Ew, gross. That picture should be off the front page!

Well it's better than the picture of puke that goes with the post about vomit on the floors!

LAT -- NY BAR EXAM RESULTS THREAD/ UPDATE PLEASE

After calling the NY bar, they said that they would have a "date" in mid november, meaning the date that the results come out could be in December... they said they just don't know at this point.

Looks like Walmart is about to find out what happens when you purchase cut-rate legal services. Hope that works out for them. Remember - nobody ever got fired for paying cravath first years 160...

"After answering several very personal
and inappropriate questions and a five hour wait she said it was 'defiantly from the flip flops.'"

What were the flip flops being defiant about?

Who represents Wal Mart? What firms are we talking about?

Uhh, hello? Wal-Mart can virtually dictate what they will pay for legal services because they provide law firms a steady stream of work. I'm surprised that isn't common knowledge.

This is simply another reason to buy Manolos and Choos.

gross.

NYC to free Walmart flip flops!

I'd be happy to provide them billing information, but it'll cost at least $1100/hour to pull that memo together.

Walmart can get over it. If they don't want to pay law firm rates, let them compete for legal talent buy trying to buy it in the market place.

I think firms need to call companies on these bluffs. Walmart can easily find legal representation at a lower price (they need look no further than their home state of Arkansas), but as anyone who has shopped at Walmart knows (and as Walmart is undoubtedly aware itself), you get what you pay for.

please take this disgusting picture off the front page - I don't want to visit the site when I have to view that kind of crap.

People vastly overestimate the effect that associate raises have on associate billing rates. Assume the average associate bills 2000 hours per year, and bills at $300/hr. If he gets a $15K raise, his hourly rate need increase by only $7.50 to make up the difference. If you decrease an associate's salary from $160K to a more modest $80K, the $300/hr rate becomes $270/hr -- which is still very high. The real costs are overhead and profits per partner. Associate salary increases are a red herring.

Defending Wal-Mart is only slightly better work than insurance defense work.

So...what's all this mean for the future of big law firm junior associates?

A huge chunk of the standard first-year doc review is more and more farmed out to contract attorneys. Doc production departments are being out-sourced to India and other places. Yet salaries are increasing (as they should, frankly -- at least in NY); bonuses are increasing. Clients (gotta be more Wal-Mart thinkers out there) more and more reluctant to pay for the work junior associates do if it can be contracted out at cheaper rates.

Maybe the beginning of the end?

David, is that your feet after the marathon? Congratulations.

12:07 - I think this all goes back to the "you get what you pay for" mentality. And more than enough companies are willing to pay BigLaw salaries to get BigLaw quality. Say what you will about over inflated salaries and whatnot, but a firm like S&C or Cravath is going to provide an overall better service to a huge corporation then some little dinky shop that outsources to non-american lawyers.

Sure, most 1st years are not worth $300+ per hour but the legal work that 2nd and 3rd years do (at least in my experience) is probably worth $350/hr - and they certainly are worth that much when compared to the alternative of farming things out overseas. And to get that quality you need to pay some first years more than they probably deserve. I, for one, would not want to be the US attorney in charge of any case that farmed work out to India. I'm actually amazed that this is happening at all. I want someone with a real, US law degree (and bar admission) to be accountable for that work - even if it is only "doc review". That's why BigLaw shops routinely have 1st years do things that Paralegals could probably do - they want someone's head to put on the block and in most cases a Paralegal (or someone who lives in India) is not going to cut it.

Contract (US) attorneys may be one more reasonable solution to this - but once the first huge malpractice suit comes through because of a mistake made in out sourced work, most companies will quit their bitching about paying too much for first years.

I don't know what kind of legal work Wal-Mart brings to its firms. I'm guessing that there is a lot of fairly unglamorous tort and workers' comp. Perhaps they can get by with bargain legal services for that kind of work.

Wal-Mart is famous for bullying its suppliers into reducing their wholesale prices. I suspect that it will have a lot less success pursuing monopsonistic practices in the high-end legal market. Wal-Mart probably does a some high-end corporate work, but I expect it's less than a major industrial client. Wal-Mart's business just doesn't seem to involve as many complex legal relationships as even a mid-size airline. I don't think they have the market clout to dictate fees to the major firms.

If the big i-banks impose a fee freeze I'll start to worry.

The firms who do WM's routine work will obviously comply with this. I seriously doubt that many of them are paying first year lawyers $160k. Which raises the question of what is the point of this memo, other than the grandstanding?

When WM needs serious expertise in a high-stakes deal or case, though, I have a hard time seeing them categorically excluding firms who want to raise rates each year. If you need that kind of serious and rare expertise, you are simply going to have to pay for it. WM could slash legal costs overnight by forming its work to small firms in smaller markets. But if major deals/cases go bad, what GC wants to walk into a board meeting and defend the hiring of a firm no one has ever heard of? Are you going to hire a firm in Little Rock to do a major internal investigation b/c they are cheaper? I think not.

Oh please, Wal-Mart is just formalizing what most corporate clients already do. I have yet to see a partners not yield to at least a couple of key clients when it comes to passing on rate increases, particularly for associates. Every law firm CFO I know is extremely frustrated by this. Wachtell is probably the only firm I've ever seen that didn't have this problem on a large scale, and that is because they refuse to do any commodity work.

Please take the picture down----its lunchtime or near lunchtime for a lot of people visiting this board.

I don't get the idea of excluding junior associates from doing work on certain matters. Maybe you can get away with contract attorneys on document reviews. But you really want to pay a 6th year's rate to do legal research all day?

And the idea that first years are completely clueless is false. Can they run a case or take an important deposition? Of course not. Can they research and write? Sure. They've at least been trained to do that. And on an important enough case, it is worth it to pay them for that narrow expertise.

Is the sort of work that comes from Wal-Mart the sort of work that drives big law law firm revenue in the first place?

Compare revenue generated by S&C's M&A dept against its lit dept.

If you accept that law firm revenue or PPP is driven by corporate transactional work, the work generated by Wal-Mart is kind of insignificant to big law's bottom line.

In other words, what does a top-tier transactional practice care about what clients like Wal-Mart think about what they pay their associates?

You people do realize that Wal-Mart does do a lot of corporate transaction work don't you? Particularly a lot International M&A. Did you really think that Wal-Mart was just the stores in the US? No, they've bought a lot of top international retailers and driven them into the ground.

Clearly somebody has to pay for the 1st years. If the 1st years don't do work on major cases, then one year later you end up overpaying for an underexperienced 2nd year.

12:33 - I'd say they bought a handful of major retailers in foreign lands. But that's still a lot less M&A action (and a lot less complex transactions) than you see at a GE or a major chemical company.

12:39 Exactly my point. At 12:07, that's what I tried to draw out. Where do big firm clients expect junior associates to get training, especially if clients are more and more cost-conscious.

12:20 made a good point. It may take a big malpractice suit to wake the firms up. First-years may not be worth the rate they bill at, but how do you get the "attorneys . . . who are performing at an exceptional level and whose experience and knowledge is adding substantial value" unless you start them off as first-years.

If you take away most of the work first-years do (doc review, due diligence, etc.), how do we get the training to become quality mid-levels, etc.? The vast majority of revenue comes from associate work, not partner time on a matter.

Maybe the big firms should start acting like US attorney's offices -- only hiring after 3+ years experience elsewhere. (Of course, let me get my 3 years in first before we make that move ;)

Lat, I am now voting for Volokh because of this picture.

I call BS on 12:31. First years may know how to read and write, but they certainly can't do it well or efficiently. They have to reinvent the wheel every time they're asked to do something because they haven't learned yet to just ask around to find out who has already done it first. They take at least twice as long to deliver work product that is twice as shitty as a third year. I tell my regular firms that I would much rather pay the higher hourly rate of a senior associate or partner than pay anything for any first-year to be doing any of my work. I also tell them they're welcome to have first years sit in on calls but they had better not show up on the bills (unless maybe I have some specific due diligence question they might possibly be able to answer).

@12:39 The people who should be paying for the first years' training are the firms. If they can't put competent people on matters they shouldn't be passing the costs through. Who else ever heard of a business where you pass straight through to the customer poor-quality work (yes, I know they can just make it up on the partners' rates and disguise it that way, but I don't care).

I rest my case. See 12:56.

That memo is stupid. What a tool.

I love the fact that in the past year (since first year salaries have moved up) there has been a ton of GCs and Corporations threatening their outside firms that they better not see increased billing rates because of these salary increases. But when salaries were stagnant during the previous 7 years, and billing rates steadily increased every year (sometimes quarterly), resulting in multiple increases in PPP, we didn't hear any threats from these people. Apparently they don't mind paying high rates, as long as the associates don't see any of it in higher salaries, just the partner in higher PPP.

How many top-tier firms does this even affect? Who among the real Biglaw players represents Wal-Mart?

Dear Assho...we mean 12:56,

Congratulations on joining the most annoying group of a-holes on the planet: the in-house counsel who somehow transformed himself from a third year law student to a seasoned attorney with all-knowing powers overnight. We love how as soon as someone changes career paths from firm to in-house (generally soon after they are rejected for partnership) they immediatley jump on the soap box and preach the ills of law firm practices.

We are sure you felt the same way when you were a first year attorney right? (oops, forgot the a-hole club skips this step in evolution).

It may even be true that first year attorneys' time should not be billed. However, it never ceases to amaze us how every in-house hack goes out of their way to bash the work of these budding attorneys. This is especially amazing given the fact that half of the work product we see coming from "in-house" attorneys is embarassing. There is a reason most in-house bitc...we mean attorneys are where they are, and it is not to be home for dinner.

Regards,

The rest of the legal world

Congratulations, 1:36 on exemplifying the problem with first years. The value placed on you by customers is far less than the value you attribute to yourselves. Do you really think that biglaw junior associates' opinions are shared by "the rest of the legal world"? When you actually assume some responsibility for client development and relationship management, your opinion will be slightly more welcome. Until then, have fun "adding value" with your document review and forgive the rest of the legal world when we don't sympathize with your plight.

I happen to agree that most inhouse lawyers suck. In fact, one of the few things I miss about biglaw (and it was more than a few years and didn't involve being skipped for partnership) is the level of sophistication of the other attorneys with whom I worked (but not the first years, of course). However, there are many of us who have succeeded on both sides of the fence and know just how ridiculous it is to pay first years the hourly rates they're supposed to get.

Do you honestly believe that the value you deliver to clients warrants the hourly rates the firms charge? I'm talking about the value right now, not what it takes to get you to the point where you're competent. That's an investment the firms should be making, not the clients.

While you might possibly speak for a majority of people on this particular site (junior biglaw associates), get rid of the royal "we" and recognize that you are, in fact, part of a very distinct (and annoying) minority among the legal profession. Someday you'll grow up and join us.

1:48, I don't understand what economic theory you purport to espouse. You appear to assume that there's some precise and dollar-quantifiable intrinsic worth to the work that attorneys do--a value that "warrants" a particular billable rate. This is wrong: a first-year attorney's value warrants *exactly* the hourly rates the firms charge, so long as the client pays the bills. That's basic economics. There are certainly rumblings about this needing to change from some clients (like Walmart, and you, apparently), but it certainly hasn't happened yet.

Dear Dinner Boy:

First, it is easy to be "home for dinner" when you are eating alone (which is obviously the case with your passive agressive issues.)

Second, we don't have any desire to engage in a debate regarding the value, or lack thereof, of first year associates. We were only pointing out what an asshole you are. Your second post simply highlights this for everyone.

Third, we are glad you agree with everyone else that in-house counsel are generally incompetent, frustrated, self-appointed assholes. You take pride in the fact that you have finally been given some level of power (mainly, reviewing legal bills). Whenever the first sign of a true legal issue arises, you run to your outside counsel and beg us to make everything all better.

Fourth, as it relates to "value" (apparently all in-houses' favorite word) the only value you have is in trying to pinch pennies off outside counsel's bills. It certainly is not related to legal work or intelligence.

Try not to break your arm patting yourself on the back for demeaning a few hapless first year associates and get back to reviewing (and paying) the legal bills of real attorneys. That is after all, your job. Maybe your work should be offshored to India to be done for $15/hour. There is some "value" for you Dinner Boy!

Regards,

Humanity

Using universal qualifiers to refer to any group is one of the most infantile logical fallacies one can make.

I am a recently-made second year associate at a large New York law firm. I've seen first-year associates who are incompetent. I've also seen third-year associates who are incompetent. Those sophisticated associates Home for Dinner refers to were probably sharp first-years. The rest he (based on tone I assume its a he) refers to were probably just along for the 2-3 year ride and didn't care.

But to say all X are Y is just wrong. Find one X that's not Y and your argument becomes laughable.

You guys are a bunch of drama queens. If you find that picture so hideous, don't look at it, and you might want to get out more.

You guys are a bunch of drama queens. If you find that picture so hideous, don't look at it, and you might want to get out more.

You guys are a bunch of drama queens. If you find that picture so hideous, don't look at it, and you might want to get out more.

Walmart is just trying to save money so they can pay more money for better PR. Their rep is in the toilet.

Can lawyers do math?

Starting salaries were $125K in '99. A 3% increase per year yields the following salaries:

'00 - 128
'01 - 132
'02 - 136
'03 - 140
'04 - 144
'05 - 149
'06 - 153
'07 - 158

What is the big deal? It's more like a COLA than a crisis.

Perhaps I could tie my salary increases to the % increase of wal-mart executives, or to the PPP at my firm, both of which have gone up a lot more than 3% this decade.

I love how a lot of people who have no input and no clue how their firm is marketing itself have very strong opinions on this.

Gee, a major corporation wants to lower its costs and associates want to be paid more. Let's talk about this for the next three days.

I am sure that when Walmart is involved in a major case it will hire the best firm available and pay big bucks, whether that is to a boutique or to a biglaw. But for the run of the mill stuff, why should it pay the huge bills? You do not need a Bentley to drive to work every day, a mercedes, or even, gasp, a chrysler, will work just fine.

Paul Hastings represents Wal-Mart on all its labor/employment work . . . this memo was probably directed at them

Oh come on. If your feet start having a reaction to your shoes you take the d*mn things off before they look like scabbers mcgee. That is some baloney scam attempt.