The Leaning Tower of Biglaw
Jonathan Glater’s article in the New York Times this morning is just further evidence that the pyramid scheme of major law firms is starting to show its age. Yesterday, the New York Lawyer (subscription) took more direct aim at the weak foundation of the Biglaw business model:
Over the last couple decades, high leverage—the practice of having each equity partner supported by three or more associates or income partners—was accepted as a basic tenet of profitability. A firm billed out these junior lawyers at significantly more than it paid them, often getting billings that were triple the lawyer’s salary. It seemed like a sure-fire way to make money. But high turnover and rocketing salaries ate into profit margins. Now, the whole pyramid model is looking fragile.
And it shouldn’t come as a shock that the pressure weighing down on the business model is coming from partners desperate to hang on to every penny of profit. It is clients that ultimately control the purse strings.
More detail after the jump.
Clients are putting incredible pressure on firms to control costs:
Susan Hackett, general counsel of the Association of Corporate Counsel, is another. “I don’t have a problem with the $1,000-an-hour lawyer, but the $350-an-hour junior associate isn’t worth it,” she says.
But whenever the economy slows, there are calls to change the nature of Biglaw billing. Will this current crisis produce lasting changes? According to the New York Law Journal, Milbank doesn’t think so:
The model still has its believers. Leverage is “very good in very good economic times and not good in bad economies,” says Mel Immergut, chairman of Milbank, Tweed, Hadley & McCloy. When the economy comes back, he expects firms such as Milbank that do “high-end, complex work” will benefit.
I believe we can distill that statement to the very simple business idea that firms can fire associates when demand is low, and hire more associates when demand picks up. Nobody is really worried about the “supply” of willing attorneys.
Nor should they be. There simply aren’t a lot of six figure jobs available to people right out of school.
You don’t need slave labor to build a pyramid, you just need a labor force with no better option.
Work Like an Egyptian [New York Law Journal] (subscription)
Billable Hours Giving Ground at Law Firms [New York Times]
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first
"Nor should they be."
First, to catch an obvious typo.
First to say that I am really happy to be going to a non-pyramid structure firm! Have fun praying to hold on to your jobs at V10 firms, classmates!
Already in the morning docket, didn't read.
Mmmmm, sitting down on the pointy end of the pyramid b-plug.
I'm confused by the logic here. High turnover and rising salaries were hurting the pyramid... but those are no longer present. Salaries are not going to rise and in many cases are being frozen, bonuses have been at least halved at the vast majority of firms, and the only turnover is due to layoffs. The system may be looking shaky now that the economy has gone in the tank, but rising salaries and high turnover are no longer present, yet the shakiness continues.
My firm's pyramid structure is rock-solid, and can't topple. I do the substantive work that my clients need, and bill appropriately for it. No hedonistic biglaw excesses here, like extravagant candidate dinners, piles of useless swag, pointless 'retreats' or redundant staff. Unless you count the frozen margaritas by the pool or beach while I work. But I never charge the clients for those! *slurp*
Not sure why this has not yet been in the news, but Milbank has been quietly showing people the door in NYC. Not in the massive numbers it appears that LW is, however, as I am sure other will/can confirm we are letting people go.
Could the photo from that NYT article have made that Cravath partner look any more ominous?
It's just a matter of time until the legal industry crashes. Too many lawyers, too little work, and so much waste. There is absolutely nothing in this world that justifies paying a first year associate $160k plus bonuses for the value they give clients or the firm, even when the value is counted as an investment in the future. Clients are finally coming to their senses and realizing the lack of value and the inertia that comes with big firms and their BigCosts.
What else can you expect the chairman of a law firm to say? Of course he thinks the firm's business model still works. He should have mentioned that Milbank laid off 7 litigation associates earlier this week. Remember his ridiculous "promise" not to lay people off? No one should give any credence to anything this guy says. He is a big-law dictator who runs unopposed for chairman every year.
Doctors work for years at $50k in programs far, far more competitive than any BigLaw firm. All while their (larger) loans accumulate substantial interest.
This after four, not three, years of school -- where they actually have to learn.
Just a thought.
is it just me or does solo guy come off as a huge fucking douche?
Can confirm that Milbank has quietly fired 10 litigation associates (which included some rising second years) and 5 other associates (in corporate/M&A and securities).
12,
Research scientists go to school longer and get paid less. What's your point? That you failed economics?
Firms doing high-end, complex bogbite law abandoned the billable hour years ago.
the only reason the "pyramid scheme" would no longer work is because the partners have come to feel entitled to the $1m+ PPP. firms can survive w/o laying ppl off and still paying the pre-crash market salary/bonuses if partners could stomach "spreading the wealth" ... i guess then it wouldnt be a pyramid scheme anymore though
I have friends at Milbank that claim no lit associates have been fired. I'm not suggesting that they are correct and you arent, but what is your basis for that information?
13 - Agreed. Solo guy is one large bag of douche.
I am offended. Please moderate.
The reason the pyramid scheme will no longer work is because the billing rate required to sustain the 160 starting salary are not sustainable. As soon as Wall Street figures out that they should not pay for $1000 shower curtains and 50,000,000 jets, they are going to jetison the $300 an hour to look over documents, a task that a paralegal could do for much less.
Top talent, i.e. Supreme Court clerks and other legal genius will still have a bidding war for their services, but the lockstep days will soon be over.
Schadenfreude.
17, the problem with "spreading the wealth" is that the partners who generate it tend to leave for firms that don't make them share it. But yes, the world would be less scary if everyone are altruistic like that. Too bad they aren't.
-- libertarian d00sh
17, the problem with "spreading the wealth" is that the partners who generate it tend to leave for firms that don't make them share it. But yes, the world would be less scary if everyone was altruistic like that. Too bad they aren't.
-- libertarian d00sh
This is 14 here. 18 - your friends are incorrect. Given that I am in the litigation group at Milbank and two of the associates let go discussed it at length with me in my office yesterday, I am going to stick my what I said. Sorry that your friends are either in denial or haven't been told about it yet.
This would never happen in Houston.
I am amazed by the lack of business acumen of the people that manage law firms. Every other business is able to manage costs and recognize the returns they receive on employees, why should law firms be any different? As a former business consultant, I can tell you that we knew down to the minute how many hours each consultant had to bill to be profitable to the firm, we also knew how to amortize this cost over periods of time based upon cyclical events such as downturns in the economy. We also had a clear clue about the value of our associates and understood that value comes from the consultant and not the school they attended or the prestige of the firm.
Bottom Line: BigLaw Egos are writing checks the firm can't cash.
While the building motif is cute, it's hard to imagine a pyramind toppling.
FIX IT. JUST FIX IT!!!!! Step 1: FIX IT. Step 2: Repeat step 1 and FIX IT!!!!
FIX IT. JUST FIX IT!!!!! Step 1: FIX IT. Step 2: Repeat step 1 and FIX IT!!!!
FIX IT. JUST FIX IT!!!!! Step 1: FIX IT. Step 2: Repeat step 1 and FIX IT!!!!
12, you might not know this but doctors in training, no matter how competitve the program may be to get into, cannot be fired unless they are very poor performers. That is most certainly not the case in biglaw, where the vast majority of associates either quit or get fired before their 8 years are up.
Question for the group. The accepted wisdom is that there is no way salaries can wratchet down. But if the recession is longer lasting and deeper than merely 2009, why is it preposterous to think that firms, looking to buoy partner profits in a saturated legal market won't lower starting salaries by 30-40k. Would capable attorneys shun such firms? Unlikely. Also clients might flow toward a firm perceived to be trying to reign in the excess of year's past. So my question simply is; why won't firm first and second base salaries drop back to 2002 levels, just like everything else in the economy? Additionally, with anecdotal evidence that clients are reluctant to have first and second year attorneys bill on cases, wouldn't this be an even greater incentive?
What possible explanation can there be for lockstep? Hey make an offer and if they don't like it they will go somewhere else. Why should law firms cater to little baby lawyers.
As a local government lawyer, I think this is long overdue.
We used to hire "Biglaw" for some limited matters. Our office swore that off three years ago when our chief could not get in touch with the partner we hired, and talked to one of the associates working on the matter. The kid was nearly clueless about the issue. It was rather obvious that whatever work he was performing on the matter was not exactly critical to the litigation. The bill did not reflect said cluelessness. We protested large portions of the bill and received some mealy mouthed "apologies" and reductions in some rates.
Now we use two firms that specialize in local government litigation. The bill is on average 60 to 70% lower than our former Biglaw bills and the results are just as satisfactory.
The future Biglaw associates on this board should pay attention to this article. Governments and Corporations (the vast majority of Biglaw clients) are just not going to pay for a 25 year old to earn 160K plus bonus for work that a paralegal could easily perform. The pyramid days are coming to an end. It will be interesting to see whether Biglaw A.) implodes B.) thins the associate ranks dramatically and allows associates to gain substantive experience early on, so that the rates may become realistic again in relation to the knowledge and work product or C.) cut associate pay back to a manageable level that is acceptable for the skill, knowledge and work product for a 25 year old with no experience
24 -- Thanks for your input, but don't be a dick. Asking for your "basis" is not a personal attack. Read and respond.
If there is one thing that both lawyers and i-bankers can agree on, it is that consultants are m-effing douches. Please observe:
http://www.funnyordie.com/videos/dc131a468d/damn-it-feels-good-to-be-a-banker-the-musical-from-portala
"Value-added" = charging $300/hour to figure out how many times a day employees can use the john without cutting into revenue growth
IWKYYFCR
32, of course salaries can ratchet down. It did in the early 1990s. You should take your "accepted wisdom" from wiser people, i.e., not 1Ls.
I am offended by #7's picture. Please moderate.
Triple? Really? I am paid about $80/hr and I get billed out at $390!
World ending, sky falling, blah blah blah ....
35 - wasn't trying to be a dick. My earlier response was a tad rough. Apologies. Just nervous about my job...Milbank litigation is in trouble. Too much growth. Way too many associates.
17: Were you one of those kids that posted "NY to $165k!"? Well, associate comp is way out of wack. Maybe ppp could remain the same and fewer layoffs could be made if associate comp was ratcheted back to what it used to be before law firms started to match I-banks. Talk about partner greed. What a riot.
32: Salaries are typically inelastic on the downward side; however, it's just a matter of time until a law firm either offers across the board decreases in salaries or more likely, eliminates bonuses altogether. If firms were smart they would freeze salaries for a given period and decrease the salaries to first year associates. This would serve to bring salaries more into line with the depressed economy. It's not like there aren't a ton of attorneys available who would be willing to work for the current salary given to first years.
They should also change their bonus structure to encourage retention and spread bonuses out over time so rather than receiving a lump sum, attorneys wre encouraged to stay with their firm to continue receiving the bonus from the year before and so forth. The snowball effect would make lawyers think twice about jumping to another firm.
There are a number of services that lawyers and law firms provide. One (or many) is to allow clients to shift risks to the firms. Think of law firms as large insurance companies.
How should lawyers price their risk-shifting services?
35-How is IP litigation at Milbank?
wow..so everything was ok until the associates started making a little more dough.
2 Evans 1 Chisler
12,
You are right that doctors in their residency programs tend to have better credential than biglaw associates and yet take home only a fraction of the associates' annual pay.
You failed to note however that residency is only a temporary step. The doctors will inevitably move on to bigger paying jobs once they are done with residency. A specialist can easily make over 200k working only 40 hours/week for the rest of his life, well into the 70's. A biglaw job does not offer this kind of potential.
A doctor can also get his high paying job in virtually every city in the US. In fact the smaller the city the higher the pay. A biglaw job does not offer this kind of flexibility. There are only a few large cities in which a biglaw associate can be useful.
I am offended by the lack of professionalism demonstrated on this blog.
Texas Professional
38: 32 here. It is simplistic to say that this is "1L belief "and I am far removed from being a 1L and don't really listen to them. But obviosly big firm managers, the people with the purse strings, raised salaries in a bidding war for talent. I know that as a matter of logic that salaries *can* ratchet down, but my question is will they, is that the next step after slashing bonuses and firing people. Look, the shock of Cravath's bonus reduction, the fantasy world that associates lived in where they thought other firms would side with Skadden, etc. makes me believe there is a wide gap between the reality of today's BigLaw market, and the willingness of associates to accept that reality.
I am offended by the balls deep severance package I was offered at Milbank...
Bottom line: the model is broken- very few partners I know are worth 1 mil or more; many are there just justifying their existence and can't beileve the money they make; never dreamed of it; of course they want the model ; it works for them but they just got to first base quicker than the rest of us; timing was right for most of them. It's not about not sharing the pie ;it's about asking for more of the pie and screw anyone else. Thats' what law firms have become; it's a pretty much a worthless degree when you consider the income potential, debt and insecurity you get. And that bs about it can prepare you for anything is just that, you cant do much anything with a law degree except practice law or being a recuriter- I mean how many cogent memos or briefs can you write and who cares anyway; how many "brillant lawyers" do we need or know? The other reality is most lawyers don't have any business sense; they don't understand nor are they trained to think like biz people.They don't know the difference between a P&L or balance sheet. We are redundant and over rated; overpaid, much like the partners we work for.
what is considered a first year salary that is in line with the economy? 30k? 50k? 100k? 125k? 160k?
I'd love some blueberry pancakes and bananas. Ohh, and also Scarlet Johansson.
#32 there is one firm that pays first and 2nd years crap and then ups their salary (if they make the cut) see http://abovethelaw.com/2007/09/attention_tier_two_grads_duval.php
34 - lol poors.
When you sue a corporation or bank and they throw 20 associates on the case to bury you in paperwork and bankrupt your poor property tax base, you will see the value in biglaw.
Fire the ugly female associates and staff first.
Handsome Harvard
The structure falls with recession.
43 - not 17 here. Law schools have been ratcheting up tuitions in response to the salary increase. It is not uncommon to have 175k in loans upon graduation (without even considering undergrad loans).
Cooley froze and removed hours requirement for bonuses in 2009.
i SOLVED it.
Biglaw firms simply need to freeze salaries of all current lawyers for the next five years. They continue to hire, but each year they offer the incoming class 10K less per year in compensation. at the end of five years you have first years starting at $110K (where they MAYBE belong) and a nice increasing scale, with 2nd 3rd and 4th and 5th each making more than the class below them.
the salary freeze will require a reduction in first year associate pay. the only way a second year can stomach a freeze is if the new hire is making less than him. how absurd if a 2nd year makes no more than a first year? they MUST reduce first year salaries.
Who is Evan Chisler and why do I care?
The so-called pyramid wouldn't be a problem if not for LAZY associates that sit in their office and expect work to come to them without having to ask for it. They whine about not making enough when they were making way more than they were worth for a long time. Then when the market corrects itself by putting the lazies out the street, the lazies whine even more.
Why are there capital letters being posted from the future?
32 - this would be fine, if law schools forgave the difference between their 2002 tuition costs and their 2008 tuiton costs plus the cost of living adjustment. Otherwise, an avg. NYC associate would barely be able to eke out a living (not hyperbole).
Zoo de lor!!!!!!!
What's up with the incongruity between the picture - a pyramid - and the title - "Leaning Tower of Big Law"?
Pick one metaphor and stick with it.
40 - you have to include benefits, overhead, etc.
It's the old 1/3, 1/3, 1/3 rule - 1/3 salary, 1/3 benefits and overhead, 1/3 profit to the firm.
1. hire 24 year old with no work experience and an overpriced degree, paying him 160K starting salary plus bonus
2. ??????
3. PROFIT!!!
Yes that is bizarre about the capital letters from the future
32/51, I was referring to your "accepted wisdom" that there is "no way" salaries can go down. There is a way salaries can go down and it happened less than two decades ago.
I did not address what would happen in the future, because I am neither Nostrodamus nor Negrodamus so I cannot tell you what will happen in the future. If you can, please tell me what tomorrow's lottery numbers are, thanks.
Quite the opposite, 13. Quite the opposite.
Ok people, relax. Biglaw salaries are not going anywhere. The "freezes" we are seeing now from a handful of firms (30 or so) are the "nuclear option" and will remain in tact through 2009 or, worst case scenario, through 2010. To think that firms are going to "reduce" salaries back to 2004 levels is simply ridiculous. The increase in salaries was the result of a bidding war for talent, and there is little doubt that certain firms (Skadden, DPW, CWT, etc.) will NEVER, EVER reduce salaries in that manner. Here we have the "greatest economic crisis since the 1930s" and the top tier firms (aka the firms that have not frozen salaries) are still paying reasonable bonuses. The sky isn't falling (as much as many of you biglaw haters out there would like it to be....)
I solved it!
Over the next few years, most biglaw firms will move to cheaper offices and save millions renegotiate their leases because they've just gained HUGE leverage on account of the economy.
Dear lawyers,
While you were staying late in the library making outlines, we were making a few million. To clarify, that's 20-30x the bonuses you seem to get so worked up about every year.
Then, when we finally lost our risky bets, we took down your industry (and the rest of the economy) with us. Turns out we were playing with PPP instead of having to wager our own money.
Finally, many thanks for sending us your taxes (taxed at the full ordinary income rate, of course) and helping to keep our management intact. Those of us who still have jobs will look forward to repeating this cycle in 10 years. The rest of us will have to decide which Caribbean island to build our beach house on.
Love,
finance guys
p.s. you are the sucker at the table.
Firms can cut salaries at will. I'd like to see some law grad turn down $125K a year if that was market. Or $100K. Hell, there are at least four qualified people out there for every 1st year associate who would gladly take his job without complaints for $90K.
The associates themselves have zero pricing power.
The only issue is a collective action problem. No one wants to be first to radically restructure salary. It's risky and if your peers don't do it, you may screw yourself. Skadden wound up a victim of this principle on the other end of the spectrum.
34: LOL "local government lawyer" are you excited about the Cooley reunion coming up? I saw the keynote speaker is "John Smith, local government lawyer." Is that you?
36 - thank you.
This Susan Hackett fool often shows up in these articles running her mouth about stuff she is clueless about. She worked in a law firm for a year before going "in-house" at the Association of Corporate Counsel and she's been trying to establish herself as an expert for years.
Outsiders always complain about junior associates, but they aren't the ones who run transactions or who have obligations to their boards and shareholders. Important, critical information is discovered in due diligence and document review. If you want to find it and mount a strong defense or get the transaction done while managing the risk, someone needs to do that work. if junior associates don't do it, it doesn't get done. Susan Hackett doesn't understand this, because she has never been a real lawyer - she's just been a talking head for some lam advocacy organization. She thinks that she is demonstrating the kind of advocacy her clients want, which might be right. They want the rates they pay to be cheaper, they want the work to be more efficient and they want their overall costs to be lower. However, all this foolishness about how junior associates aren't worth it, that's just ignorance. They are necessary, and if you want to get advice from the top guy who helps structure your transaction at $1,000 per hour, you often also need someone to perform your transaction (senior associates and junior partners at $400-$700 per hour) and junior associates to do all the behind the scenes grunt work, like Schedules and diligence. Don't want it done? Find, don't do it, but don't complain that it's the $350/hr junior associates who make things expensive. Good legal advice is expensive, just like many aspects of running a robust, compliant, profitable business are. Maybe the market starts to push rates down a little, but I doubt it. The kinds of cash that business spend on legal costs are nothing compared to what they spend on other things.
To summarize, I am almost as sick of Susan Hackett as I am of Dan Hull, but at least he's a practicing lawyer (albeit a douchebag who works with small clients). They both share the train of being clueless about subjects outside their areas of expertise but crowing on constantly about how their experience is applicable to everything in the whole world.
62- you are assuming that all law firms across the board would agree to the compensation structure. If one top firm did this and none of the others followed, that would severely inhibit that firm's ability to hire any top associates.
If a corporation brings a suit/is sued for $1billion+, do you think that corporation really gives a shit how much their legal tab will be?
Also, the legal field operates on a client-lawyer relationship model: if your client knows and trusts you, they will stay with you regardless of the price (unless it is outrageous). It is not simply a race to the bottom - sometimes quality of work product will trump the price tag.
I am in no way suggesting that all associates at BigLaw are quality lawyers - far from it. But across the board and on average Big Law associates from top firms are more intelligent and better lawyers than local ambulance chasers that went to T-3 law schools.
Discuss.
34, associate *salaries and bonuses* should be irrelevant to you or any other client. your issue is with associate *billing rates*, which have increased far more rapidly than associate salaries. so partner salaries (which have exploded as a result of the gap between associate billing rates and relatively *low* salaries -- this is, of course, the definition of a pyramid scheme) should make you angrier than associate salaries.
62. Clearly, you didn't read the cogent analysis of 44.
81, and people several months ago said nobody would follow Cravath on half the bonuses of 2007.
62. Clearly, you didn't read the cogent analysis of 44.
78, you are indicative of the problem. Anyway, enjoy the unemployment line and the collapse of Biglaw.
I will be retiring next year at the ripe old age of 52, and receiving an annual pension of $104,000 with full health benefits for life. I'm already talking with a local government firm about coming on board next February. Perhaps we can hire you to prosecute traffic tickets after your fruitless attempts to gain employment in Biglaw. Say, how does $32K a year sound? I'm sure we'll get some resumes from your fellow Biglaw alums whose jobs all got outsourced to India, so be sure to highlight your oh-so-useful tenure on law review!
70, that's actually correct. The fill-in-the-blank for your step 2 is "bill him out at 3-4 times his hourly wage." It's not so idiotic to pay someone $160 plus a 10-20% bonus when you're making $500k off him.
40 and 69. Clearly not a clue about the reality of billable hours in determining the cost of an attorney. When must actually look at realistic burdened rates. The 1/3, 1/3, and 1/3, model is obsolete especially in talking about billable hours. It's a simplistic model that neither accounts for hours above the 40/week mark and the higher hourly salary. It also fails to take into account sunk costs.
If firms are really using this model to estimate rates and costs, no wonder we're in such a sorry state.
Did 44 have a cogent analysis? Are capital letters from the future taking over our minds? Discuss.
IWKYYFCR
88 is correct.
The 1/3, 1/3, 1/3 mythos is only indicative of attorneys' lack of knowledge of business, or basic math.
32/51 here. Of course I have no idea what's going to happen. But my suspicion is that base salaries for first and second years are way to high. If firms reduce these base salaries then law students will more carefully consider their debt burdens. If they more carefully consider those burdens, law schools will reduce their prices (in the form of more grants or better loan forgiveness programs). The bottom line is that in boom times firm managers believed, and were probably right, that it was associate's market. There was a risk of talent flight. But not now. Now, associate attrition rates are near zero. And the ranks of qualified, unemployed associates are high. Also, if salaries decrease, billable hour expectation can also decrease to match the lower available work.
Before Cravath's bonus reduction I would agree with those who say it was a prisoner's dilemma with no firm wanting to take the first step. But now, what's the risk with making a bold move. How is it that lawyers in a cheap cost-of-living market like Houston (160k) or Atlanta (145k) are entitled to this much money? Note I worked in Houston once upon a time, so don't start telling me how valuable you all are down there. I get it, but your cost of living is nowhere near other markets.
Well, gee #36 who is the bigger "m-effing douche?"
The guy that is "charging $300/hour to figure out how many times a day employees can use the john without cutting into revenue growth" or the clueless law firm executive (read: omniscient partner) that is so inept at running the business that it needs to hire him to figure it out?
At some point tuition will go the way of housing prices and plummet. At least this is what I tell myself as I watch my kids grow older.
93-
Ah the never-ending conundrum of douchery....This whole egg/chicken debate is rather circular, so I will exit it stage left.
But the video was hilarious, right? I lol'ed for like 2 minutes after it ended.
-36
94- Not gonna happen as long as "costs of providing education" keep going up.
That and the US gov't will shovel money towards any 18 year old who wants to get an art history degree...colleges can and will continue to charge whatever they want. If I were a college administrator, I'd do the same thing.
The ship be sinking...
So, we have one bad year and now biglaw is crashing? Bullshit. Everyone thinks everything is crashing if you have a bad year. A few weak firms will die, and some heads will get chopped all around, but if you think KKR is going to hire Jacoby & Myers to run their deals, then you are stupider than you look. Lawyers are basically insurance policies. The world won't explode immediately if you go cheap on it, but if things do go bad, you will regret not paying a few extra pennies for a better lawyer.
Unsuccessful people have no grasp of what things cost, or what the actual value of anything is. Lawyers don't make that much money. That is why I left Biglaw for a long-short HF. The impact of our attorney fees on our profits is almost written off as a minor rounding error. The only people who think lawyers are highly paid are legal secretaries who were too dumb to get into law school and too fat to marry a banker or fund manager.
I actually yelled at our outside counsel for trying to sell a flat fee rate to us. When I said no and that I want to make sure that he was working for the money I was going to pay him, he tried to sell me some shit about how it would be better for me. Bullshit. If a seller approaches a buyer with a change to the price and says it is better for the buyer, he is full of shit and is basically calling the buyer an idiot by not expecting him to pick up on it. If you want your paltry fees, fucking work for them!
Hey long-short HF guy, thanks for your opinions. Glad you have time to be commentator #98 on some biglaw board.
13, 19: You might be thinking quite differently when you get your no-offer/pink slip. Don't think you're 'safe' because you're not. My presence here gives many attorneys who got the short end of the stick in the current meltdown something to think about, and maybe move forward with.
I would never trade my frozen margs for those sour grapes you're spewing. If you were more civil, I'd actually feel sorry for you.
98: I'm sure you think we know (or care) what a "long-short HF" is, but we don't. There are two major points I gleaned from your obnoxious and crazed diatribe: 1) you are full of shit; and 2) you hate women because despite your money, if in fact you have any, you are so physically and morally repugnant that even hookers won't get within 1,000 feet of your stinking presence.
In summary, you are a tragic piece of shit who will not be missed by a single person when your fat, disgusting ass expires courtesy of a major heart attack. Though no one will notice or mourn your passing, it really can't come soon enough.
Most of do know what long short HF stands for, basically it means someone who leaches off of the market without actually contributing toward anything. They will argue that they somehow offer a form of insurance and ensure a fair price and some market liquidity, but that is really full of shit. The market would be more efficient and fair without them.
98 - well said. It's clear that the entitlement philosophy of summer associates, who think they deserve $1,800 a week for eating free meals, continues into their career as associates, when they think they are entitled to a job even though they are not producing value and results for clients. Heck, I routinely meet 3rd year associates that haven't even TRIED to bring business into their firm. Then the entitlement philosophy continues into partnership, with the partners thinking they are entitled to a flat rate for doing nothing.
I get really worried when I read these end of Biglaw doomsday predictions. I just got here - come on man, give me a chance to rake in my fat prize and then throw the system to the wolves.
103, large law firms do not expect junior partners -- much less 3rd year associates -- to be able to land client business large enough to support large law firm rates. Unless you come from enormous wealth and/or a very well-connected family, you're just not coming in contact with C-level executives from Fortune 500 companies (and if you are, they aren't offering to take the work they were planning on giving to a senior partner at another v10 firm in order to give it to some 20- or 30-something associate). The firm is not interested in taking the crappy $200k case (or $1M case, whatever) that your college roommate's startup company has going.
>Susan Hackett, general counsel of the Association >of Corporate Counsel, is another. "I don't have a >problem with the $1,000-an-hour lawyer, but the >$350-an-hour junior associate isn't worth it," she >says.
Who does she think is doing to actually work? The $1,000 an hour lawyer? As if!
105, you will never, ever be a partner with that attitude. You bring in a 200,000 or even a million dollar case as a third year and you will be having dinner with the partner that night.
101: Thank you! Well said. What a repugnant , egomaniacal piece of shit 98 is. I'm guessing he isn't over 5' 5" with a shoe size of 6.
101: Thank you! Well said. What a repugnant , egomaniacal piece of shit 98 is. I'm guessing he isn't over 5' 5" with a shoe size of 6.
$1,800 a week? Is that a joke? Is that after taxes and my expected weekly expenses are taken care of? Otherwise my sense of entitlement thinks that is far too low a number for a Summer Associate of my caliber.
98 - you're my kind of guy. Funny stuff.
Regardless, here's to hoping the pyramid topples. Biglaw sucks.
--Biglaw associate
107 has never worked at a large law firm. Assuming you weren't conflicted out of that case anyway, no AmLaw 100 firm would accept representation of a case that small. I understand things might be different at your 5-person slip-and-fall shop in South Jersey.
34 and everyone else riding the "it is ridiculous for 25 year olds to make 160k" train:
- First, most 25 year olds dont make that much money. Those that do likely went to a top law school, and were at the top of their class.
- Second, the people making 160k are (typically) working very long hours. This is not a typical work week.
- Third, these people are being taxed very hard. After tax the number looks far less impressive, especially considering #4.
- Fourth, the people making 160k probably have six-figure debt. After tax and loan payments many of these people are living on 70-80k per year.
Now tell me: if you are at the top of your class at an elite institution, what do you decide to do: tend bar and make 50-60k, or work tirelessly at a difficult legal job for 80k?
Because if you ask these people to take large pay cuts, attending law school will make absolutely zero financial sense, particularly since most people leave the profession within a few years anyway.
Long short equity = blind gambling = morons who don't study finance, at least when applied to a hedge fund trying to turn a profit above market. How's that HF move working out for you, 98?
98 thinks he's cool because he yells at people. Great attitude. Is anyone on this board nice to anyone, ever?
Wait - why is everyone saying that associate salaries are the problem? Unless...they aren't associates...and are motivated by...self-interest?
I don't see how flat rate pricing can make sense from anyone's perspective. For the firms, they have to guess at their costs, which are mostly labor, roughly translating into how much work something will be. Every twist in a deal will either trigger a re-negotiation or a loss. The firm will win if it guesses a flat fee that overcompensates them for their costs, and does so to a greater degree than the current model.
Business people think everyone is trying to get over on them, and rightly so. Every time you do business, the other party wants as much for their side of the deal as possible. Today, the clients claim that the rates are too high and suspect that attorneys churn work for more fees. If they get this structure, they will claim the flat fees are too high, and the attorneys do a rush job on their deal or case and just move on to the next deal. They won't be happy with a price structure until the lawyers are working for the same wage as one of Nike's Indonesian shoemakers. Every bill is too high if you are the one paying it.
Evan Chesler is a lot of things. But he is neither a fool nor is he charitable. The hedgie is right. The Fonz look-alike thinks that he is going to make money off this, otherwise he wouldn't be doing it. If clients are really asking for this, perhaps they may want to be more careful in what they wish for in case they get it.
113 spare the not everyone makes that much money. Yes, you're right, we get it. The poitn is those making that much money probably don't deserve it given the value they add to the case. They are only productive in doing menial repetitive tasks that can be quietly added to a pro forma without the client caring (10.0 review document or 11.5 prepare deal documents). But now, with a crap economy and clients watching every penny, firms have no idea what to do with these people. And I am not talking about 3 and 4th year junior associates who have finally learned something and usually add value to the cases they work on.
Sorry, but this general counsel woman is out of touch. Associates do almost everything substantive at my firm. And senior partners bill for the most mundane things. To a large degree, senior partners bill to hold teleconferences with the client simply to make them feel loved. If I were a client, except in regard to courtroom appearances, I'd FAR rather have three junior associate hours than one senior partner hour.
74 - randid cadwalader trolling
Biglaw sold us out.
Er Ah, I agree with 58