War on First Years

Today’s evidence that the Biglaw paradigm is crumbling comes from the clients of Morgan Lewis & Bockius. The ABA Journal reports:

Among the sea changes is a reluctance by a number of clients, or even an outright ban, as far having first-year associates work on their matters, says [Morgan Lewis Chairman Francis] Milone in a wide-ranging interview with the Philadelphia Inquirer.

“It’s a trend,” he tells the newspaper. “We literally have some clients who are telling us they do not want us to put brand-new associates on their matters.”

On the one hand, you can take that comment with heavy dose of cynicism. It’s exactly the kind of thing a managing partner would say if he was laying the groundwork for an associate salary cut. For a more full example of how to cut salaries by making associates feel generally useless, check out Womble Carlyle.

After the jump, we see there are even more reasons to be skeptical about chairman Milone’s motives.


Here’s the question and answer that lead to Milone’s comment about clients. From the Philadelphia Inquirer:

Question: Law firms are still very profitable. Why do they need to downsize?

Answer: You have to make a judgment about whether you can keep people busy going forward. It is not healthy for a lawyer to not be busy, to have free time on his or her hands. You don’t grow, you don’t develop, you’re not happy.

And from a cultural perspective, you don’t want to build a firm that culturally is populated by a lot of people, or too many people, who don’t have enough to do.

Q: Is that the only reason?

A: The other piece of it is the feedback we got from clients. Because they’re looking at the way they want law firms to act. They’re not going to be as willing to pay, frankly, to train new lawyers. So it’s going to be harder to find things for new lawyers to do. And when we’re paying new lawyers $160,000 and clients don’t want to pay for them, you’re putting them in a position where there may not be a lot of things for them to do.

Morgan Lewis has associates that are not busy and not developing professionally. And that’s bad for those lawyers. So the best thing to do for all involved is to fire them? Because the firm culture is better when you fire 55 attorneys and 161 staff during the worst economy since the Great Depression as opposed to taking a hit to profits per partner? My brain hurts.

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In terms of clients being willing to pay for junior associates, the other side of that coin is what Morgan Lewis is charging those clients. Milone addressed that issue too:

Q: Are clients asking you to discount your rates?

A: It’s more subtle and, frankly, more sophisticated, than that. They’re not just saying, “We want a discount.” In fact, most of them, not most of them, many of them are now saying, “Discounts are not the answer.” They want a higher correlation, frankly, between the value and the cost….

Q: But isn’t the bottom line for clients to pay less, right? And aren’t the general counsel offices under pressure from their own CEOs to cut costs.

A: Sure, every business is under pressure to cut costs. The general counsels are under pressure to cut costs. But they’re a lot more, frankly, sophisticated than simply saying, “We want more for less.” They really are focusing on outcomes and what the value of the outcome is to the business.

Oh, I get it now. If I may translate Mr. Milone into my own words: “Frankly, it is very sophisticated, but junior attorneys are overpaid and do not add value. In fact, I kind of hate most of them, not most of them, many of them. Now that the entire market has collapsed, I’m pretty sure I can get more from them and pay them less. Which would be an awesome outcome and really increase the value of my business.”

Is this what an industry on the brink looks like?

Q: Do you think that the practice of law at big law firms has gotten off track?

A: I think there was too much focus on money, on profit. I think there was a disconnect between this notion of value and the cost that clients were paying. I think there was too much competition among law firms based upon who made more money, and less upon how well we fulfilled our professional mission. And I think getting the pendulum to swing back more to where it belongs, more to the middle, is a good thing.

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Is that a pendulum you’re swinging, or a very sharp axe?

Good luck Morgan Lewis first years. Apparently, you need to focus much more on fulfilling your professional mission and much less on fulfilling your debt obligations.

Leveraging the law [Philadelphia Inquirer]

Some Law Firm Clients Ban 1st-Years, Says Morgan Lewis Chair [ABA Journal]

Earlier: Nationwide Layoff Watch: Womble Carlyle is an ‘Innovator’ of Associate Cutbacks

Nationwide Layoff Watch: Morgan Lewis Lays off 216