How you like me now?

I can't believe I am saying this: good job on the post. OK there- I said it.

If I had my compensation slashed as much as 60 percent, I would take it as a sign to leave and go back to BigLaw.

It's a little misleading to say the average partner makes the AmLaw PPP number. That's the average among equity partners, not all partners, especially at a place like Kirkland where the vast majority are non-equity. Even among equity partners, most partners make a fraction of the average partner, because a handful of top-end partners make 10-12 times what the junior partners make.

The ship be sinking...

Happy Passover, everybody!

Dr. Nick

Clearly compensation rates are trending downward right now. And that will continue for awhile -- until these clients start losing cases and deals. You want your Fortune 500 company to depend on the legal services of an overworked, good-but-not-great midsize firm that competes on price? There are major companies that lost millions, and sometimes billions, or dollars because they entrusted their legal defense to lawyers who were in over their heads, and the plaintiffs' bar took them to the cleaners as a result. And once that happens again, and market cap plummets and liability increases, those high billables won't seem like a problem anymore.

Law firms will have to make fundamental management changes over the next few years. In-house counsel are slowly forcing partners to take on more management responsibilities for every case, which doesn't exactly play to a partner's strengths. Soon, day-to-day management of cases will have to wind up in the hands of business management specialists; guys with MBAs, not with JDs. Let laywers get back to doing what lawyers do and that will solve a great deal of problems with how clients view the bill. It won't be as profitable in the short-term, but surely the gains in efficiency will realize gains in profits in the long-term.

Elie,

Allen & Overy has to rehire the axed associate in Germany. They laid her off, saying she was redundant, then filled her spot with another person, which is illegal in Germany.

Kind of like how the Lathams in the United States layoff half their first years after only four months, with little work, just to hire another summer class. One would argue that it'd be fairer fo them to defer half the first years and not have a summer class one year. Getting lathamed hurts them much more than law students not having latham as an option one year. The Lathamed first years are already stuck with their OCI choice. Would be summers have hundreds of other firms to bid on.

Kind of reminds me of these mass layoff firms (Latham

5,

Non-equity partners are not real partners. Kirkland and the other feel-gooderies can't expect everyone to distinguish.

NY to 190!!!

9

Legal ethics rules don't allow non-lawyers to have control over cases, you retarded assfuck.

@9 = Mystal

2 is hilarious, Bush's fault forever until the economy improves then it's because of Obama. awesome.

Dream on 8. BigLaw was built on premium prices for rote work such discovery or papering deals.

Anyone can see the problem with flat fees: Lawyers are incentivized to do as little work as possible for the most amount of money.

And why is O'Melveny the Galileo of this movement? Tons of firms have been using flat fees for a long time. One memo proclaiming an old idea shouldn't make you the new Half-Skadden.

12 - you are the retarded assfuck. #9 had a good post (and I am not him/her). By "day-to-day management of cases" #9 probably meant the stuff that non-lawyers can do, which is pretty much everything except clear-cut litigation tasks like drafting pleadings, going to court, doing depos etc. Do you work in Biglaw? I doubt it because if you did, you'd know how much time is wasted on managing administrative bullshit.

Hide behind these snotty notions of being a "profession" all that you want. But its still a business subject to the rules of economics . . if ABA rules are standing in the way of lawyers being more efficient, then you can take it to the bank that those rules will change before this recession is over. Listen to your clients.

-Ex-lawyer who now unfortunately pays lawyers

Enough about OMM. Their plan is, in the words of Frat Stud, no big deal.

16 - that is silly. Flat fees incentivize lawyers to do as little as possible while still leaving clients satisfied.

I don't understand why these clients don't just hire other lawyers. We used to have an unnamed V20 writing our swaps but now use a lower V100 and pay about 60% as much. Work is more fungible than ever and the days of only 10 or so firms being able to handle complex work on Wall Street ended decades ago.

60% pay cut?!? Good lord.

Fees are a function of supply and demand. If a biz doesn't want to pay $1,000 an hour, then don't. Everyone is free to go somewhere else; after all, there isn't exactly a shortage of lawyers in this country.

Count me in among those who is tired of OMM being hailed for its genius plan of getting better attorneys who work harder.

At the end of the day, you either increase revenues or decrease costs in order to make more money. There is zero way around that. Flat fee or not, the only way for OMM to get more profitable is for their attorneys to work harder. Which is exactly what OMM's "innovative plan" envisions. As to whether the revenues come in the door via flat rate or hourly, almost every firm has used flat rates for years on many litigations and deals ... yep, even Latham. There is nothing innovative about it.

The problem facing BigLaw is that it is devolving into a service industry. Just look at the increase in temp hires and the decrease in hourly wages paid to them in conjunction with the increase in layoffs in associates and partners.

The real problem for BigLaw is the massive concentration of overpaid and overpriced partners at the top of the heap. Until all of those those overpriced and overpaid partners get to experience life as a temp attorney for $18 per hour, 10 hours a day, 6 days a week, no health benefits and no pay if there is a holiday, then BigLaw will still face a crisis.

When that happens, we can say to ABA -- problem solved! We're now a lowest common denominator service industry in the name of competition and the free market.

9 = Epic fail.

16 - That's not the primary problem with flat fees (though it is a problem - the kinds of matters you hire BigLaw for are generally the kinds of matters you want every rock turned over on).

The bigger problem from BigLaw's perspective is that most of the drivers of legal bills are outside of the law firm's control (and many are within the client's control). Imagine how many fewer settlements you'd see if large corporate defendants didn't have to worry about incurring additional legal costs when defending the numerous nuisance lawsuits that plaintiff's attorneys routinely file in the hopes of extracting a settlement. Imagine how many more complex agreements and structures we'd see if clients didn't have to pay their lawyers any extra to draft them?

I have no idea how you develop a pricing structure to account for that stuff. It's not like you can put out a pricing structure that says asbestos case =$X, acquisition = $Y, etc. Not only does it get extremely complicated really, really quick, but at the beginning of the case/deal, you generally have no idea how hairy/time-consuming it's going to be.

We are working on a truncated timetable here, people.

Why are HLS grads so totally awesome? I was just wondering about the consistency of their awesomeness.

Bottom Line: Law = TTT

This past weekend I hung out with normal people in a normal town. They were such good people. It made me feel like such a piece of shit. I run around all day licking some partners balls who I don't like or think is that bright.

25 = epic fail

Ever heard of contingency fees?

At some point the prestige of being lawyer will be tantamount to being a plumber. Scientists will yield the bigger swinging dicks.

31 --

As a lawyer, I can say I wouldn't really see a problem with law being as prestigious as plumbing. They aren't terribly different professions.

I interviewed with this TTT a while ago. The partner was a smug fucking bitch. If you're going to be smug and arrogant, at least back it up by being competent. I'm glad I didn't get an offer from this TTToilet.

"That's the average among equity partners, not all partners, especially at a place like Kirkland where the vast majority are non-equity. Even among equity partners, most partners make a fraction of the average partner, because a handful of top-end partners make 10-12 times what the junior partners make."

Nope. The highest-earning partners (max shares) at Kirkland make less than 7 times what the smallest shareholder makes - which was still about $1 million last year.

At least a plumber gets to bang horny housewives from time to time. Lawyers lives suck .

If the practice of law were akin to a jungle, in-house counsel are the equivalent of housecats. Housecats are de-clawed and neutered creatures that have no fire in their bellies or fight in their hearts. I find it somewhat comical when associates leave private practice (likely because they could not obtain partnership) for "greener" pastures going in-house. There is a false sense of empowerment when in-house counsel makes recommendations to the board or management about what firm to use to handle a legal matter. That power is shortlived when most don't last more than 5 years in an in-house counsel post. In the meantime, in-house counsel boast about their beautiful lives. If driving a Volvo, wearing dockers and irregular shirts purchased at Marshalls and taking the family to Cozumel for vacation is your idea of happiness, I pity you. This 60% salary cut is long overdue. It is safe to say most of these in-house cretins won't be getting any Christmas bonuses. Can you really expect anything else other than coal in your stocking when we have Commissar Obama steering our economy?

To add insult to injury, not only did my company give me a salary reduction, we got a Cheese of the month yearly subscription as a bonus. It wasn't even redeemable for cash.

CitiGroup is a zombie bank anyway

PE, do you think you and Katiana will ever reignite that old flame? I have been to that SCores you referred to on East 59th. I once had a daliance with a Puerto Rican stripper who lived in Brooklyn. I took her seven kids to Chucky Cheese in Long Island City.

Citi is known as one of the worst places to work. This was true even before the great market collapse.

If they want to look for overpaid people, they might want to start at the overpaid bankers who thought real estate could only go up and that liar loans were a great idea.

Passover?

41

If you're commenting on #7, Dr. Nick has a reputation of being retarded and it is a plain miracle that he passed the NY bar on his 37th try.

17 - You don't know what you're talking about either. Lawyers cannot take direction from non-lawyers with respect to client matters. Period. If you can think of a definition of "day-to-day management of cases" that doesn't involve telling other lawyers what to do, yeah, I guess non-lawyers could do it, but the role would be so small, it wouldn't be worth hiring someone with business experience to do. And, no, non-lawyers are non permitted to perform everything but "clear cut litigation tasks." Law firms could not, for example, have non-licensed attorneys counseling their clients - if they could, there'd be no point in having transactional attorneys take the bar, get licensed and continue to pay hundreds of dollars to the state bar every year.

By the way, if you think lawyers are going to change their professional rules to allow non-lawyers to start drinking their milkshake in the middle of a recession... well, let's just say I know why you couldn't hack it in the law.

Of course it is possible that the rules are changed by the time the recession ends, but only because it appears Obama, Pelosi and the rest of the Democrats are trying to do everything possible to make this recession into another depression.

PE, aren't you talking about your clients there? You're such a tool. I hope that the in-house lawyers who are your clients quickly see through the thin veneer of bullshit you layer over your arrogance and contempt, and shit-can your pathetic ass. Go suck eggs.

Kawk and Bulls only recruits from preeminent law firms. We agree with PE that in-house counselors are the carcasses of failed law careers. If you are in-house your wife would rather be pleasured by a real lawyer. That what she fantasizes about while she leans against the washing machine

Hi 8, in-house counsel here.

I see little difference in the outcomes produced by expensive, large firms, and inexpensive, mid-level firms. I, like most in-house lawyers, hire the expensive firms for CYA purposes - as I am fully protected if Skadden returns a less than desirable result, while my firm selection may be criticized if a random mid-level firm returns a similar result. However, as corporations focus more on cost-cutting, and as law department budgets come under increasing scrutiny, my clients may insist that I stop using top-tier firms. If that happens, I will do so cheerfully, with a smile on my face. Very few law firm attorneys are worth what we pay for them, and this is particularly true of more prestigious law firms.

44, I strongly suspect PE is a law student.

Law firms don't know how to make money without fucking over their clients on a regular basis. If firms had to bill reasonable rates for a reasonable number of hours, the firms would blow apart within a few months. The idea that any lawyer is worth $1K per hour is rediculous. The idea that any lawyer is worth $500 per hour is rediculous. The fees and rates went up simply because everyone else raised their's first. Lawyers have no imagination, no ethics, no class. Fuck them all.

#9: While I disagree with those who say your suggestion CAN'T be one (it can) I scoff at your belief that MBAs are the answer.

As a refugee from BigLaw who is now on the corporate side and working with MBAs let me tell you:

Lawyers are the worst businesspeople, unless you count MBAs.

Never have I seen a bigger bunch of d-bags who manage to f up situations than the MBAs who work in a given business and the MBA "consultants" who do God-knows-what to justify their fees.

One final point: Clinton (who gave us 8 years of peace and prosperity) was a lawyer.

G.W. Bush (who had a reverse Midas touch and turned everything he touched into shit) was an MBA.

I rest my case.

43 - LOL. I'm not going to get into a pissing contest with you, except for to say that I left law for a job in the financial world that has many of my law friends jealous and constantly slipping me their resume under the guise of asking for "career advice." I guess I'm one of those guys that prefers making money and doing interesting things . . if you want to call it not being able to "hack it" that's fine. Whatever you have to tell yourself. Keep hacking away.

Meanwhile, understand that the thing you're saying will never happen has already been happening. More and more sophisticated work has been moving in house for years, and there's a myriad of non-lawyers ("officers", "assistants" etc) who make sure that the in-house lawyers are only doing exactly what they need to be doing and nothing more. Law firms need to get with the program or the trend will continue clients will find a better way for their work to get done efficiently.

Any MBA student will tell you that recruiting for investment banks, Fortune 500 finance departments, etc has made a notable recovery since last year . . meanwhile law students are shitting bricks. Why aren't law firms hiring people when their clients are? I say its because law has a more long-term problem on its hands.

PE is a law student, and I wish he'd develop a new personality that is actually funny

You're probably right 50. He'd best hope he can remain anonymous, as he would otherwise be radioactive. Antagonizing some of our more excitable posters is fine, but making light of a lawyer's suicide renders him pretty radioactive.

49 - That's fine. I'm not going to argue with someone who doesn't know the BigLaw model or the difference between a client doing something internally and sending it to a law firm.

I could spill a lot of ink talking about the increasing internalization of formerly outsourced legal functions, but it's not worth it. Undoubtedly it's been happening and is happening at a somewhat increasing pace due to the recession, but if you think that clients will ever be able to internalize all of the functions that outside counsel provides...well, you just don't understand the market.

The ability of clients to find a "better way" to get their legal work done will always be constrained by (i) their ability to hire talented people with the requisite expertise to do the work and (ii) legal rules that prevent non-lawyers from having the work outsourced to them. No systemic shift is going to change that - it will only change the amount of work that gets sent to firms.

47: Ridiculous. Ri-diculous. As in, deserving of ridicule. Like your post.

Firms and clients like to throw around "fixed fees" and "alternative rate structures." But in practice the way it usually works is this:

Partner and client agree on flat fee.

Associates get to work, and figure out the partner bid the work wrong.

The budget gets blown.

Time gets cut to the discretionary maximum.

Partner goes back to client to negotiate for more, whining about "unforseen complexities."

Client agrees to give more up to a point.

If necessary, partner goes to the MP/executive committee to argue for a cut greater than the discretionary maximum.

Client winds up paying what they would have had just straight hourly measures been used.

I'm only a senior transactional associate, but I've seen the above scenario play out more than a few times. Clients talk big, but when they actually see all that the lawyers are doing to get them the desired result, they usually relent a little.

7 = Mystal

We need to bomb the credit bureaus back to the stoneage!

-DOJ Secure

I just want to wish Justice Ginsburg good luck- we're all counting on her.

Thanks 46. Who are your "clients" if you're in-house?

Obviously I agree with you and everyone else that the vast majority of biglaw work can be done just as well at half the price. Just because some kid borrowed $200k to go to law school and is now being paid the same amount per year, doesn't suddenly mean you should have to pay accordingly. That's the lawyers' problem, not yours.

All I'm saying is that there really are situations where you get what you pay for, and that sometimes it's penny wise-pound foolish to focus on the legal bills. I've been in law long enough to know, for a fact, that there are major corporations out there facing very costly liabilities today because they skimped on their lawyers 10, 20 or 30 years ago.

- 8

58 --

Inhouse lawyers often support specific business units within the companies that employ them. The leaders of those business units are the "clients" of the inhouse lawyers.

An oversimplified example: a consumer product company may have a detergent division, a lotion division and a laundry division. The president of the detergent division would be the client of the inhouse lawyer assigned to support that division.

-Not 46

58.
Get a clue. In-House people refer to the corporate folks as their "clients." Which is why A/C priv in such situations is recognized by the courts.

Once you graduate law school and deal with In-House counsel (assuming you get a job) you'll hear them use that term. All. The. Time.

46 here, 59 basically answered the question - my clients are business units like "the procurement group" or "the real estate section."

Now, typically, those groups aren't concerned with costs, as legal fees are paid out of the law department budget. So, to protect ourselves, many in-house attorneys hire top law firms, so the business units can't criticize us later on if something bad happens. If senior executives are worried about legal costs, that dynamic starts to change.

Certainly, sometimes it's appropriate to use the best and the brightest, and to pay a premium. But in-house lawyers pay that premium far more than is actually necessary, which is what allows so many large firms to flourish. Let me put it this way, if I have a case going to the Supreme Court, I'll use a certain lawyer. (I'm not going to give him any free advertising by naming him.) He can charge pretty much whatever he wants, and I'll consider it good value. He has a unique set of skills, in my opinion. If I need someone to babysit a 50 million dollar licensing agreement, there are many hundreds (thousands?) of lawyers in DC or NY capable of doing that work, and there's really no reason for me to confine my search to those markets. I'll often get better work (and a more responsive attitude) from a mid-sized firm in a smaller market. My project may make or break that entire firm, while it's one of many huge, super-important projects at a large firm. And it shows. Trust me, there are few things more irritating that correcting typos in a document prepared by someone earning over five hundred dollars an hour.

PE is not a man. He is a loving machine.

Sorry 60, I've been out for a decade and have never heard an in-house counsel -- my client -- refer to his or her "clients" before, and certainly not in the colloquial manner that 46 did. I figured that was probably what 46 meant, but thought I'd ask since it's not a phrase I've heard before in that context. I'm actually trying to have a substantive discussion with other attorneys who purport to be experienced. I don't think that includes you. Certainly you haven't offered anything of value.

I know what you mean, 61, particularly about the difference between a high-profile name and a boondoggle project, and thanks for the feedback. I'm coming from the litigation side so my concern more is about strategy and defense over the long term.

48:

I am with you; I was merely generalizing when I said "MBAs." I've met more than my share of MBAs who I would shudder to think have any responsibility in the corporate world.

-9

Where is this "law firms should hire MBAs" bs coming from? All the out-of-work MBAs who are also unable to find jobs? At least those bozos don't have to pay dues, maintain eligibility, and oh yeah, pay some bs company $5000 to teach them what they didn't learn at school in order to practice.

Please MBAs, just go back to price fixing or creating ponzi schemes or whatever dubious "value added function" you think you serve, and leave the legal profession alone. Because right now lawyers are supposed to be the people PROTECTING the rest of us from that crap.