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.]
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Sad...really sad.
ReplyDeleteNo, no - this should be a time for rejoicing.
DeleteYou have arrived at the comments section first of all commenters.
As The Highlander has explained, "There Can Be Only One".
This same phenomenon was alluded to in The Matrix, where Neo Anderson was often referred to as "The One".
So buck up, be happy and feel proud of your firstishness.
Congratulations.
I'm surprised it took so long for firms to realize that no law grad, not even from Harvard or Yale, is possibly worth over $75K to start.
ReplyDeleteJust another example of the Boomers at the top of the pyramid (law partners, law professors) looking for one last greedy moneygrab before they retire. Gots to pay for that obscene and pointless new his 'n' hers Lexus SUVs, right? And that racism club, er, sorry, country club membership? And all those fucking pastel shade golf clothes? And the second home? And making sure the three grandkids get to perpetuate this disgusting system by paying for their educations at that shitty but oh so exclusive private college you went to and support so proudly because it admits black people but only for the basketball team...
BECAUSE YOU EARNED IT, RIGHT? You earned everything for yourselves, Boomers. It's not like you are stealing any of that from this and later generations by changing the rules in your favor, is it?
"I'm surprised it took so long for firms to realize that no law grad, not even from Harvard or Yale, is possibly worth over $75K to start."
DeleteDoes not follow.
Just because the big firms are hiring a certain percentage of newgrads into the staff attorney track, does not mean they're not also hiring at 160K. They are.
Sure they are. But give it time. They are realizing that the dummy labor of first-few-years-of-practicing-law is not worth $160K, and they have lowered the entry point.
DeleteThe kids getting the $160K salaries are not vetted for their own academic achievements, but for their family connections.
Dad is a US senator? Hired.
Mom is a judge? Hired.
Uncle is CEO of major corporation? Hired.
Brother has connections with SF hot startup? Hired.
Or:
Law review at T3? Meh. Not what we're looking for.
Harvard UG and Yale LS? What else ya got?
Top 5% at T14? Fuck off.
Law firms hire future rainmakers at $160K. They hire Ivy law grads at $75K. And the rest of us might as well just fuck ourselves.
Sure there is nepotism, but not like that. You would need to be almost certain to bring in business to be hired as a first year based on nepotism. The only time it really works for a law student to get hired is if the lawyer's parent has a family business that is a client or prospective client on the large side. In that case, the lawyer will be gone within a couple of years anyway to go into the family business.
DeleteIf you don't think that grades and school matters, you know nothing about biglaw 2L hiring.
DeleteNepotism isn't going to get you a job on its own unless you can bring in business.
That was a very good post, but I will say that I thought it was LawProf because he is usually the "bad cop" (but in a good and essential way).
ReplyDeleteI will say that I would do the job of a law professor for 45K + benefits + raises that go up with inflation + 3-4 classes a semester.
You hit it right on the head DJM.
ReplyDeleteHis post reminds me how out of touch law professors are with big firms as well as with the plight of their unemployed grads.
How he thinks anything he suggests will benefit students is beyond me.
The only effect this will have is an accelerated rate of decrease in applications to law schools. I believe that many 0Ls see that $160,000 and decide they will be rich forever. Before these beginnings of transparency, that number and the lies the schools told using it, tempted way too many applicants to attend.
Now students are beginning to see the glimmer of the truth about employment, they are not applying or attending.
Why would anyone pay $150,000 or more to go to a school like Brooklyn Law School without being scammed.
There is still a great deal Ing misinformation out there. I saw a post the other day by an 0L ( or maybe 1L) stating that most lawyers work in biglaw.
ReplyDeleteObviously that is wildly false, even in New York City, capital of the biglaw firm, the number of solo practitioners vastly outnumbers the attorneys in biglaw..
Love the last paragraph.
ReplyDeleteAlso love that he expects firms to raise salaries by $50,000 from 1L to 2L.
Why does he even have an opinion on biglaw salaries?
I disagree with one statement though. Biglaw firms are not thriving with the overcapacity they have in place. They are barely hanging on to flat or 1or 2% growth.
ReplyDeleteI think biglaw hiring will continue to decrease and that the number of staff associates will increase even more.
If you can get good people for less, why pay more.
I agree: the BigLaw partners were engaging in a bit of "puffery" there. I asked them to revise their memo to reflect the fact that, as Citi/Hildebrandt recently advised, they actually have excess capacity.
DeleteLol.
DeleteOf course partners would say their business is thriving. I'm sure there are some Dewey partners who thought things were going great .
Long and medium term it is hard to see how the BigLaw associate and leverage model can continue. BigLaw has long been poor at training junior lawyers because the high rates changed and leverage tends to lead to what an old partner of mine dubbed "micro-competence," i.e., associates who were very well trained in a small area - a subset of antitrust for example, but who are generally weak in their broad knowledge of the law. There really is very little incentive for BigLaw to do a good job of training associates, particularly in the more specialised practices that have low leverage but high value and USP to the client, because that associate becomes very mobile once trained. On the other hand the $160k first year becomes a billable 1 1/2 to 2 year associate and can be worked hard on mundane project, but easily replaced.
ReplyDeleteThe problem with the approach that BigLaw follows is that firms become ever more dependent on a small cast of highly paid rainmaker equity partners - they have an ever more shallow bench - and overpay to add rainmakers. Losing a key rainmaker then sends the firm into a downward spiral a la Howrey, Brobeck or Dewey. In theory BigLaw might get around this through recruiting from boutiques and MidLaw, but relatively few of the partners in successful boutiques want to be in a BigLaw environment - many are refugees anyway.
However, I don't think Solan's proposal is that outlandish - the idea of paying first years a lot less. It would reflect the value that most bring to the table. His rate of increase in pay is quite excessive though. I think around $50-60k for a first year makes sense, rising to maybe $75k for a second year, $90k for a third year and in increments up to around $190k pre-partner, but with greater likelihood of being raised to partner (depending of course on the nature of the firm's practice and the hourly rates it can support.)
There is a catch that just about everyone notices that Solon has ignored - that this whole scheme only works if the cost of going to law school falls dramatically. Nowhere in his article is mentioned the most important word "tuition." The cost of law school - and the debt and repayment burden that so many new law graduates have is the big "bugaboo" in this situation. Paying a new associate $60k per annum would leave many sleeping in doorways.
The more interesting aspect of the situation is what happens if BigLaw adopts this idea and law schools, up to and including HYS can no longer claim that there are $160 per year jobs out there for 90% plus of their graduates to get at graduation - or at least for the special snowflakes. If the lottery did not from time to time payout the jackpot, how long do you think people would keep buying tickets?
MacK: biglaw is adopting this idea , just more slowly than Citi would like.
DeleteBut what model should Biglaw follow?
What is the solution here?
Is Citi missing something crucial when it sees clients dividing up work much more than they used to do? Is this division being driven by biglaw forcing out good people who then create their own boutiques?
I made that point before MacK - that if those huge 1st year salaries for a tiny number of associates were cut, it would be harder to law schools to justify those huge tuitions.
DeleteBut the workload for 1st year associates would have to be cut to match the cut in salary. In the long term this would be healthier. The workload sounds pretty insane from I've been reading here, and this is probably not necessary. Its not like medicine where its life and death.
"But the workload for 1st year associates would have to be cut to match the cut in salary. "
DeleteBunk. Not until the oversupply ends (and becomes an undersupply).
Well I'm pretty sure if biglaw drastically cut first year salaries and raised them at reasonable - not 50,000 intervals , it would have a huge impact on law school attendance.
DeleteIt actually might help end the scam faster, so maybe it would be a good, but painful move
I don't see it happening, though. I see biglaw keeping small classes and not hesitating to cut first or second year associates ruthlessly if they don't have the work to sustain those associates ( see white and case) biglaw has become masterful at the stealth layoff. I see more non- partner track lawyers being hired, even from T6 schools..
I noticed some of the practice attorneys at Cravath are experienced and come from Harvard. Does Cravath pay these guys $50,000 in NY City? Not likely.
ReplyDelete"I noticed some of the practice attorneys at Cravath are experienced and come from Harvard. Does Cravath pay these guys $50,000 in NY City? Not likely."
DeleteBy now, the burden of proof is on those who maintain a high salary range to show that it exists - just what percentage of Harvard grads report their salary? What percentage of each class's salary is mysteriously (or not) absent from Harvard's statistics?
I agree, and I've revised the Cravath paragraph of this memo. The concept that the partners were trying to express is that even Cravath is witnessing cracks in the Cravath way.
DeleteWhy wouldn't Cravath pay that much? Sullivan & Cromwell has a nearly identical role (called "Corporate Analyst" or "Litigation Analyst", depending on the practice area) and their starting base is only in the mid-fifties. In theory, they can make significantly more with overtime, but probably only if they work in Ligitation.
ReplyDeleteI think corporate would get overtime as well . But do we know more about these positions? What work do they do and can they even get overtime?
DeleteI can help you out with this, holding one of these positions myself. Yes, corporate *could* get overtime, but over the course of the entire year it doesn't amount to very much. The nature of litigation discovery work (which is often very lengthy and time-consuming) is very different from due diligence (which often has to be done on a very accelerated schedule). A discovery associate could spread out their overtime by working 12-15 hour days every day and maybe one or two days out of the weekend. Over the course of the year, this could easily get you into the six figures. But in the corporate setting, it is nearly impossible to get to the level of deal volume you would need to be able to arrive at this threshold. Due Diligence simply doesn't work that way.
DeleteThink about this way: for however many hours a "Due Dilligance Attorney", for lack of a better term, has to work, you can envision easily double or triple that amount being put in at the junior and mid-level associate level, with perhaps another level of multipliers for the senior associate on the deal. Billables maybe start to flag somewhat the closer and closer you get to the partner on a deal. Few practice groups, as a matter of shear man power, have the capacity to create 300 hours a month worth of billables at every level of any given deal for any deal that comes down the pike, year-round. For this level of billables to become realistic, you would have to see is an almost hyper-inflationary spiral worth of deal activity in the broader economy, which frankly nobody should be counting on (or striving for).
In my busiest, most stressful year, I was regularly putting in fifteen hours a day nearly every day for six months straight, pulling consecutive all-nighters, and often working well into 5:00am on Mondays. This would be all well-and-good (I guess) if I were an associate making 160K. But for all the overtime I was allegedly able to reap . . . I took home barely 72K that year.
I have never seen anything close to that much ever since. Beggers can't be chosers, I realize, but I didn't go to law school to be beggered.
So how many hours do you work before it counts as overtime?
DeleteHow are you managing with loans and living expenses if you don't mind?
Anything you can add about these jobs would be welcome. I don't think there is much information out there.
I should add one more dimension to this: our work is billed to the client at the same rate as associate work. Now, just imagine this model expanding: it's not going to pass any savings at all on to the client.
DeleteThe new norm will be two tracks of lawyers in BIGLAW, both billed at the same rate, but with significant gaps in compensation or long-term career prospects. And the way these two tracks will be viewed internally at a lot of these firms will be as "smart lawyers" and "dumb lawyers", no matter even if you graduated T6.
Also, are the discovery associates the ones that supervise the doc review people, or do they have a different role?
DeleteI'm literally shocked that you are billed at the same rate but paid half as much. I don't see clients standing for that for very long.
DeleteIn response to 8:35am, I'm managing with my loans largely for reasons nobody should count on: I live in a rent-stabilized apartment and my mother passed away a few years back with a bequest that wiped out most of my private debt burden. Gov't loans are another story, but those are getting paid as best as they can. I basically live paycheck to paycheck for my work.
DeleteAt my particular firm, overtime kicks in after 40 hours of work. It used to be 35 until a couple of years back, until they discovered an ingenious way of counting the first hour and a half of overtime as "straight time" instead of overtime (basically, you're first five hours of overtime over the course of the week doesn't count as overtime), effectively reducing our pay without changing our salaries any.
I'm using the term "discovery associate" to describe people who actually perform the doc reviews. While most firms employ mainly temps to do this kind of work, a number of firms use a mixture of temp and permament staff. Discovery is usually supervised by a junior associate or, in some instances, by a senior discovery associate/staff attorney/whathaveyou.
DeleteAnd , as DJM mentions, these positions still count as biglaw hires from a school. I wonder if the school reports the a tusk salary for these positions.
Delete"I don't see clients standing for that for very long."
DeleteWhat difference would it make to them? They don't know who's performing any given task, just that's being performed. I suspect our work product just shows up on the invoice as "corporate due diligence/research", as opposed to the more administrative details that would fall under a paralegal's brief.
I honestly can't remember the last time my school ever contacted my about my employment situation, if even they ever did.
DeleteThanks for your responses to these questions. And I'm sorry about your Mom.
Delete804:
DeleteYou "took home" 72 K in your big year. Was this net of all withholding taxes?
What city do you work in?
Put another way, what upward market pressure would Cravath (or any other firm) be under to compensate these positions better than they do?
ReplyDeleteCravath could literally fill their open legal positions with Harvard, Yale and Columbia Law School graduates who have years of BigLaw experience but are now unemployed, and pay these lawyers minimum wage. Corporate and employee benefits in New York have huge surpluses of unemployed lawyers from top schools with years of major law firm experience.
ReplyDeleteThe up or out system has produced legions of unemployed trained lawyers. It is not sustainable unless one believes in training for unemployment.
In New York City, a college grad can get $65,000 base salary and someone two years out of college can get $80,000 with bonus. The $80,000 job has real pension benefits and is worth somewhat more.
Harvard lawyers with experience being paid $50,000 (with minimal benefits) by Cravath? Looks like the Harvard Law degree may have become a liability for this Harvard Law grad and not an asset. They would have been better off just getting a job out of college. If you can get into Harvard Law, you ought to be able to get a decent starting job out of college.
That's bullshit on the undergrad salaries, most don't make that much.
DeleteIn Manhattan, college grads make a lot. Maybe not elsewhere. These are market rates for the jobs.
Delete10:21 Direct quotes from the internal recruiter at a job I applied to. This was the response I got back:
Delete"...why would you be interested in an Analyst role that only requires 2 years of experience?
... Just so you’re aware, the maximum total cash compensation (base + bonus) would be in the $80K range."
That firm has substantial benefits unlike law firms, including employer paid pension and 401(k), so the total compensation is really a higher than suggested by the response.
The $65,000 is someone very close to our family, and would have no incentive to lie. That person is a grad of a good but by no means top college. I have not heard that the person had a spectacular GPA. The job was the product of looking for a few months.
Yes, there are opportunities that pay well early on if one looks. It is not bullshit on the undergrad salaries.
This is a link to starting salaries for Yale graduates.
http://xfinity.comcast.net/slideshow/finance-collegesthatpay/yale/
The starting salary is over $50,000 and the mid-career salary is well over $100,000. That is nationally, where salaries are much lower than in Manhattan. I would expect that $60,000 would not be unusual in the private sector for a starting salary in Manhattan for a Yale graduate.
If you mean undergrads from Harvard, Yale, etc. then maybe not so far off the mark. I thought you were referring to entry level salaries for all/most college grads.
Delete10:21
One of the problems has been that BigLaw is training 5,000 new lawyers a year, throwing that many out each year, and there simply are not anywhere close to 5,000 jobs of any type legal or non-legal, for the former Biglaw attorneys to go to. If this new model were to signal that non-partner attorneys with more than 8 years of legal experience from good schools with good records could actually hold jobs in big law firms, that would be a good development. The current structure, which is so skewed in favor of highly paid young lawyers, and ultimately puts so many of these highly paid young lawyers out on the street, just does not work. The law firms need to hire many fewer first years, and need to price their jobs so that clients are comfortable paying and the lawyers they hire are not being trained for long-term unemployment. Lock step increases in pay in law firms as the class ages, lead most lawyers out the door and lead many lawyers to unemployment as the last stop, long before any reasonable lawyer would want to stop working. That means the up or out high leverage system needs substantial restructuring. This is a welcome development if it accomplishes cost efficiency for clients, age diversity in law firms and cutting down substantially the number of lawyers who are asked to leave the firm each year.
ReplyDeleteThe current structure is skewed in favor of the partners and it always will be skewed that way.
DeleteI think it is good for people to realize that they may not have exit options and to know that they may never make as much as they do right now as a first year associate.
Another family member made $55,000 in his first job, also in Manhattan. That job was a union job (he had to join the union as a condition of employement), and it was about 5 years ago. It also had substantial benefits. I would not be surprised if that job pays $60,000 now. That job took a very long time for him to get - he did not know anyone connected to it before he applied, and was a two year job for people going on to graduate or professional school.
DeleteIf you are an undergraduate going for a science degree, you can get over $25 an hour as an intern working part time while in college, and that is in cheaper cities than NY. I have looked at the ads.
$50,000 for a law graduate in the private sector in an expensive city like NY is a scam.
After a layoff, I took a position one of these career associate positions at a national firm. Don't get me wrong, I am thrilled to be getting paid, and I enjoy the people and the work at the firm. But I am making $70,000 per year. That's less than half of what a "partner-track" associate would make. In our office alone, we have a handful of career associates, and I know the firm has these positions in other offices. Of course, there was plenty of competition for my job. I am just fortunate to have beaten out the other scavengers.
ReplyDeleteAt $70,000 a year, it may pay to go to law school in a secondary city like Pittsburgh, but that salary sure does not work out well in NY, Boston or Washington DC for an experienced lawyer 10 years out or more.
ReplyDeleteThe price of a baby boomer lawyer from a T6 school- there are slews of them unemployed. You can hire them for practically nothing. The T6 baby boomer lawyers will be paid less than their children working in a major city who are two years out of college and got decent jobs. The problem is the huge surplus of T6 baby boomer lawyers who are unemployed.
This goes to the true viability of the law degree today, even from the top schools.
You do understand that these top firms are possibly only hiring a handful of grads from those schools?
DeleteAnd, also, the tuition at those schools are just as high as the best schools. So most grads will have high debt loads to repay.
I'm trying to work out scenarios where it makes sense to go to law school. The numbers just don't work out. Unless maybe to go to Yale or Stanford because you will have more options.
Its probably simpler just to say it doesn't make sense to go to law school. *Maybe* it would make sense under some narrow circumstances (Prof Campos's book would explain), but if some starry eyed undergrad chasing their "dream" comes to you for advice, it would be best to tell them simply no, don't do it.
DeleteI guess we've always had a sense that positions like these existed, but it's only been in recent years that we've developed a much clearer idea of how little they pay.
ReplyDeleteA career paralegal in BIGLAW with a decades worth of paralegal experience probably makes significantly more than any of these career/staff/discovery attorneys with a law degree, bar admissions, and any number of years of major law firm practice under their belt. Moreover, it's an incredibly heavy-lift transitioning out of these jobs, both because of the perceived shallowness of the skill-set they require and a professional bias against non-partner track positions.
I didn't know these positions existed at Cravath until this post by DJM.
DeleteIs there a way to find out which biglaw firms have these positions and how many there are?
Anyone who did real corporate work at Cravath and not just due diligence would have no trouble getting a job longer term. You could work for minimum wage and get hired at market somewhere else. Lots of career attorneys at Cravath (these guys were highly paid but not on partnership track) in the past went directly to major law firm partnerships.
DeleteHard to know what the story is unless you understand the jobs of these people. It seems like they hire back their former associates in these positions, which overall is good. It is unlikely that a firm would hire back a former associate and pay less than the starting salary for first years.
How can Solan be so ignorant of the basic facts about associate compensation?
ReplyDeleteAnd why does his ignorant mind conjure up a fantasy where other people are earning too much money? It sheds light on his biases. But it has nothing to do with reality.
The positive spin on this is that he and Diamond are letting the world see how out of touch professors remain. I hope they are starting to get a wake up call.
Delete"How can Solan be so ignorant of the basic facts about associate compensation?"
ReplyDeleteIt's no skin off of his nose, is the simple answer.
As has been pointed out on this blog, the school get its money up front, and repayment is absolutely none of their concern.
DJM - You brought the fire today. Well done.
ReplyDeleteAt fucking last. All DJM's previous posts have been bordering on law school shill.
DeleteThis is LawProfTown. DJM is just a fluffer.
second that
DeleteThis Brooklyn Law prof. is proposing a reduction in starting salaries for the kind of jobs that Brooklyn Law grads cannot obtain.
ReplyDeleteMaybe the agenda here is that top Brooklyn Law grads could stand a chance to compete for big firm associateships if the firms slash starting salaries in half or create lower-tier associateships paying no more than public sector law.
dybbuk
I don't understand that logic. Even if firms had unpaid interns as 1st years- how many people would they have to take from Brooklyn to fill those slots?
DeleteThere are so many people above the top of the class at Brioklyn in the law prestige hierarchy and there are thousands of grads fighting for biglaw.
How does decreasing salary make the Brooklyn kid more likely to get the job? I honestly don't understand.
I hope someone links to this thread on TLS. I know that 0Ls remain woefully ignorant of law employment after graduation.
ReplyDeleteWhat fucking narcissism. He's suggesting the entire profession should bend over to protect these professor jobs. It's sickening.
ReplyDeleteWithout the untiring public interest efforts of law processors, the dark night of fascism would already have descended on the United States.
DeleteFrankly, we don't pay them enough.
er "law professors", but I like "law processors" as well.
DeleteThink of them as the educational equivalent of a Vegematic.
Even if they never taught a single hour, their contribution to scholarship alone justifies a pay raise
DeleteI attempted to add a comment to Solan's article linking here, but it went to moderation.
ReplyDeleteDoubt that it will ever see the light of day.
If we could just make legal education like medical education, we'd solve the problem. Providing practical training is expensive, so the government gives hospitals billions of dollars to train physicians after they finish medical school. Its only fair since everyone benefits from highly trained physicians. The government can do the same thing for law firms. Pay them for each associate they hire to cover the costs of training the associate for the first 3 to 8 years (the range of training for a doctor). Payments should be the same as those made to hospital, around $100,000 per trainee per year. Presto, the problem will be solved.
ReplyDeleteYou are seriously suggesting that the government should pay more for legal education than they already do?
DeleteNothing about practicing law approaches the cost of medicine, which is itself too high.
The problem is that nearly everyone benefits from better standards of medical care. Everyone does not benefit from the government pouring a ton of money into some law firm who might be representing pfizer in an attempt to "blight" your property so they can take your house and build a plant and make tons of money off of it.
ReplyDeleteNot so. First, many doctors work for firms like Pfzier in areas like marketing that some view as unhelpful to society. Others devote their practices to plastic surgery of procedures of questionable benefit. In fact many major teaching hospitals have large groups doing plastic surgery and other procedures of questionable benefit.
ReplyDeleteSecond, there are many people who need legal help but don't have access to competent lawyers. IBR and PAYE both ensure that there will be legions of lawyers willing to work for low wages (there just aren't enough high paying jobs for all of them) so we just need to train those lawyers in practical skills.
There are already legions of unemployed lawyers. People with no money can't get represented.
DeleteDrug company work and plastic surgery are still beneficial I don't get what you point is.
DeleteThe reality is legal work is adversarial in nature. The Harvard law grad wants all of his opponents to suck. The Harvard med grad wants every medical school graduate from the crappiest school to the best to be an excellent physician. It is a team based profession where every graduate needs to be highly competent by the time they graduate residency.
Medicine really has no similarities to law.
DAMN, Deej finally found some SNARK.
ReplyDeleteCongrats, Professor Merritt.
Why does DJM hate the rule of law?
ReplyDeleteActually, I had a nice laugh reading this one by DJM. Very well played, DJM.
I don't understand the question.
DeleteI expected this comment to be attached to a link for spam.
Deletei think it is a reference to prof diamond who says that this site and anyone who demands honest stats is against the rule of law, against tenure, and for Jim Crow.
DeleteAbove, Barry and another were asking about HLS salary outcomes.
ReplyDeleteFrom LST's 2011 data, 95.5% of HLS grads were employed, and 94% reported a salary while only 1.5% did not (and of course, the remainder 4.5% of the HLS grads were not employed).
Salary was 145K at the 50th percentile and the mean was 112K.
So I don't think very many of the HLS grads are taking the discovery attorney jobs mentioned.
Of course, outcomes for c/o 2012 could be wildly different, and those numbers should be out in (??) March or so?
Try HLS grads who lost their jobs though. Then they may be taking less than wonderful jobs. Also try HLS grads who are too old to be regular associates. They may have limited options and take jobs in the private sector that are not optimal, and surely not what most people would expect of a HLS grad.
DeleteJust looking at the practice attorneys at Cravath. These guys are highly paid. Not clear if they make $200,000 or much more on average, but no way they make less than a first year. There is an error in this post to the extent it implies that the practice attorney slots would not be highly coveted.
ReplyDeleteI think you're right about this. My fictional partners were expressing their glee that even Cravath has departed from the "Cravath way," and that point still holds, but these particular lawyers are experienced.
DeleteSo I've revised the memo to be clear that the Cravath lawyers mentioned here are not entry-level ones.
"I'm literally shocked that you are billed at the same rate but paid half as much. I don't see clients standing for that for very long."
ReplyDeleteAgreed. It wouldn't be too hard for a client to look up the names of the associates working for them to see which ones are "discovery" or "staff" attorneys being billed at full price.
What are you and the other guy babbling about? This has been going on for a decade and not one client has done that? Proof? The practice is getting larger and larger.
DeleteThe one big difference now is that the larger clients are getting into the e-discovery game themselves since the ABA opened the practice to any Indian with an Indian degree.
"I'm trying to work out scenarios where it makes sense to go to law school. The numbers just don't work out. Unless maybe to go to Yale or Stanford because you will have more options."
ReplyDeleteAt sticker, even those schools are risky. Biglaw is both a soul-sucking grind and a bottom-heavy pyramid.
This is a pretty typical scenario:
1. Start law school in your twenties.
2. Work your ass off for three years so you can land a Biglaw job.
3. Work you ass off for five or so years at that Biglaw job, putting all extra money toward paying off the huge debt.
4. Find yourself laid off by your early thirties.
It was all just a big circle -- you started with nothing and you worked your ass off to get back to nothing. The only difference is that, now, you are old and tired and you have a degree that only qualifies you for a job you probably don't want, and that will probably never again pay as much as it did in your early career.
My advice when people ask me about law school is always this:
1. Don't go.
2. If you are going to go anyway, don't pay sticker -- ANYWHERE.
The layoffs, or whatever you want to call them (they are the result of up or out policies) are the most pernicious. In some practice areas, there are simply no full time permanent jobs beyond the 8th year unless one has a book of business. In house almost never hires, or if they do, there are 100 applicants for each job.
DeleteThere is really not much one can do with a law degree, years of BigLaw experience, being out of a job after a few of several years, and no employment options. One is stuck.
It is different from other lines of work, because other lines of work do not practice up or out, to this same degree. In another line of work, maybe 10% of the workforce could be laid off in a bad recession. In law, it is a continuous process of layoffs, and jobs for maybe 25% of those laid off. You have layers and layers of laid off lawyers competing for jobs, as well as those about to be laid off from big firms. The probability of working long term, like into your 50s in a real permanent full time legal job that pays the median income for lawyers in your state - very poor, almost nonexistent. You really need to be in the 10% or 15% of all lawyers to work through your 50s, and most lawyers will fall off the job ladder in law long before that.
elaborate on this bottom heavy pyramid. what professions are top heavy and beneficial
DeleteSome professions became light at the top through consolidation during my career. Commercial banking was an example of that. The many young bankers who started were not able to stay bankers. My relatives doing that quit, tired of it and did not want to go back. A classmate also quit that. I do not know of any unemployed commercial bankers desperately seeking work.
DeleteInvestment banking is bottom heavy. Most investment bankers are in their 20s and 30s. A couple of colleagues in investment banking were fired (one many times) but resurfaced and made a fortune. One is a lawyer. You can find a boutique to wait out a firing if you are a good banker. My relatives who started out as investment bankers making a mint out of the top B School ended up unemployed. One quit MD from one of the bulge bracket investment banks (that position is hard for anyone to attain), quit a second MD job, took years off, spent his millions and now is working in sales. The other I do not know the story. A third relative ended up the president of a major corporation, dean of a professional school and finally a college president. I always hear that investment banking is tough. There are likely many firings, but I do not know.
The health care professions are evenly distributed age wise.
Teaching has been the same way - not yet bottom heavy, especially now with budget cutbacks. However, I fear with the new evaluation process being stuffed down the teachers throats that teaching will become very bottom heavy. Older people tend not to get as good reviews as younger ones.
Law firms have become super bottom heavy in the last decade because of the Citibank/ Hildebrandt cheering squad for age discrimination that all the big firms follow like lemmings. There is no reasonable basis for up or out policies in large law firms that ultimately will leave a huge percentage of the lawyers these large firms hire at the junior level unemployed.
Law has the worst age pyramid of any profession, except perhaps the military, where youth is in fact a bona fide occupational qualification for most jobs. Youth is not a bona fide occupational qualification for law firm jobs.
Just think - what if the whole U.S. economy decided to fire older workers who are not in the top 1% of wage earners on the theory that older workers are less productive than younger ones. That is the Citibank/ Hildebrandt advice. I do not understand why law firms are exempt from the age discrimination laws so this horrific system of putting most lawyers out on the street without real jobs long term is tolerated and considered legal by the EEOC. The big law firms are big players in the high unemployment rate for experienced lawyers.
Many industries have age pyramids: sports, fashion, advertising, much of the entertainment industry, high technology (software), TV, as well as investment banking as mentioned by others here. It may not be quite as formalized as what lawyers experience, that's all.
DeleteThere aren't a whole lot of professions where age is a big advantage: medicine is probably one of those rare fields. I would add airline pilot and, in some cases, teachers. Age is also a benefit in elected office -- just look how old many Congress members are. Other than that, it's usually an increasing problem for most people.
"Salary was 145K at the 50th percentile and the mean was 112K."
ReplyDeleteBut the 25% salary is only $60,000. Some of that is probably PI jobs, but that leaves a lot of potential room for Harvard grads doing doc review.
So what exactly is a practice attorney at Cravath? I'm assuming that the discovery attorneys do doc review at clients offices or something.
ReplyDeleteI don't think practice attorneys are senior associates who didnt make partner, but it isn't clear.
They appear to be specialists in various areas and appear not to be on the partnership track. Some are older. Cravath used to have senior attorneys. Not sure if they still do. They were specialists in various areas and some went directly into large firm partnerships at other places. Senior attorneys were quite highly paid, probably a little more than the most senior associates for the most part.
DeleteThis is a positive development. These lawyers are not being taken advantage of. They have great practice opportunities at Cravath even though they may not be considered for partnership.
Just to be clear, it is very hard to get a job like the practice attorney slot. There are so few jobs of that type.
DeleteLawrence M. Solan lists himself as the Director of the Center for the Study of Law, Language and Cognition at Brooklyn Law School. What, oh what, is that? These guys give themselves more honors than than the Mexican army gives its generals medals. William Ockham
ReplyDelete"These days, we keep even our conventional associates far away from clients and rainmaking opportunities."
ReplyDeleteprobably the major reason why 170+ LSAT applicants have declined the greatest
"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."
ReplyDeletehttp://www.whatisaheartattack.net/wp-content/uploads/heart-attacks_0.jpg
Posted the link to the Ivy grad doc reviewers on Top Law Schools. Over a hundred views, no comments yet:
ReplyDeletehttp://top-law-schools.com/forums/viewtopic.php?f=1&t=203042
Someone asked how do you know these doc review associates at Cravath don't start at $160,000.
DeleteSee we have a long way to go.
Isn't the brooklyn lawsuit up for dismissal next? Any word on if anziska is taking them all the way up?
ReplyDeleteIt is not even clear that the discovery attorneys are really doing doc review in the same sense as the blogs indicate and they are low paid. I did or supervised a huge amount of diligence in corporate deals as an associate, counsel and partner at large and mid-sized law firms. Some of it is very interesting. You need to read the documents related to the deal and the background materials relating to the business. You also need experienced people who understand the legal issues to do the work.
ReplyDeleteNot being a litigator, it is hard to tell the quality of the work these guys get, but it may be quite high level work. It may also be work that allows part time or lesser schedules than Cravath lawyers normally work.
Does this job pay $75,000 a year? Who knows? It is likely over six figures on a full time basis with these law school pedigrees.
By the way, practice area attorneys are listed before associates in the practice area descriptions. They are more like counsel or senior attorneys. Since almost no one makes partner at Cravath, being an experienced attorney there who is not on the partnership track would not be a negative for most other law firms or in house jobs these guys wanted to move to.
ReplyDelete"Someone asked how do you know these doc review associates at Cravath don't start at $160,000."
ReplyDeleteAmazing.
It is likely a 6 figure job. Several years ago a T6 school minority associate I knew was fired from her associate position (as were almost all of the minorities at that firm then). She had no notice and took a job similar to the discovery attorney at another top firm. The hours were good and I think it paid $100,000 with bonus when the going rate for first years was $125,000.
ReplyDeleteSee, now I'm confused and I wish DJM hadn't even added Cravath into the mix if she didnt know what those jobs actually are.
DeleteI posted earlier suggesting that they manage doc review, but someone else said , based on their experience, they actually do doc review.
I know someone had to manage the doc review and interact with the high level clients.
So by throwing Cravath into the mix, using positions that may have been in place for a long- time, at a high salary- DJM weakened her points.
Everyone knows that it is almost impossible to make partner at Cravath and that they created the leverage model. They may have had positions like this for decades.
I don't know. I feel that getting off- track by adding Cravath takes away from the actions of Wiilmer Hale and Orrick for offsite discovery.
There is no doubt that many firms will follow that model as long as it is profitable and easy to manage .
http://www.top-law-schools.com/forums/viewtopic.php?f=5&t=202842&p=6347000#p6347000
ReplyDeleteSo here is a woefully misguided post about the worst case scenarios after law school with no job.
So far the suggestions have been to work for the school( which I think was misunderstood) or possibly join the military. I can't tell if this is a fake thread or not.
They should realize that if they don't get biglaw they need to drop out. Finishing the degree is useless at that point.
I hope these kids realize that at 21 if they go into 6 figures of debt on IBR, they will be paying off that debt for longer than they have already been alive.
If the majority of law graduates wind up on IBR with this make government lenders rethink the practice of extending unlimited credit for law school tuition?
DeleteThe problem is that even the doc review attorney jobs are relatively good jobs for an experienced Columbia Law grad that has aged out of BigLaw. It probably pays $100,000 or more, the attorneys are probably treated well and the hours are probably decent from what I heard from a colleague with this type of job at a competing firm.
ReplyDeleteFor experienced grads, the jobs do not exist. They are not there.
The problem is that the BLS publishes that the median earnings for attorneys in NY State is $165,000. That salary does not reflect what happens to more experienced Columbia or Harvard or Yale law School grads. It surely does not reflect the high rate of job losses of experienced lawyers and the difficulty of finding work at at all.
The other point to be had is that if the other firms have outposts in very low cost areas, it may be possible for an attorney to live very comforably on a not huge salary.
I remember visiting a lawyer in a small town in the midwest. He was in a tiny firm. While I did not love his home, some of his colleagues lived in Victorian palaces. They resembled museums. You need to understand the cost of living, that stability of the jobs and the way lawyers are treated to see if it is a good deal.
Clearly the doc review jobs for $25 an hour in NY City where the lawyer never knows where his or her next paycheck is coming from are horrendous deals.
Without question, only 10 percent of document review attorneys make 100k or more. Don't be delusional.
DeleteA few further thoughts for those who have asked about Cravath: There is great variation in job titles, as well as in the degree to which firms list their new categories of attorney workers on their website. That makes it difficult to track these jobs. WilermHale and Orrick are upfront about their back office attorneys, which I admire, but other firms are more cagey.
ReplyDeleteThe comments here were helpful because they brought out some new information. I didn't know, for example, about the Sullivan & Cromwell "analysts." The firm doesn't list any of those lawyers on its website, although they clearly exist. In addition to the comments here, I found quite a number of these "analysts" on LinkedIn. Checking back to the S&C site for those attorney names, they are not listed anywhere by the firm.
On Cravath, whatever the firm does internally, it clearly relies upon contract attorneys for some of its work. LinkedIn lists numerous lawyers who work (or previously worked) as contract attorneys for Cravath. I suspect that most, and perhaps all, of these are lawyers who work for temporary staffing firms rather than directly for Cravath. That's a slightly different question than the one addressed in my original memo to Solan, although it's a whole different level of hurt for new lawyers.
As I wrote in the OP, firms have already taken Solan's recommendation, and are hiring new lawyers at lower salaries for the same old work--and without even the 1/20 chance of partnership. But they are also quite happy to hire lawyers for even lower hourly rates, without any sort of ongoing commitment to those lawyers. If Cravath and other firms can get good staffing through temporary contract attorneys, they definitely are not going to hire more "permanent" attorneys.
The commenters here, of course, know that. What's extraordinary is that Solan and some others don't understand these changes.
Professor Merritt's post is an insult to all the hardworking law school admissions officers who work night and day, reading and discussing personnel statements and recommendations, to make sure greedy, irresponsible individuals, like those Professor Merritt purports to write for, don't get into the legal field in the first place. Sure, its expensive and a lot of work to go through personal statements and recommendations, if we were really in it for the money we'd base admissions on LSATs, GPA and skin color. But we went into education because we care about society and we're will to do the work to weed out people who won't behave responsibly.
ReplyDeleteYou hard working admissions officers are reading personal statements of people who are going to be mostly unemployed long term if they go to law school. There is no demand for the students you are admitting because there is a vast oversupply of lawyers and very little work for them. You are not performing a service but rather a disservice to the people you are admitting to law school who decide to attend. You are contributing to ruining the lives of these people by admitting them to law school.
Delete^too dumb to recognize the sarcasm tag...please don't reproduce.
DeleteHow much IS a law school grad worth? That someone who graduates at the top of his class at HYS makes only $160,000 per year tells one a lot.
ReplyDelete$160,000 per year, perhaps, just barely, puts one in the top 10% of income. Of course, it does not go very far in a big city, particularly a big city like New York City. More likely, you will be living in New Jersey and commuting into the city.
A $50,000 salary puts one squarely in the 50th percentile of income. If I am going to spend seven years in school, and incur $200,000 plus in total student loans, I want to earn more than the median income.
This is particularly true if the firm is billing out my time at $300 per hour and demanding 2500 billables per year. They are raking in $750,000 a year for my labor, while paying between $50,000 and $160,000?! Even at the top end, this is a ripoff.
Plus, they really are not teaching me all that much and they are not giving me opportunities to develop my own clients.
The Big Law Scam goes hand in hand with the Law School scam
Pretty well every firm writes down associate time - 1st years are these days almost unbillable, second years are tough to bill. So reckon that the firm will be lucky to recover on 500-1000 hours of the first years time (lucky!)
DeleteRoughly, taking into account recruiting cost (all the summer associate pay is a write off usually), office space, secretarial and other support, FICA, and other expenses, there will be little change out of $320,000 for a first year paid out, and maybe $100-150,000 in revenue. It is not until they are second years that associates typically become a positive revenue proposition - a firm is lucky to break even in year one.
They also pay a small bonus as well as Social Security,unemployment and employee benefits, so more like a cost of $200,000. Overhead is at least that much and they are not collecting on all your time at high rates, especially for first years. All in all, they make a few hundred thousand dollars per lawyer if they can keep the lawyer busy for 2,000 hours a year and collect those hours at a high billing rate. Today not all of this works out though.
ReplyDeleteAgreed, also the traditional breakdown is 1/3 of revenue to overhead, 1/3 to comp/expenses (newsflash insurance at law firms is extremely expensive to both the employee and the firm) and 1/3 to profits. On average, that's about how it breaks out at large law firms.
DeleteCan we get some advocacy for this? http://www.govtrack.us/congress/bills/113/s114#
ReplyDeleteGreat post, you should publish this in a newspaper somewhere. Regarding the question of whether first-year associates at biglaw are 'worth' what the market pays them: the salary is high because of the demands on their time. A firm pays a first year associate $160,000 -- out of that, only about $20,000 (if that!) is if for pre-existing legal knowledge that the associate learned in law school. Because basically, they don't have any! Law firms treat first years like blank slates from a legal perspective. Sure it's great if you remember how to perfect a security interest in a chicken from your secured transactions class. But if not, that's fine too, it doesn't really matter because we're going to show you anyway. Law firms don't actually expect first years to know anything. How does that reflect on three years of law school at $50k a year. I could teach a person off the street to do my job as easily as I can teach a first year. The law school is just wasted time and money as far as training.
ReplyDeleteWhat the firms do pay for and usually get is a person who (i) has proven themselves to be reasonably intelligent, dedicated by attending and finishing a top law school and (ii) someone willing to put everything else in their life, including sleep, second to the work. That's what the salary is for. The actual legal knowledge is not worth much, hence the annual salary increase of approx $10,000 per year to reflect your increasing seniority.
So, the only benefit of law school to the big firm is much like the benefit of the LSAT to law school. Substantively, it's completely irrelevant, but it's some general indicator of a person's future success in the industry. From a training perspective, it could be cut down to one year or even incorporated into an undergraduate curriculum. Two years is still too long but it would be a good start.
"Pretty well every firm writes down associate time - 1st years are these days almost unbillable, second years are tough to bill."
ReplyDeleteI hate to tell you this, but you are full of the odiferous material here. I am fairly confident in saying this because I probably have been in this business 25 years longer than you.
The notion that firms are writing off associate time is nonsensical.
No sane associate is going to bust his hump trying to bill 2500 hours a year only to have 2000 hour written off, and no firm is going to do it. Instead, the firm will bill associates at a lower rate to reflect their lack of experience. So instead of billing that associeate at $500 per hour, he may be billed at $300 per hour.
Viewed in this light, big laws' hiring decisions make perfect sense. A grad's class rank becomes a marketing tool: "Meet Mr. Associate. He graduated 10th in his class at Harvard. He will be assisting in your case, and he bills at a lower rate than mine, which should help contain the costs of your case."
Anyone who has extensive dealings with lawyers knows that the partners are marketing guys, and the associates do the real work. And they know they are not getting that work for free.
You can accuse me of being full of whatever you like. Clients are very rarely willing to pay for first year associates, and have not been willing to pay for about 5 years or so. Firms that bill large amounts of junior associate time do not get rehired and lose the client pretty inevitably.
DeleteNo first year associate ever gets to see a bill in BigLaw. He or she has no idea of what gets written off (and I doubt that you do.) At the heart of the contract lawyer game and document review mills is the reality that the document review and due diligence that used to be billed as associate time is now sent to contract attorneys - and by the way, most smart clients are regulating how much markup the law firm can make - so no they are not billed out at the same rate a junior associates (yep GCs know about that little wrinkle.)
Opportunities to recover first year associate costs are thin on the ground. Firms hire junior associates in the hope that in years 2, 3, 4 they will recover the investment. I have been pitched by firms again and again and again - and I have shared an office with Harvard and Yale law review editors. The number of times I have heard anyone say anything as godawful stupid to a General Counsel as "Meet Mr. Associate. He graduated 10th in his class at Harvard. He will be assisting in your case, and he bills at a lower rate than mine, which should help contain the costs of your case."
What I have heard is "meet Mr. Associate - last year he worked on the X-matter. By the way he has a good knowledge of Y and has done a, b, c.....(he is not a complete waste of space and you need not worry that you are being billed to train him...)" If he is a BigLaw associate it is a pretty safe bet that he/she probably went to a t-14 and graduated nice and high in his/her class - but I want to know what he/she has done.
Inter alia, since I have been in this business over 20 years, associate, GC and partner, your estimate of how long you have been in the business makes you somewhere around your early 70s
Anyone who thinks a first year associate is worth $300 per hour, even in a big firm is delusional. Relatively few lawyers can justify $300 per hour. That by the way lies at the heart of the employment crisis - there are very few legal matters that can justify those billing rates - but the debt that many law students carry require them to pull down huge paychecks on graduation - when they are pretty useless as lawyers.
I have never once seen a bill go to a client where the firm doesn't eat a lot of associate time and some expenses.
DeleteThe number of times I have heard anyone say anything as godawful stupid to a General Counsel as "Meet Mr. Associate. He graduated 10th in his class at Harvard. He will be assisting in your case, and he bills at a lower rate than mine, which should help contain the costs of your case" is zero.
ReplyDeleteJust viewed the WilmerHale website. After a while I lost count of the "staff attorneys" and "senior professionals" all of whom had this identical description of their job:
ReplyDeleteMs. Blank focuses her practice on issues of e-discovery. Specifically, she works with other attorneys, litigation technology project managers, and paralegals on teams that manage electronic and other documents in large cases and investigations. Attorneys on these teams take a leadership role in the document control process, systematically tracking documents from preservation to collection and through review and production. They work with e-discovery vendors and their review and analytical tools; review documents; train and oversee other firm and contract attorneys who review documents; and partner with project managers to perform production quality control."
Position include grads from Columbia, NYU, Cornell and GULC.
Grim. Grim. Grim.