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Defining "leverage"
Posted: Wed Sep 26, 2012 9:50 am
by Anonymous User
What does it mean when they say a firm is highly leveraged? And why is it bad?
Re: Defining "leverage"
Posted: Wed Sep 26, 2012 9:56 am
by androstan
Being "highly leveraged" means there are many associates per partner in a particular practice/group/department/firm. Because there are so few partner positions, it is exceedingly difficult to obtain one, even if you work extremely hard and are highly competent.
Re: Defining "leverage"
Posted: Wed Sep 26, 2012 9:59 am
by shock259
Other perceived cons include: sweatshop like atmosphere, no interest in the associate's professional development.
Re: Defining "leverage"
Posted: Wed Sep 26, 2012 10:01 am
by thelaststraw05
Anonymous User wrote:What does it mean when they say a firm is highly leveraged? And why is it bad?
Highly leverage means many associates for each partner. Firms with low leverage are about 1:1 in this ratio, firms with high leverage can have 5-7 associates to each partner.
Pros:
- Senior associates are almost running the projects on their own with little involvement from partners.
- Junior associates have a bit of a safety net before bad work product makes it to a partner as it is often going through more senior associates.
Cons:
- The more highly leveraged, the harder it is to make partner.
- Associates are more expendable in this model.
- The most attractive work is taken by the partner, anything that is moderately attractive that is left is taken by more senior associates on the matter, juniors are left with entirely doc review and other less glamorous work.