Realization Rates and First Year Associate Profitability Forum

[Anonymous User]

It was my understanding that first year associates are not profitable for big law firms. So, I'm curious who, if anyone, knows their financials - I'm not certain if all firms allow associates access to their fees billed/received, etc. - or any information on the economics or profitability of first year associates. It's not something that younger associates talk openly about here, so I was hoping some TLSers wouldn't mind sharing.

[Anonymous User]

It was my understanding that first year associates are not profitable for big law firms. So, I'm curious who, if anyone, knows their financials - I'm not certain if all firms allow associates access to their fees billed/received, etc. - or any information on the economics or profitability of first year associates. It's not something that younger associates talk openly about here, so I was hoping some TLSers wouldn't mind sharing.

I'm a first year. We have access to all of that information. I'm realizing about 90% of hours billed. I've billed 1,250 hours to date and about 400k has been billed to the client. The firm has collected $267k from my billings. I'm in a secondary market so not making 180k.

[Anonymous User]

Randomly, my numbers are very close to the poster above and I am also a first year associate. I have billed and received fees (realized) for slightly over $400,000, ~1,600 billable hours, and have a realization rate north of 90% (it's hard to tell because my numbers are an aggregate of two separate fiscal years, for this fiscal year my realization rate is ~97%). To be fair, the realization rate for my first fiscal year (stub year) was not nearly as good as this fiscal year.

I'm also in a secondary market, and by that I mean I'm not making $180k and I'm not in a place like Dallas, Chicago or LA.

[tyroneslothrop1]

You're probably going to get a fair amount of self-selection here of people reporting their high realization rates. We don't have access to that information at my firm. But we had a second year associate leave last week "voluntarily" and his rate was reportedly 64%.

[UVAIce]

You're probably going to get a fair amount of self-selection here of people reporting their high realization rates. We don't have access to that information at my firm. But we had a second year associate leave last week "voluntarily" and his rate was reportedly 64%.

I think that's part of the problem. For example, my firm has a billable hour requirement of 2000 hours, but it's not quire as hard of a requirement as 2000 hours in NYC. The aggregate data from the firm essentially shows that the "average" associate isn't billing that much. So if you're billing 2000 hours all the power to you, but if you have ~1800 hours it's hard to tell if you're in real trouble or not (a lot of this depends on your practice group). Good luck trying to find anyone who is going to honestly give up the information unless they're on track for ~2200 hours.

Many young associates have low realization rates due to the billing arrangements with clients or that that the partner running billing makes it a habit to cut young associates time (generally for good reason). I'm sure some of this is practice group specific.