Ending Lockstep Salaries, But What About Billing?
There is a report in Bloomberg today, about the attempts some firms are making to end lockstep associate salaries:
The firms are responding to the plunge in corporate, real estate and finance work by overhauling compensation for associates, who often total as many as two-thirds of a firm’s lawyers. Some, like Orrick, are beginning to reward lawyers based on performance rather than seniority. Others plan to cut salaries for starting associates, just two years after top firms raised pay to compete for talent.
It looks like associates are dispirited, disorganized, and desperate to hang on to their jobs. If I was a professional business consultant, I’d think now is the perfect time to start stomping on dirty “workers” while they are down:
“In the current economic crisis, we see the final demise of the Medieval guild in the American legal profession,” said Joel Henning, a law firm consultant at Hildebrandt International Inc.
I am unarmed. Strike me down! Give in to your anger! With each passing moment, you make yourself more my slave.
Law firms have operated for decades with associate pay structures that don’t reward performance, Henning said…. “One of the best things firms are doing is breaking the ridiculous lockstep structure of associate compensation,” Henning said. “There is no other profession that operates that way.”
Young fool … Your feeble skills are no match for the power of the Dark Side. You have paid the price for your lack of vision!
But isn’t there something missing from this story? More after the jump.
Orrick, which has been trying to lead the charge on this for some time, believes that this will give associates the “option” of staying at the firm forever, without the pressure of trying to make partner:
Orrick’s reforms will let lawyers know if they’re likely to make partner and allow those unwilling to work the long hours required for that position to stay at the firm, Baxter said.Clients typically pay much less for work done by a law firm associate than that performed by a partner.
“We will be perceived as a law firm that is adapting to the marketplace,” Baxter said.
But will Orrick — and other firms that are eager to slash associate salaries — actually “adapt to the marketplace” and change the other end of this arcane paradigm? Will firms reduce their billing rates for associates that no longer deserve top salaries?
If a future fifth year starts getting paid like a current second year, then shouldn’t they be billed out as a second year? If we accept the exceedingly logical premise that an “older” lawyer doesn’t automatically make a “better” lawyer, then surely that internal determination (and the resulting cost savings to the firm) should be passed onto the clients.
How far are firms really willing to take this? If you are going to make practice law a performance based industry, then you have to make that show up on both ends of the balance sheet.
Associates, of course, don’t have any power to really impact the “new paradigm.” A 25-year-old with a massive amount of law school debt is going to take whatever job they can get. If that job pays a little bit less than it did before, there will still be an oversupply of young attorneys willing to work hard for that money.
But clients do have some say in whatever new system firms are trying to create. If a law firm is willing to say “not all of our X-year associates are worth the same to us,” maybe clients will say “great, we expect to see that distinction reflected in our bill.”
‘Medieval’ U.S. Law Firm Pay Structure Buckles Under Recession [Bloomberg]
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Ending lockstep now is absurd - the Dow is on a 5 day roll and the recession is behind us.
I took a poop on a partner's desk this morning to let him know what i think of ending lockstep.
Hildebrandt is actually derived from the latin phrase meaning to be consistantly wrong at identifying compensation trends.
"A 25-year-old with a massive amount of law school debt is going to take whatever job they can get. If that job pays a little bit less than it did before, there will still be an oversupply of young attorneys willing to work hard for that money."
Which is why it doesn't make sense that first years get paid this much. You could drop to $100k and still get the same caliber people.
Lockstep compensation is simply insane. It's the kind of moronic, anti-meritocratic system that you'd expect to see in an industry with an excessively powerful union - not in management-friendly BigLaw.
What possible argument could there be against paying people what they're worth?
The only thing lockstep around here is my Prestige.
Skadden, bitches.
If lockstep billing is not eliminated at firms that get rid of lockstep salaries, how will clients feel about getting the "B team" lawyers staffed on their cases?
Lockstep ended for hundreds of associates last week.
5,
Lockstep salaries match up with lockstep billing rates. The increased revenue from higher rates for advancing class years generally dwarfs the corresponding increases in salary. Law firms do it because it's good for firms.
"With each passing moment, you make yourself more my slave."
mystal = racist.
I think there is another aspect of this. If lockstep were eliminated wouldn't firms be better able to compete for the best attorneys? So while some would make less, wouldn't some others make more?
They still have lockstep salaries at Redass Lobster.
twelth!!!!!
In light of this new compensation trend, the Management Committee will be adopting a new policy of non-lockstep-severance layoffs beginning on Thursday.
I take strong exception to the notion that associate pay, even in a lockstep system, does not reward performance. In law firms, performance is measured by one thing above all else: hours billed. Because most firms require a certain threshold of billable hours (mostly around 2,000) to be eligible for a bonus, or, in some instances, to stay on the normal track for base compensation, the system works fine, all else being equal. When you add to that mix drstically increased bonuses for more hours billed, the compensation structure works just fine to incentivize what the firm is really looking for: more billable hours.
However, in the current marketplace for legal labor, the firms can essentially do whatever they like in terms of compensation because of a temporary (hopefully) severe over-supply of associate lawyers. The firms can justify it however they like and characterize time-honored associate compensation practices as ridiculous, but this is about supply and demand for young legal talent, and nothing else.
Taking away lockstep takes away one of the only protections agsinst gender/race/other kinds of discrimination. Whether it happens consciously or unconsciously, it happens everywhere in every situation where there is management discretion and lack of transparancy.
Maybe women don't negotiate as well for raises. Fine. Whatever the cause, non-merit disparities happen if lockstep is gone.
It's not just women. Married men and tall men also end up with higher salaries when there's discretion and lack of transparancy.
I'm not saying lockstep is the only way to correct for this stuff... but I'm having trouble thinking of another.
The song is not new and this remix is just reactionary. If Orrick does this and no other respectable firm follows suit, this farce will end. Bonuses and pink slips already do a fine job delineating associates. And new law graduates are not completely powerless. When no top grads show up at non-lockstep firms, clients and partners will take notice.
Of course associate salaries are artificially high. So are associate hours, PPP and billing rates. Lockstep isn't the problem.
4 - Sloppy thinking leads to sloppy writing. Don't just throw undefined pronouns like "you" into your conclusion, because I can't tell who you're talking about. Who is "you"? Cravath? Reed Smith? The entire legal industry?
Nice 14, haha.
7, I think you make a good point. But will clients think they get an associate 'discount' while getting service from the best partner at his top rate. In other words, would a client who might not otherwise pay Orrick (for sake of example) rates pay the partner at Orrick his top rate but request lower rate associates, thinking the value is in the partner's contribution anyway but the total bill won't be what it could have been with lockstep associates billing rates?
15 and 16 are both right
i'm fine with changing "ridiculous" associate compensations schemes, as long as they do it after they change the equally ridiculous law school model. three years at $50k each just so i can say i have a law degree, because i get to teach myself all the law i need to pass the bar over the course of two months after i graduate.
so i'm drowning in debt in a way that none of the current partners ever contemplated at this stage of their careers, and all of a sudden not only is the "profession" aspect of the law melting away, but i'm still getting hammered for being an overpaid paralegal. you want to fix the system? get the ABA on it, and pick a plan: lower law school tuition, fix the absurd bankruptcy exception for school loans, or shut the hell up about how much i get paid.
How many businesses with a ton of employees DON'T have some kind of "pay grade" concept for similar people? The debate is wether the bogey is too high, rather than whether everyone deserves/receives the same amount.
If you don't deserve a lockstep pay increase, you're not supposed to be working there anymore. If you deserve more, you get a bonus.
Give me back that fillet-o-fish!
Give me that fish!
Give me back that fillet-o-fish!
Give me that fish!
ATL layoffs announced. First to go: Mystal!
Lockstep is a joke. Name one other industry that rewards its workers simply on the basis of the workers aging a year. Sorry, chumps. You're going to start EARNING those salaries. The horror, the horror!
16, stfu. please, take your bullshit somewhere else.
16, so because some people are poor negotiators, we should flatten the compensation curve and not reward the higher performers (some of whom are women and minorities)?
Brilliant. Let's extend affirmative action to payscales.
Yes We Can
16 is so right. I agree.
16, I'm a 5'10'' male and I don't feel discriminated against.
You should try it sometime... you know, acting as something other than just a victim.
I agree with 16. I looked at lockstep associate compensation as a positive for minorities and women to help keep discrimination in check.
I also thought it was good for firms who wouldn't have to pay more for a candidate that had 10 offers than a candidate that had 1 offer. Given that so many students have had no (or an insignificant amount of) work experience before law school, I find it hard to believe that law firms can accurately gauge the potential of a first year associate and pay the associate properly.
What? No other industries that pay in lockstep?
How about the largest employer in the United States?
12 nailed it!
I would be a lot more willing to take a pay cut if my firm arranged to have my unsubsidized school loans bought by a bank that charged me a reasonable fixed rate. No need for total loan forgiveness, but something's got to give.
Oh, and fuck law schools. 22 has it somewhat right, but let's not let the clueless law school administrations off the hook.
"also thought it was good for firms who wouldn't have to pay more for a candidate that had 10 offers than a candidate that had 1 offer. Given that so many students have had no (or an insignificant amount of) work experience before law school, I find it hard to believe that law firms can accurately gauge the potential of a first year associate and pay the associate properly.'
This is so dumb.
1- Maybe the person with 10 offers is a hotter commodity with more attractive skill set than the person with one offer?
2-This is why for first years, compensation probably wouldn't differ that much, but annual increases would reflect merit as more information was accumulated. Shocking!
FIRST to have already better than a half-day's work AND to point out Elie's failure to use the subjunctive mood.
24 - LOL - If I get laid off, I'm going to sing that song as I pack up my office and exit the building.
There is a second part to this - the permanent job at a law firm. Firms continue to kick out their best non-partner attorneys, when many of whom would gladly stick around for a frozen salary and more reasonable hours and would be far more profitable to the firm than most associates.
30 = transexual from the meatpacking district. Take that shit over to craigslist, Buffalo Bill.
Ergo, the push to smalle rmarkets. Duh
http://www.blackbooklegal.com
26 -- You really haven't thought this through. Although Elie could have made it a lot more clear, the firms predicate yearly lockstep billable rate increases upon an associate's advance in seniority. This would have to change with the demise of the lockstep salary increase, because the firm clearly no longer believes in the predicate for the yearly billable increase, i.e., that an additional year of seniority is actually worth something. Otherwise, clients would probably wonder why they were paying even more than they did last year for someone who didn't even merit a raise.
There are ways around this problem, like making billable rate increases dependent on some kind of skill assessment of the attorney, but Orrick isn't talking about that.
I am constantly amazed how often we hear the refrain of "But I took out X thousand dollars of loans to get my JD and now I am not going to make that ridculous salary, and now its not there!"
Which is the 26 year old way of saying "You Promised!" like a 5 year old. Welcome to the world of grownups boys and girls....
16 = overpaid black woman (Yolanda Young).
I think partner salaries should be based on weight.
E. Mystal
32 is a genius.
-not 32 and employed by the largest employer in the United States
26 - name one other industry that works on the billable hours model.
Along 16's line - I always thought lockstep was a way to prevent lawsuits from women and minorities about getting paid less.
This is excellent, for performers. However, understand that if excellent firms are comfortable making a second-string of associates, rather than resorting to staff attorneys, "Wal-Mart" firms (DLA Piper, GT, KLG, etc.) are going to die on the vine.
You guys are clueless -- this whole thing is being driven by clients' unwillingness to pay the inflated associate rates needed to sustain the current salary structure. Clients frequently say they're happy to pay $1000/hr for a partner, but not $400/hr for a second-year. Any firm that lowers salaries is doing so in support of a change in their rate structure.
46 -
Accountants, expert witnesses, prostitutes...
46, car mechanics.
While I'm not a lockstep apologist, one additional benefit is that it is a transparent system for recruiting and other issues. Recruits can see which firms have compression and which don't. And as numerous people have pointed out, lock step can still have merit based incentives: don't advance underperformers to the next class year; give bonuses to the high performers; fire underperformers; make high performers partner.
i for one welcome the lockstep changes. this will just give me a chance to outshine everyone else in my starting associate class and make more money.
*perfects the fine art of ass-kissing*
-nervous T-10 1L
soon to be nervous 1L sa
ANOTHER PROUD MOMENT IN PAUL HASTINGS HISTORY:
Rule 11 sanctions:
http://www.law.com/jsp/article.jsp?id=1202429081570
How many more associates will need to be laid off to pay for this mess?
32 Even Uncle Sam has limits. You can get a yearly step increase in pay, but you can't go up a GS level just by time in grade without earning a promotion from your boss
Problem is there has been such a proliferation of lawyers and BIGLAW spots in the last 10 years that n house no longer values BIGLAW work as much as they use to. it used to be that in house was populate in the lower and middle ranks with attorneys who could not get into BIGLAW an therefore relied on purported BIGLAW legal service superiority. With the proliferation of BIGLAW and attrition therefrom, in house spots have been imbued with BIGLAW experienced attorneys who know full well that non partner level attorneys at BIGLAW do not know what they are doing.
BIGLAW is in an inevitable consolidation. It won't ever disappear but consolidation will. This is but a symptom.
24, well said my friend, well said
You should all try not having undergrad and law school debt. It makes all of this rather uninteresting. Try picking better parents next time.
How much trouble am I in?
First year layoff
Passed bar not yet admitted
People laugh at the notion of hiring anyone
Already have 4 roommmates
100,000+debt from college & law school
Unemployment a real boon to a social life
Killed myself for this in law school (was LR)
Could it be worse? My laid off classmate has a wife & kid
We did not lose jobs -face it many of us lost careers
sixtieth!!!!!!!!
42: Whether it's whining, griping, or acting like a five year old, the truth of the matter is that law school leaves many burdened with a ridiculous amount of debt. A debt many thought would be manageable, but has proven to be anything but manageable. A debt well worth accepting because education is something for which to aspire and it is an assumption that it will pay off in the long run.
Unfortunately, that is currently proving a mistaken assumption. To kick new lawyers when they are down and questioning their future is truly shameful, especially for reasons of schadenfreude. It reminds me why many see attorneys in a derogatory light.
Recent graduates asking for lower, fixed rates on their loans, or an understanding by law firms is not much to ask and would help the profession overall. I know recent graduates stuck with rates greater than 8% for loans. Even the rate on federally loans is above 4.5%. If the feds can bailout the Big Three, banks, AIG, and countless mortgage holders, why can't they provide loans to students at a low guaranteed rate?
These young lawyers are not asking for forgiveness of their loans or even whining, they're asking for understanding.
9 knows its gonna do what it do baby . . .
32 - And the US Government runs like a well-oiled machine, doesn't it? I don't think justifying a business practice just "because it's what the government does" is a very good approach. But then again, that may explain why so many law firms are having trouble.
Do companies really know that their file is being worked on by X number of 4th year attorneys billed at A and Y number of 3rd year attorneys billed at B, etc.? Seriously, how else are they going to know that some 3rd year attorneys make more or less than other 3rd year attorneys and which ones of each are working on their file?
Granted, I've not experienced "BIG LAW" first hand, so I'm naive. But in the lawfirms I've worked for, there have been two associate billing rates, junior and senior. If I understand correctly Big Law does work in 'teams', so who's going to know which of the 3rd year attorneys (aka junior) are being paid more or less than some 4th year attorney (who may or may not be senior)?
43 - She's also short and single.
"Orrick, which has been trying to lead the charge on this for some time, believes that this will give associates the "option" of staying at the firm forever, without the pressure of trying to make partner:"
didn't Howrey start this before Orrick??? Howrey announced this a couple years ago
i love the comments what associates are "worth". while $100k may be fair compensation to most of you idiots who got poli sci degrees and have no skills, once the economy picks up every IP associate with an engineering degree would go into programming, and a lot of JDs with pre-law experience would jump into consulting.
$100k to bill 2000 hours in a law firm? no way.
"With each passing moment, you make yourself more my slave."
...actually, it was "servant," not "slave." Go check.
The phrase is "If I were" not "If I was."
I agree that lockstep salaries are rediculous. But, I also think it is rediculous that the primary measure of a lawyer's "performance" is the number of hours he bills. Get rid of hours being a lawyer's primary measure of performance, and lockstep salaries will quickly go away as well. However, law firms are never going to do this - the idea that more hours you log, the better the lawyer you are is engrained in the legal industry, and it's here to stay.
67 Hear Hear! Seriously, no one complaining on this list is working for legal aid
61, the feds "bailed out" those entities by giving them loans at 10% interest rates or taking over their common stock. So if you want the feds to bail you out, you are free to ask the federal government to
1) refinance your loans at 10% interest rates (a la banks), or
2) take over 79.9% of all your future earnings (a la AIG), or
3) repo your collateral (i.e., your J.D. degree) and give you a slightly lower interest rate loan.
Good luck with that. You'll need it since you can't even understand how the bailout works.
I wouldn't have entrusted my salary to any of the disorganized, passive aggressive partners I used to work with.
70 - it may be that logging more hours makes you a better lawyer, because those hours may add up to more experience.
Abandoning lockstep pay would also require abandoning the entire law firm promotional system. There are many problems with that, among them the fact that lawyers are not business people and likely could not figure out how to reward true excellence (as opposed to 2500 hours of document review or work that had to be redone by others), or that law firms are still sexist and women would automatically be paid less (because women are "organizers," not "thinkers", or so the male partners at my firm believe).
I don't think it is a given that eliminating lock-step necessarily means that “superstar” associates will get big payouts. I currently work at a firm that has non-transparent bonuses. My sense (though it is hard to tell) is that even the best bonuses end up being at or below market. It is difficult to convince partners to pay more, when there is no transparency. Frankly, if other firms didn’t have lock-step transparent bonus numbers that we could point to, I am confident that the bonuses would be even lower. My gut feeling is that even great associates would not do much better financially (possibly even worse) than they are now, and overall associates would be paid much less. I hardly think that partners are pushing this change out of a desire for more justice in compensation – they probably see it as an opportunity to significantly lower overall pay to associates. Even the “superstars” may not make out as well as some suggest here. It seems that very few associates (if any) would really benefit from a non-lock-step compensation system because the transparency would disappear.
I have not worked at a law firm although I hope to someday. So, will someone wiser than I please clarify just how Orrick will decide how much to bill their clients? or, why any clients would want the attorneys that the firm deems too lousy at practicing law to give a standard pay raise working on their cases even if it was slightly cheaper?
My biglaw firm already does this. And yes, associate billing rates are dependent on compensation and merit -- not seniority. Clients seem to have no problem with paying associates different rates based on merit and practice area rather than seniority.
The appalling Star Wars-inspired copy is some of the worst I've ever read on ATL, and that's saying something.
59--you really should try to calm down. Nobody has lost anything other than income in the shortterm. It will really, truly, be ok in the long run. You're too young to take that on anything but faith, but it's the truth.
As an honary member in the universal geek squad of death, I totally dig the pic of the Emperor.
63: Not saying that the government is well-run. Just saying that a lock-step pay structure isn't unheard of, contrary to Elie's assertions.
67 - The posts you're referring to are from people who don't understand the business in any way, shape or form.
Trying to explain law firm economics to them is like trying to explain physics to a 5 year old.
This is all so ridiculous. Why should law firms care about student loan amounts? The only thing rational law firms should care about is the amount they have to pay to obtain quality associates. Period. End of story. The market went up because everyone was making money hand over fist when clients were willing to pay exorbitant fees. There was never that much competition for litigators or specialists, but their salaries were swept up with the rising tide.
The reality is that the law firm market should stratify based on position the same way that the MD market has. Top of the class choose positions like dermatology because you get more money for less/easier work.
This is an income statement issue, not a balance sheet one. Though I guess it's too much to expect lawyers to understand the difference.
My balls are lockstep -- with power!
Law firms should care about student loan amounts because if the starting salaries aren't high enough for it to make sense to take out the six-figure law school debt, then talented people will do something else with their lives rather than go to law school.
Elie, you are truly a moron. Worst article ever. I never used to bash you, and could not understand why others did until more recently.
You have no understanding of economics or law firms...how you got this job just goes to show that any twit with a Harvard degree can get SOMEONE to give him a job.
The icing on the cake is that you want nothing more than for big law to fail...probably because no one would hire you. I wish I could have you fired.
Law school tuitions were bid up by students eager to take on huge debt in the anticipation of a high probability of landing a 160k job. If 160k doesn't hold, law schools are going to suffer, bigtime, as students will no longer be willing to take on debt and law school applications decline.
The quality of the pool of entry level candidates for associateship at law firms will also decline in direct proportion to the change in the ratio of a law school graduate's debt to their expected first year income.
Law firms, and clients in turn, will suffer from brain drain as the best and brightest go into professions other than law. That's probably a good thing, but will have a big impact on the legal profession.
mmm . . . waffles. Goddamn, I loves me some waffles . . .
A partner I work with told me that our firm moved to lock step in part because partners were spending too much time dickering over individual associate pay. Each partner wanted the associates in his/her fiefdom paid at the top of the class and of course to underpay the rest of the firm's associates.
As for whether other industries have lock step compensation, BIGLAW is a completely different animal from most industries. A large class of associates with essentially interchangeable skills and resumes starts the same position on practically the same day. They develop skills at more or less the same rate (with a few super stars and a few duds showing their colors early). They are subject to the same billable requirements. They move through the up-or-out system over a period of 7-9 years, at which point they become owners, counsel or leave. Everything about the system is lock step (including as many have pointed out, billing rates) so it makes sense that compensation is too.
Give me back that fillet-o-fish!
Give me that fish...
Give me back that fillet-o-fish!
Give me that fish...
Duh. Firms bill associates out at rates that are different from their class year all the time. Associates that do something non-legal, work for the government for many years, have a clerkship that doesn't count, etc., are billed out as more junior than their class year would suggest. Some firms bill associates out at different rates depending on practice/specialty. Clients have no problems with it - why would they?
Give me back that fillet-o-fish!
Give me that fish...
Give me back that fillet-o-fish!
Give me that fish...
Another implication that no one has yet bothered to mention (perhaps because the comments are mostly by ignorant law students) is that if merit-based pay is widely implemented, it will create a more interesting employment market for laterals. For the first time laterals will chose to move between firms primarily based on compensation. Firms will compete to hire midlevel and senior associates, particularly with expertise in speciality areas, which will drive compensation up. Recruiting firms will thrive.
72 or 42: The bailout is easy to understand as is the message written by 61. The author is looking for favorable terms similar to those offered on mortgage bailouts and offered to the various recipients of the bailouts. Clearly, the terms of the bailouts are different for each individual industry. Banks paying ten percent is not exorbitant when looks at the Goldman/Buffett deal where Goldman paid ten percent or the Morgan Stanley/Japanes Bank deal where the terms were the same ten percent. If you knew the banking industry, you'd realize the terms were quite common. (some of the strings attached - especially adding strings after the fact - are less common.)
I think we should give student loans a break and lower their rates to a figure below mortgages or allow all of the interest to be deductible.
90 is right on. This article sucks. Orrick sucks.
"Another implication that no one has yet bothered to mention (perhaps because the comments are mostly by ignorant law students) is that if merit-based pay is widely implemented, it will create a more interesting employment market for laterals. For the first time laterals will chose to move between firms primarily based on compensation. "
Thats uttery ridiculous. (A) There is no market for laterals currently. (B) How would a lteral know what the compensation is for each firm if there were no transparency as to salaries? Answer: he would not.
The only reason folks lateral is to either get into a better firm or to make more money. If there is any uncertanty as to either, the lateral market will freeze.
Lockstep creates liquidity in the lateral market. Remove it and the lateral market becomes sticky and it hurts all involved.
The most sacred thing I do is care, ... Today I am in charge of picking a great new healthcare plan. Right? That's what this is all about. Does that make me their doctor? Um, yes.
97, (B) the lateral can ask the firm what it will pay for laterals, and then pick the best offer (and the offers will differ without lockstep). Shocking, I know.
And (A) the economic conditions today will not be the economic conditions in the future. You may have noticed that the economy changes over time.
86, and what would that "something else" be? Most people go to law school because they don't know what to do with their lives, and the pay is good. So, if the pay might no longer be there, what will these bright people do with their lives? If they were smart enough or tough enough for med school, they'd do that, but very few would qualify. Should they go for MBAs now?
This is a good article. Thanks Elie.
100, they could go for MBAs, or forego the debt entirely and take a job that will eventually wind up paying them 80-120k or more, sans the debt. If you're not looking for instant gratification at age 25, plenty of jobs for smart people eventually pay over six figures - consultant, accountant, government, non-profit management, hospital management, HR, IT, successful small business, etc.
100, they could go for MBAs, or forego the debt entirely and take a job that will eventually wind up paying them 80-120k or more, sans the debt. If you're not looking for instant gratification at age 25, plenty of jobs for smart people eventually pay over six figures - consultant, accountant, government, non-profit management, hospital management, HR, IT, successful small business, etc.
88 gets it. His/Hers is the post of the day.
There were lots of bubbles. The education bubble is now beginning to burst.
97 - ??? Your post makes no sense. If firms could pay whatever they wanted to pay for talent, lateral associates could pick and choose from whichever firms offered them the most money, benefits, etc. during the recruiting process, or stay at their firm if that was the best paying option. Moreover, there may be no market for junior associates currently, but there is still a market for midlevel lateral associates with speciality skills/practices (antitrust, energy, telecom, govt contracts, etc).
59 - A 25 y.o. with a wife, kid and $150,000 in educational debt is mentally ill.
Most PoliSci, English, and History majors who are afraid of math--especially those who obsess about spelling errors--will not do well in the business world. Sorry. Get a PHd or go broke.
106 most people graduating from law school are not 25 - he is 29 and not mentally ill. In fact he was smart - all he has is his family not the firm.
82 The majority of people who post on this blog have absolutely no understanding of the business in any way, shape or form. Its primarily a bunch of students and baby lawyers that that abovethelaw whips into a frenzy by inflamatory language and one-sided articles-I can't bring myself to call it reporting. There is an utter lack of experience and true insight on this blog. It is pathetic.
The only problem I had when the label decreased my compensation based on performance was a greater portion of my income going to cocaine.
Rick James - Love ya man. I gots your back
And I am not from Havana, baby.
86--"Law firms should care about student loan amounts because if the starting salaries aren't high enough for it to make sense to take out the six-figure law school debt, then talented people will do something else with their lives rather than go to law school."
Get real. There will always be some schmuck who will go to law school, because he thinks it makes him impressive----and because it is the only way he will ever get laid.
"The majority of people graduating law school are not 25..." this may be true, but it is misleading for BigLaw. Cross out the non-trads (who are not getting/wanting BigLaw anyway) and it's 25-26 year-olds.
And yes, that is way too young and broke to be starting a family when you have massive financial and career commitments. True love can be really, really expensive.
Joel Henning, a law firm consultant at Hildebrandt International Inc., apparently doesn't read much. According to him, no other profession pays its employees in lockstep. Apparently, he's not familiar with the education industry. Take a look at your local school district -- you'll find that new teachers are paid in lock step. Unlike associates, they are not eligible for bonuses either.
I am a new partner at my firm. There's a lot to be said for the medieval guild model. Have people forgotten that that practicing law can be a unique and special calling? The law firm consultants are destroying our profession.
This is an incredibly complex issue. It is fair and understandable that associates have the same kind of reactions, whether expressed or not, as the author of the original posting. For associates, the rules of the game are changing midstream - after they've already made a decision to work in an environment in which career issues have traditionally been well defined. There's a lot to consider in this story. For example, what about billing? Hay Group views that these issues must go hand in hand. Ending lockstep and moving to merit-based pay cannot be a way to pay associates less in order to benefit the pockets of partners. That’s a recipe for disengaged associates and poor client service. With that said, partners certainly should expect to make a good profit from their investment; they've worked hard and they bear the risk of their firms not being profitable. If merit-based pay is truly based on the value that an associate brings to the firm, then that value should be passed along to clients as higher, and yes, as lower billing rates. In other words, true merit-based pay systems should measure the complete package of attributes, skills, abilities, and experiences that clients are willing to pay more for. If associates do not advance beyond adding the value of a second year associate, then they should not be billed out at a higher rate. However, if law firms are doing a good job of developing associates and providing them feedback and opportunities to gain the right attributes and experiences then everyone benefits. Associates are paid more, they are billed out at higher rates, and clients receive more value. In the end, of course, if this is managed well, many associates will benefit financially but some others will not. It's important to realize that moving away from lockstep is not a simple change in payroll and rate structures. It is a complete change in how partners and associates work together. Associates must realize that there can be an upside for them. Partners must realize that moving away from lockstep is not simple. It requires a real commitment to development, appropriate work assignment, and mentoring for all associates. But everyone wins if quality feedback and real development become the norm rather than the exception in law firms.
If I am a client, I wouldn't want to work with that 5th year asociate that is getting paid like a 2nd year because he/she isn't good enough to make as much as his/her 5th year colleagues. The reason clients use top firms is for top performance, that doesn't seem to correlate to using an underperforming associate becuase they are cheaper. They might as well use a crappy firm.
Hookers in Amsterdam's red light district operate on the billable hour model and they all charge the same amount (even the ugly and fat ones) - so there you go, another profession that operates similar to us (and who are probably doing far better than us in this economy - people still gotta get laid!)
fuck
117,
You're a retard, and a representation of why no one with any common sense comes to a lawyer for business advice. The laziest, most under-performing lawyer at Prestige A firm is still about twenty rungs up the ladder from what your firm calls a "rainmaker." Although I throw the word prestige around pretty loosely. Anyone with any proximity to the industry (read: not from Oklahoma, or from the local pipefitters' union, etc.) would never use the words law and prestige in the same sentance.
I don’t think that this decision is solving a problem; it is in fact creating many other problems that remain without solution.