At Well-Paying Law Firms, A Low Paid Corner reports on “in-sourcing,” the growing practice of big law firms hiring “career associates” or “permanent associates,” full-time non-partner-track lawyers staffing offices in places like Wheeling, West Virginia and Dayton, Ohio. They do much of the same work as their partner-track colleagues, travel less, work more regular hours, and often earn less than half–the article mentions salaries of $60-$70k–than the $160k starting salary of a partner-track first-year associate. Such positions make good economic sense for firms trying to control costs (“[e]veryone acknowledges that $160,000 is too much, but they don’t want to back down because that signals they’re just a midmarket firm . . . It’s a big game of chicken”), for clients demanding that firms reduce billing rates, and for lawyers looking to combine big-firm type work with family responsibilities. They also contain the seeds of frustration and discontent:
[A] two-tier system threatens to breed resentments among workers in both tiers, given disparities in pay and workload expectations. And as these programs expand to more and more firms, they will eliminate many of the lucrative partner-track positions for which law students suffer so much debt.
In other words, there are trade-offs. It would be corrosive to work in such a position as a 3o-ish recent law graduate who thought he or she deserved a shot at partner. Being a donkey in a stable of show ponies can rankle if you focus too much on what you do not have and too little on what you do. Thus sprach the non-tenure-track faculty.
A friend’s daughter just announced that she is voluntarily leaving her position as a Big Law fourth-year associate to join a smaller litigation firm. I won’t name the firm she is leaving but it always appears on lists of the country’s top ten corporate law practices. She has an impeccable academic pedigree and coming out of law school had multiple offers from top Boston firms. She has not been laid off or cut for sub-par performance. After successfully chasing the prize her whole life she caught it–and hated it. She hated the firm’s culture, the way partners treated associates, the constant tension and pressure. She wants more control over her life and a workplace that doesn’t tie her in knots. She is thus like most young associates, those golden girls and boys wooed by promises of fat paychecks and practice at the profession’s pinnacle only to leave big-firm practice well before partnership. It’s a remarkably inefficient system.
Recently a blog reader suggested, after reading Considering Law School?, that I am down on law school. I’ve thought about her observation quite a bit. I don’t think my thoughts about becoming a lawyer have changed much in the past decade. Are recent posts about law as a career choice more critical than my posts of a few years ago? I’ve counseled caution before the recent bear legal market. Don’t Go To Law School, The Purpose of Law School II, and Thinking of Law School? Read This have a similar message, which is that many law grads earn salaries that barely cover–or fail to cover–student loan payments. (Click here for links to all of my law-school related posts.) I am not singing a new tune.
Still, as the legal job market deteriorated over the past year my advice became more pointed. There are far fewer jobs for new lawyers today than there were twelve months ago. Starting salaries are less than they were a year ago. A friend who graduated this year from BU Law was hired by one of Boston’s best firms as a first-year associate with an expected salary of $160,000, to start this September. The firm wrote last week to confirm that the incoming class will start work in January 2010, not a major delay under current conditions. Her salary is still up in the air. Somehow, as if my magic, the major Boston firms will all decide independently to pay incoming associates the same as-yet-undetermined amount. Whatever she it is, her salary will be at the top end of the market. She’s in the minority. She earned top grades in college and law school, worked incredibly hard, and had to pay her dues to land a big firm job.
Most of the prospective law students I advise are interested in corporate or business law. Many express their interest in working at large, national corporate firms. Others possess the interest but are more circumspect about expressing it. Most are unlikely to get there. Being a lifelong B+ student does not mean you won’t have a satisfying and successful legal career, but it does mean your chances of landing a job at any of the top 100 firms in the country are miniscule.
Be realistic. Do not define success by whether you (or anyone else) lands a big-firm job.
Lock the Law School Doors argues in favor of reining in law school admissions:
As firms begin an industrywide overhaul, which has entailed slashing jobs and reconsidering hidebound inefficiencies like the lockstep salary, students will compete for half as many $160,000-a-year jobs this year as they did last. According to the National Association for Legal Career Professionals, the 2008 recruiting season marked “what is likely to be the beginning of a weaker legal employment market that may last for a number of years.” Meanwhile, as job opportunities abate, law school matriculation rates rise unchecked.
The article takes issue with three lower-ranked New York area law schools that claim “45 to 60 percent of their 2008 graduates who reported salary information are making a median salary of $150,000 to $160,000.” The key to the school’s claim is who reported salary information. What percentage of the graduating class is that? How many of those who graduated into $45,000/year jobs want to report that fact to their law school? The idea that such jobs await about half of those who graduate from law school is ludicrous. The reality is that only the biggest firms pay those salaries, in the best of markets the biggest firms only hired from the cream of each year’s graduates–the top few percent, at most, from schools out of the top tier–and in this market they have significantly cut back on the number of new associates. If you think such a job awaits you after law school take a cold shower, read the article, and talk to some recent graduates.
The recession has whacked salaries of associates of big law firms, but has not reduced the disparity in starting associate salaries according to Study Shows Sharp Disparities in Law Associate Compensation. The study is based on 2008 starting salaries. Since 2000 starting associate salaries abandoned a bell-curve distribution for a distribution with two peaks. The first is part of a small bell curve between $40,00 and $65,000 and accounts for 42% of starting salaries. The line trends down steadily to $65,000 and then soars to a narrow peak between $160,000 and $170,000, where 23% of starting salaries lie. A rollback in starting salaries and re-engineering of associate compensation models should move that peak to the left in coming years–it may “inch back toward the $145,000 range” flatten the curve. In other words the low end will remain low and the high end will move closer to it.
Everyone knows that the legal job market is brutal. Firms have laid off thousands of associates and staff, cut back on new hires and summer associate programs, diverted incoming associates to public-service positions, and deferred new-hire start dates. New York-based Stroock & Stroock & Lavan has added a wrinkle to the “how-can-I-miss-you-if-you-never-go-away” minuet: it is paying incoming associates $75k to stay away. The new hires must decide now whether to take the money, payable in September and January installments, or defer until January–and hope Stroock has positions for them.
My first response is that of course I would take the money and go to Plan B. Is that the glib reaction of a lawyer who left big-firm life in the rear-view mirror two decades ago? It may be. If I were 25, graduating this month with $100,000 (or whatever) in student loans, and believed that big-firm experience and credentials were critical to my career, I would not just grab the cash. Working in a big firm can be a career-changer. My years long ago at Mintz Levin provide a still-useful distinct, if dim, aura of legal achievement. I cannot casually reject the big-firm imprimatur.
I don’t know how aware new law students are of the transformation being wrought in the legal profession. Everything I’ve written here over the past three years about the legal profession’s tiered nature, and the need to analyze the costs and benefits of law school with a gimlet eye, are truer than ever. A law school degree guarantees nothing: not financial success, not satisfying work, not professional respect, not entree to greater things. Nothing. I’ve written some two dozen law school recommendations since last September. Am I complicit in perpetuating mass delusions about the attractiveness of a law degree?
I have keen interest in the job market for recent law graduates. My oldest son is looking for a position after his current judicial clerkship ends next fall and a 3L friend is gingerly holding a permanent Big Law job offer, fearing it may disappear with one brief email. As a service to law students, interested observers of the legal job market, and worried parents The Shark (motto: “don’t stop swimming. it’s law school”) has compiled all the depressing info we could find on your future, all in one place, a chart detailing which firms have rescinded offers to 3Ls, deferred 3L start dates, and closed or cut back on 2009 summer programs.
. . . except when it doesn’t. A friend sent me an article from Bloomberg titled Credit Market Collapse Claims Victims as Lawyers Exit, reporting on dismissals from law firms that service structured finance, private equity, and mergers and acquisition transactions. So far the numbers of dismissals is small but expected to increase. The article quotes a source from Citi Private Bank’s law firm group: “You’ll see firms use this slowdown as an opportunity to raise the performance bar and clean out the bottom 5 percent of their performers.” It is indeed a schizophrenic time for BigLaw associates. One day starting salaries increase to $160,000, the next senior associates are axed because the work isn’t there. And associates aren’t the only ones feeling the pain: “Chicago-based Mayer Brown fired or demoted 45 partners in March that the firm said were underperforming.” No, it isn’t all camel rides.
Follow up 11/28: Law.com reports that, barring a quick turnaround in the credit markets, Thacher Profitt and Wood will lay off 24 non first-year associates in January. The 350-lawyer firm also offered 29 first-years “the option of taking four months severance and leaving the firm.” The article did not report what option faces those first-years who decline the severance. 53 lawyers = 15% of firm professionals.
. . . when you are a summer associate. Last week I was comparing notes about our legal careers with an acquaintance. We met when we overlapped briefly at a large Boston firm–I was on my out the door to become general counsel with a real estate development company, he had just come in as a lateral from another Boston firm. He stayed for about five years, went into private practice, and is now very happy as general counsel for a travel-services company. Our reasons for leaving BigLaw were similarly family-driven. As he said “I got to see all of my kids’ school plays, coach their baseball and basketball teams, and be part of their lives.” I thought of this conversation and our mutual gimlet-eyed view of the BigLaw experience when I read this lead paragraph from Legal Blog Watch:
Summer associates gave their firms overall good reviews in The American Lawyer’s 2007 Summer Associates Survey, and why shouldn’t they? After all, what’s not to like? Some found exotic adventures abroad, with one traveling four-and-a-half hours by horseback across the Egyptian desert and another put up in a fancy apartment in Paris. Others were treated to skyboxes at baseball games, cooking classes, musicals, symphony concerts, whitewater rafting trips and scavenger hunts. In New York, there was Kobe beef and Picasso at the Museum of Modern Art, while in San Francisco there was helicoptering under the Golden Gate Bridge and debauchery at Half Moon Bay. All that and a paycheck of nearly $3,000 a week.
I’ll put it like this. None of our recollections of BigLaw life involved Paris apartments, camel rides, or helicopter rides below or above the Golden Gate Bridge. And the debauchery did not occur at Half Moon Bay.
Scraps from the briefcase for prospective law students and lawyers:
Pay and Workweek Differentials by Law Firm Size from the Empirical Legal Studies blog charts the relationship between law firm size, associate salaries, and associate happiness. It reports that the median salary spread over the first eight years of the associate track amounts to $631,000 for associates in firms with 2-25 lawyers versus those with 500+ lawyers and to $524,000 for associates in firms with 51-100 lawyers versus those with 500+. It’s no surprise that big firm lawyers make more money but I’ve not seen a calculation showing exactly how much more. It also reports that almost 47% of lawyers at 500+ firms work more than 60 hours/week. The number of lawyers working more than 60 hours/week is 27.2% at firms with 51-200 lawyers, 19.4% at firms with 16-50 lawyers, 19.3% at firms with 5-15 lawyers, and 16.1% at firms with 1-4 lawyers. Last, it reports that 36.2% of those in firms with 1-4 lawyers report a very satisfactory work/family balance, compared with 31.3% in firms with 5-15 lawyers, 9.7% in firms with 16-50 lawyers, 10.3% in firms with 51-200 lawyers, and 4.9%–4.9%!!!— in firms with 200+ lawyers. I’ve summarized the findings. Read the original for more data and analysis.
Will Lawyers Continue to Exist? at Human Law Mediation blog entertains the notion that information technology and the ability to carve up legal work into discreet tasks–commoditization of legal work–will transform the profession. If you want an example read this piece from Legal Affairs: Are your lawyers in New York or New Delhi?
Last, Tax Prof Blog hashes data from the Princeton Review’s Best 170 Law Schools and rates schools in categories such as Professors Rock (BU is #1) and Students Lean to the Left (my alma mater Northeastern is #2).
How about a survey of undergraduate business school law faculty? Now there’s a niche market.