost of training and staffing 14 more people outweighs that.

I obviously don't know how the numbers work in law firms, but in most businesses firms are going to prefer hiring fewer workers at a higher salary. Salary is only a small part of how much a worker costs. Some overhead to consider: bonuses, health insurance, the way payroll taxes are structured, training, physical space for workers, resources allocated to each workers, and a hundred other things might very well make the "35 associates at 2100 hours" better for firms.

Hey, if you're right, then I'm wrong.

But what I am not wrong about is the fact that these firms can't afford to keep raising salaries, and there is no room to budge on the billed hours.

[imchuckbass58]

Listen, if the structural costs associated with having 50 associates per class rather than 35 is so high that the increased billable hours (and higher quality per hour) that you would get ends up being a money loser, then I'm wrong.

But I appeal to math:
35 associates billing 2100 hours a year, making $160k a year gets you 73,500 billed hours for $5.60 million.

49 associates billing 1500 hours a year, making $90k a year gets you the same number of billed hours for $4.41 million

So with plan #2 the firm gets:
$1.19 million dollars.
A higher per-hour level of productivity (I'm surprised no one has tried to argue this point yet)
14 more lottery tickets on a potential rainmaking, multi-millions per year partner.

I refuse to believe that the cost of training and staffing 14 more people outweighs that.

A couple of points:

-The associated costs of associates are much, much higher than you think. I do not have figures, but I would not be surprised if it was upwards of $100k/year. When I worked in consulting we looked at the all-in costs of workers, and in the company we were looking at, workers making $80k/year cost approximately $150k total to support (only variable costs like benefits, office space, etc.). I'm sure it's higher since lawyers have better health plans, secretarial support, expensive real estate, etc.

-Recruiting associates is extremely expensive. Think about how how much it costs for a firm to put on all those receptions, take 20 lawyers off billable matters to do interviews, fly back people for callbacks, etc. And that's only for one school. Add into that the fact that even at top schools all that recruiting may yield you 4 or 5 associates. Again, consulting refernce - recruiting a new analyst cost something like $50,000/head (not including what you pay them over the summer to jack off and go to lunch).

-Sometimes work just can't be split anymore. Say there's a matter that requires a 2200 hours/year of attention from a junior associate. It's much easier and more efficient to staff one associate on that matter, than have one associate and another associate half time. Otherwise, they constantly have to communicate about who did what, you have different people gaining different knowledge of different pieces of the case, less time is spent actually working since they both have to be in every meeting, etc.

[Rock Chalk]

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