Saturday, January 26, 2013
To: Professor Lawrence M. Solan
From: BigLaw Partners
Re: Lower Salaries for New Associates
We read with great interest your recent proposal to cut entry-level salaries for BigLaw associates. We are delighted to inform you that we thought of this idea ourselves and have been implementing it for several years. We call these lower paid associates "staff attorneys," "discovery attorneys," or "career associates." If you have other suggestions for clever titles, please let us know!
To give you a sense of how enthusiastically we have embraced this approach, here are a few examples. WilmerHale has 70 discovery attorneys and 67 staff attorneys--together, those groups make up more than 10% of the lawyers at WilmerHale. The firm has already been recognized as an "innovative law firm" for this idea of lowering salaries for new lawyers. Baker & Hostetler, similarly, has 89 lower paid staff attorneys--more than 10% of all lawyers working for them. Orrick Herrington has 41 staff attorneys in a Wheeling, West Virginia, General Operations Center, where those lawyers provide "around the clock" service for clients around the world.
Even stodgy Cravath has recognized the wisdom of hiring associates off the usual partnership track. They currently have 14 discovery attorneys and 19 practice area attorneys, all with impeccable credentials. These aren't the entry-level lawyers you propose, but we see significant cracks in the "Cravath way." For all of us in BigLaw, this hiring market is a real treat.
Returning to the entry-level jobs, we do find your suggestion of a $75,000 starting salary a bit high. We sometimes pay that, but we can attract high quality staff attorneys for $60,000--sometimes even less. To see why, consider placement rates for your recent graduates. At Brooklyn Law, your 2011 graduates secured just 17 jobs in firms of more than 500 lawyers. That's just 3.7% of the class. Many more students, 56 members of the class, took jobs with firms of 2-10 lawyers. Those graduates reported a median salary of just $48,750. Surely we could hire any of those 56 graduates for less than $50,000 apiece?
We are also puzzled by your suggestion that we increase salaries for these attorneys to $125,000 in the second year and $175,000 in the third. Why would we do that? Your law school and others continue to churn out twice as many law graduates as the economy can absorb. Almost one-third of your 2011 Brooklyn graduates (137 out of 455) were completely unemployed nine months after graduation. With that much pent-up demand for work, we can fill as many "career associate" positions as we want without extravagant raises.
You will be pleased to know that we give all of our lesser-paid attorneys plenty of opportunities for "legal research, due diligence, discovery, and . . . just observing." We're not sure if this turns them into "sophisticated practitioners," but it is the same work that we in BigLaw have always given our entry-level lawyers. We have heard that this type of work doesn't really prepare lawyers for jobs in smaller practices or government but, frankly, that's not our problem.
We note that you don't suggest giving these new attorneys significant client contact or help in building their own practices. We agree! Introducing new lawyers to clients is a recipe for disaster. Either the clients complain about paying too much for the new lawyer's work or the clients like the new lawyers better than us. And, since we won't be able to keep most of these attorneys within our pyramidal firms, we certainly don't want to teach them how to get clients. These days, we keep even our conventional associates far away from clients and rainmaking opportunities.
We don't understand how our new system will solve your problem of declining law school applicants. Hiring new lawyers for less money works very well for us. But why would that help you attract more law students? In fact, why does anything we do affect your law school and most others? We hire primarily from the most elite law schools. And even in our most generous year, 2008, we (those of us in firms of more than 100 lawyers) hired only 19.5% of law school graduates nationally. We don't have anything to do with the vast majority of law school graduates. What are you telling these prospective students? That they will all have a chance to work for BigLaw?
Over the last few years, we have greatly reduced our entry-level hiring. By 2011, we were able to cut hiring to about half of 2008 levels. Rather than hiring 19.5% of law school graduates, as we did in 2008, our firms of more than 100 lawyers hired just 10.7% of the nation's graduates in 2011. And here's the kicker: that percentage includes all of the lower-paid positions we created. If we hadn't already implemented your idea, we'd have even fewer new lawyers on board. Even with that approach, we're still concerned about excess capacity today.
The bottom line is that we enthusiastically embrace your idea of "shifting some of the costs of training to the inexperienced associates themselves." We've watched you do this in law schools and it was brilliant. Some of us attended Brooklyn Law School in the early 1980s, paying about $4,000 per year. Adjusting for inflation, that would be about $10,000 today. But we see that tuition and fees today are five times higher--just shy of $50,000. That's wonderful: you have captured much of the financial benefit from education for yourselves rather than sharing it with graduates. We admire that, we truly do. If there were some way we could absorb all of the value generated by our associates (and perhaps shift more of our costs to them?) we would do that too. Please let us know if you have ideas on that.
[Memo updated at 7:46 p.m. to reflect some suggestions in the comments.]