DOW 10,000 BABY

NY TO 190!

Altman Weil should be considered the modern day Confucius for law firms.

I fucking quit. Absent associate unionization which will never happen, we're all effed in the a.

Is Altman Weil recommending cuts to billable rates?

Rates *must* come down in order for demand for legal services to improve.

Firms will have no trouble attracting capable talent at starting salaries of $72,000 (the 1998 level cited in that article).

Post #1 is full of win.

- 1

Economics 101: there is a difference between labor and capital.

Economics 101: there is a difference between labor and capital.

CNN is running an interesting story. An atty was in court talking to the judge when a sheriffs deputy decided to take her file off of the table and look through it.

Wouldn't it be nice if the law schools told the law students that as of January 1, 2010, the amount of law school loans the students have to pay will be the amount they would have had as debt had they graduated in 1998. It seems only fair since the law firms are now being told to reduce starting salaries to the 1998 levels. And why don't partners reduce their compensation to 1998 levels too, while they're at it.

Our office is seeing a significant uptick in work. Firms that hire people that can walk to a bank aren't about to cut salaries; more likely in a few years they will raise the entire scale again to prevent defections.

The problem is for firms that shouldn't have attempted to follow the Skaddens and Simpsons of this world. Matching NY starting salaries for Harvard grads makes no sense when recruiting BU grads to work in Atlanta.

Look to the T10 to move to a starting salary of 175 when they are losing their best people to Godlman.

How about a post on firm's changes to summer stipends/abre review costs/signing bonuses/moving expenses, etc?

This is one of the best post by Elie. I also read the article today and wondered the same thing. Every one is talking about associate's compensation but no one is willing to talk about the fact that partner's profits have increased between 50-100% in most of the AM 100 law firms. In fact even in the recession profits per partner are still holding steady.

Nice post Elie.

- NY to 190 guy

Should the folks who hire law firms consider what will happen when the current partners get old and die? Won't their companies be around to need legal services then?

At some point, it's not "training". It's called "experience" or "seasoning".

Duh.

As to why AW doesn't address partner compensation?--whom do you think hires talking heads like AW in the first place? Don't want to shoot themselves in the nuts, one guesses.

Hiya Bob, Bob.

Obama's ship be sinking.

Reality check: the partners own the firm. The associates are merely employees. Given the current supply and demand in the industry, why would partners continue to overpay associates? Unless they had to (e.g., to shore-up the law firm, expecting a speedy economic recovery), why would partners take less money and hand it over to associates?

I didn't know the founding partner at Weil Gotshal also runs a consultancy firm. Interesting

I have to admit, the guys at AW are geniuses. They somehow convinced my former law firm to shell out $50k for one of their consulting reports. It took them 8 months to do, resulted in a 16 page report that contained such keen insights as "Senior attorneys must provide mentoring for associates," "Practice groups should hold regular meetings," and "Encourage all attorneys in the firm to market within their networks." Seriously.

Lat and ATL are always saying there are too many lawyers and too many law schools--i.e. attorney over supply. But then they and the readers alike seem unable to comprehend when others outside the ATL world also realize there is too much supply...and respond with an idea like reducing starting salaries because they are unecessary and therefore a waste of money. $160k is an amount that attracts those who do and don't want to be attorneys. $125k, maybe even lower, is an amount that will attract mostly people who actually want to be attorneys.

Elie, this post was so good I'm not going to mention your typo. Oh . . . oops.

Who is hotter, Kash or Eva Longoria?

Good point, Elie. This dude is making hay sleazily mouthing what law firm partners want to hear-- at the expense of associates. Of course partners want to hear that they should just pay associates less and that they are not in any way accountable for greedily overleveraging and lazily failing to train associates they felt confident they could use up and drive off, using the colossally stupid and heartless business model they've come to love so much. People have been padding at every level from partners to law schools, so how come the associates (the ones who have been gouged on legal "education" fees and on whose 100 work-week backs partners have been inflating bills for decades) are the ones who should be knocked back to the 90s in terms of compensation? The associates aren't the problem here. This is a cheap suggestion and no solution at all. In fact, shame on you Altman Weil guy.

I would like to know if the consultancy's law firm clients have demanded that the company cut its employee salaries to improve their "value proposition."

Consulting is the the only profession more adept at absurd bullshit than law, and they maintain a healthy lead.

10, saw the video yesterday. Its outrageous. Don't know why ATL is refusing to cover it.

Altman Weil is right. First-year salaries should drop to $72k. More of us would be employed if this cut was enacted. It makes no sense to take two highly motivated, highly talented individuals, and pay one $160k while the other is unemployed. This is bad for the profession and the country as a whole. $160k is not justified given the amount of desperate talent that is literally begging to find employment.

I would take $72k in a heartbeat.

-3L on law review at T50

Altman Weil is right. First-year salaries should drop to $72k. More of us would be employed if this cut was enacted. It makes no sense to take two highly motivated, highly talented individuals, and pay one $160k while the other is unemployed. This is bad for the profession and the country as a whole. $160k is not justified given the amount of desperate talent that is literally begging to find employment.

I would take $72k in a heartbeat.

-3L on law review at T50

first to say you're wrong elie. i didn't bother to read the full article, but the fair value for a 1st year is $100k.

28, from what I have seen of your logic skills, I would not pay you $72k for anything.

Eva Longoria has nicer labia.

28 - If you were a "highly motivated, highly talented individual" you would not take 72k in a heartbeat. Therein lies the flaw in your reasoning.

Echo 22 and add

why does anyone think that the PPP numbers are accurate? it's a lot easier to confirm salary numbers than to get behind those PPP alculations. certainly partner draws are down.

Oh, and I am Ken Feinberg.

- 30

"apprenticeship programs ...are a typical model in public accounting firms"

FALSE

16's right - the market for this drivel is people who want to pay someone to tell them that cutting associates' pay is ok. They want to cut pay, but they want to have someone else to blame or take the fall if it ultimately hurts the firm.

That's fine, they can do it if they feel that they can get away with it, but there's a reason that these firms followed the big boys to 160. It wasn't because they wanted to pay people more than they needed to - it was because they felt like they had to in order to keep recruiting the talent they want to get.

Some of those firms shouldn't have raised, and some of them have gone back down to 145 (and many of those firms have significant compression against the NY scale anyway - how many that went back to 145 were really paying 6th years 250?)). Others have frozen pay without stepping it up. Other firms will keep it frozen, or will cut pay, if they think that they can get away with it.

However, all of this stepping away from the top-level compensation model is a very sharp knife. If you cut pay, or you don't step pay up on the traditional schedule, that makes you less attractive than other firms. Students and associates do care about these issues, and, while laterals might not make a jump for a difference of $10-$20k (although some will), law students will absolutely make choices based on those amounts.

Time will tell - my view is that some of these firms will think that it was quite a mistake to short someone $20k or so after that person leaves to go somewhere else, or after five years of crappy recruiting. Remember Shearman? Well, I barely do. They used to be a top firm, and then they screwed their associates on pay and a whole "generation" of Biglaw lawyers remembers that.

@32- Prepare to feel the cold cold steel of my scimitar. No one disrespects the magical beaver of my precious camel flower Kash.

ShaFeef

I'm pretty sure "reviewing a box documents" is another Beatles lyrics.

CHECK YOU GRAMMAR

are our fucking student loans going back to 1998 levels too?

Using an inflation calculator, what once cost $125,000 in 1998, cost $164,400.84 in 2008.

As a recognized advisor to firms on compensation consultant compensation, I believe it is time for these compensation consultants to “change the value equation to clients.” They probably should set pay for compensation consultants back a decade, to 1998.

Actually, 41, according to the calculator at the Bureau of Labor Statistics. $125,000 in 1998 is equivalent to $165,620.40 in 2009 (or $165,109.66 in 2008)

Current data is only available till 2008. In 2008, $125,000.00 from 1998 is worth:
$165,109.66 using the Consumer Price Index
$158,580.48 using the GDP deflator
$179,400.59 using the value of consumer bundle
$168,644.96 using the unskilled wage
$186,156.75 using the nominal GDP per capita
$205,285.15 using the relative share of GDP

Here's how it works: Consultant beats the drum that law firm salaries are too high and they need to fix, update, rearrange, streamline, modify, etc. the structure. Law firm thinks, "Huh, pay less money? That sounds good." Law firm thinks, "How do we do that the right way?" Law firm calls Consultant that gave recent speech. Consultant says, "What a coincidence you should ask - we can help you implement a program for changing the salary structure. It will cost thousands of dollars." Consultant gets hired and is very happy. Law firm gets to reduce overhead and is very happy. Win-win. Except for associates ... but, frankly, who really cares about associates these days.

37-

I remember Shearman... and I'm a 3L in California. Didn't even interview.

@28: Why pay two people to do the work that one can easily accomplish? There may be a ton of supply in the market, but the demand is simply not there. And why should someone with better credential who is able to land a job pay 160 give that up for someone with lesser credentials? We're not socialist yet and life isn't fair. Hard workers will be rewarded and the salaries don't need to drop to accommodate those who couldn't cut it.

I don't see them recommending that law school professor salaries get slashed by 30%.

This consultancy must really be sophisticated to bunch all "law firms" together in one basket. Whatever Cravath does is surely the best strategy for king & spalding and vice versa. According to this idiotic logic, this "consultant" would recommend that Tiffany pay their suppliers the same as Walmart, or that Ferrari pay their engineers the same as GM.

This "consultant" should go reread his undergrad business texts and realize that there's such thing as market segmentation.

It sounds like this consultant is trying to coordinate a horizontal conspiracy for associate wages at large firms.

There probably is room to cut. One need only look at the current alternatives for Biglaw associates to realize that firms could get away with paying less for the foreseeable future. I know people who've been laid off from v10 firms who have struggled to find any legal work. I don't think we'll see banks picking off very many biglaw associates either. That was a more recent phenomenon which spurred the growth of firm bonuses. In the past firms didn't pay much in the way of bonuses because banks weren't hiring associates en masse.

Do law firms realize associates will just not *do* the work for the salary of $78K? which given inflation is less then 1998?

At that salary point, the opportunity cost of not learning anything while reviewing documents is not worth it - law school grads will go off to government, low prestige state clerkships doing traffic tickets, and other lines of work. This is what happened with the dot-com boom, and the reasons salaries went up earlier in the decade.

The end result will be firms having to hire less credentialed grads - and then not be able to explain high associate billing rates to clients - the so-called cravath model.

This will eventually screw the firms - but partners dont care because most are baby boomers who will be getting out soon anyway

Altman exists for the sole purpose that when associates file suit against large firms for collusion and wage fixing the large firms can say "we didn't talk to each other...we just talked to Altman." They are the law firm compensation collective conscience. The ATL for partners, if you will.

51, you may have noticed that we're in a recession and nothing like the "dot-com boom."

28 -- The increased cash was in essence a substitute for diminished experience. That was the trade-off: go to government and get real experience straight away at a decent salary; or go to a firm and spending two years looking at documents but get paid a huge amount to do it. Reducing salaries while maintaining (or in your view doubling) the number of associates that a firm has working on matters, will dilute that experience even further. You can get $72k straight out of school at the government and within three years you'll be on about $100k having done some incredible work. If that's what firms were paying, no grad from a top school would even consider them.

Has anybody else seen this?

http://www.victoriousopposition.com/index.php/site/comments/court-deputy-lifts-papers-from-defense-attorneys-file/

A court room deputy swipes files out of a defense attorney's folder in the middle of a hearing.

20 - yes it is interesting. I also understand that his brother is part owner of a watch company.

Altman won't protect them against the antitrust claims. This is a hub-and-spoke conspiracy and Altman is the hub.

This guy Cotterman has a dual BA/MBA from Syracuse University. He should not be opining on anything. He should be pumping gas.

http://www.altmanweil.com/index.cfm/fa/p.people_detail/oid/c91e93f5-d008-4170-ae4a-af0e5f10ba0b/person/James_D_Cotterman.cfm

Retired partner here: Altman Weill is full of shit. They first came to my former firm in the mid-1980s to advise on a possible merger. They supported the merger, but had no idea whether it would work or not. The management group simply paid them to come and tell a partners meeting that it was a good idea. I asked the two consultants how many times in the past AW had advised in favor of a merger between two firms like ours and the other firm in question. The answer was: none. We merged, it was a disaster. My firm later hired AW at least a dozen more times to come in and pontificate on one issue or another, usually compensation issues. Again, I found them to be totally full of shit. Consultants are hired by those in management in order to produce a favorable opinion to back up management. That's it, period.

19 is a great example of the typical Babyboomer "take-whatever-I-can-and-fuck-everyone-else" attitude.

Why would partners take less money and give the rest to associates, you ask? Well, in other days this used to be called "investing in the future" of your firm and your profession.

Of course, this isn't relevant if the only future you care about is one involving you in a crappy condo in Florida. That attitude goes a long way towards explaining the mess we're in today.

HTFH, jackass.

130 may be ok in Atlanta, but 160 is not nearly enough in NY.

53 plus the point is opportunity cost
- the dot com boom is just an example from the past

- and wall street pay looks better than doc review

For a law student - is getting 78K as a first year and learning absolutely nothing - with the good chance of being fired

or is getting 55K from a bank - with a bonus -- plus the actual experience and the opportunity to move up?

22 said: "$160k is an amount that attracts those who do and don't want to be attorneys. $125k, maybe even lower, is an amount that will attract mostly people who actually want to be attorneys. "

Here's the thing: I wanted to be an attorney because of the high pay. (When I came out of law school it wasn't $160k, but you get the point.) Had salaries been a lot lower, I wouldn't have bothered.

I'm so glad I got into the profession when I did though. I may have gotten in the perfect year to maximize earnings before screwjobs like these came into play.

60, why should partners feel an inclination to invest in the future and take a long-term view, when half of the associates will leave in four years? which group has more loyalty to the firm?

Sorry, BigLaw. You may not be buying my family time, social life, and waking hours at $160k/yr, but I'm not selling it at $100k/yr.

46, exactly. People are going to remember Latham and other similar firms which went hog wild on layoffs this time around, and they should also know about the pretenders paying 145, 148, 153, 160, 165, 170, 170, 170 or whatever paltry increases these crappy firms are doing these days.

You might as well put a sign on your front door that says "We don't do sophisticated legal work here, all you have to do to work here is be a warm body, there is no incentive for smart, hard workers to come to work here."

People remember Shearman because they cheaped out on a bonus for like one year. Depart from the norm and risk the wrath of future law students and laterals. You can say it doesn't matter, but there is objective evidence that it does. Do you think that top students chose Kirkland over Cravath 15 years ago? Do you think that they do now?

We have just hired a 7th year attorney out of a firm for $78,000 in Houston. 3L for $45k. But they didn't go to Harvard, so maybe there needs to be a tiered approach?

Altman could handle that.

63, you're right on. Retired partner here: I made mine and got out just before all the real shit started hitting the fan. Now, I get to read about it, but not live through it.

I can't believe I'm saying this, but good job, Elie. Your post was topical, politically neutral, very well-reasoned, and almost typo-free. (Hint: "box documents" probably wasn't what you were going for) Nevertheless, I'm confident that what I spent the last 90 seconds reading was worth the time I invested. What a strange, new feeling...

The video of the cop taking the documents is insane.

This is actually a great post by Elie. I might have to start reading ATTTL on a regular basis again.

24- you sicken me to ask such a question. You are putting Kash out of her league by asking such a stupid question. You should more or less compare Kash to Roseanne or Rosie O'Donnell.

55 -- holy shit! I guarantee I would have done something to get disbarred... but it sure as hell would have been worth it.

GRRR GRRRR ALTMAN WEIL... GRRR GRRRR, Me Angry Elie, GRRRR!!

Altman Weil can suck it. Nice post, Elie.

a couple of dudes shot about 27 army dudes at fort hood. shit, this makes afghanistan look like a cake walk. It will probably take at least one JAG to handle this mess. Get those resumes out people

Mr. D-Bag consultant has the worst "blog" ever... http://blog.altmanweil.com/

Plus, is there an ethical issue with billing associates at such a high rate and paying them little? Assuming the it is doc review or something the partner does not add any value to, then the reasonable fee would be something over the hourly rate paid to the associate plus overhead. The 500% markup is not reasonable under the ethics rules governing fees.

Well put, 65. When it all boils down neither supply and demand, debt, talent/skill make any f-ing difference. People aren't going to work in the big firm environment for less than some threshold that is well above 72k, even if less than 160k.

64 - Yes indeed, why take the long-term view on anything that is uncertain to benefit you in the long run when you can make certain to maximize profit in the short run? You make a rational point that I completely understand.

You may find this link helpful:

http://en.wikipedia.org/wiki/Tragedy_of_the_commons

-60

I used to read Greedy Associates and get jealous back in 1999-2002. All of the "BigLaw" lawyers comparing perks and complaining about workload, etc., while I was in "MidLaw" toiling for a relatively meager salary. Now I sincerely feel bad for you people.

I can't believe that guy. Try to watch your shit while you're talking to the judge I guess...

This is insanity!!! I went to law school to become a civil rights lawyer, and because of the mountain of student loan debt (have paid off more than $70,000, but thanks to Sallie Mae's private loan interest, still owe more than $140,000). I switched to patents, have been every kind of intern/extern/law clerk/patent examiner (i.e., have already apprenticed) and after three years found myself laid off with about 70 associates when my firm tanked. Now, I am treated like stigmatized property in a seller's market, with BIGLAW partners calling me "honey," and encouraging me to take low paying (100,000 and less) non-partnership track jobs. WTF!!! I feel like I will never pay off my loans, am stuck doing patent document review, and will never get my career back. Maybe Mark Levy had the right idea.

Hey, James D. Cotterman. If I weren't a pathetic nerdy lawyer - I would totally kick your a$$.

4 -See ya! Plenty in line for your spot.

The problem is that the "work" being done by 1st and 2nd year associates, particularly reviewing boxes of documents, is glorified secretarial work, and the only reason why the 1st and 2nd years are doing it is so that the firms can bill the clients a higher amount. It's work; it's just not legal work.

@72- Prepare to feel the cold steel of my scimitar. No one disrespects my precious camel flower Kash!

ShaFeef

Instead of focusing all the negative attention on the private sector, which operates fairly consistently according to supply and demand, why not focus the attention on the one part of the process that apparently has no market check whatsoever?

What makes the economic crisis so unfair to young lawyers is not the supply and demand of the workforce...that exists in any field. What makes it unfair is that instead of a blue collar guy going on unemployment and looking for another line of work, the young lawyer has no skills and a mountain of debt.

Who is responsible for providing the young lawyer no real skills and a mountain of debt?

What courses are essential to a young lawyers education that cannot be covered in 2 years? Or even 3 semesters? Why is there no component to legal education that includes training on how to practice law as a successful business?

Don't take your eye off the ball...the legal education system is the major culprit here, peddling wishful thinking as prudent career counseling, living off the largess of inflated tuiton paying for an education that is twice as long and expensive than it need be. The universities need to be taken to task, along with the ABA, for the gross mismanagement of the profession.

85 - You missed the point. Even a simple competent secretary would require a hefty salary if he/she was expected to do the "glorified secretarial work" 14-18 hours a day, 6-7 days a week.

Also, firms would run into problems if people doing the "glorified secretarial work" you speak of were not licensed attorneys.

Were associates paid $125 in 1998? I thought that happened a few years later during the .com boom. I think salaries in 1998 were more like $100.

88 - maybe, but probably more like 78k, not 165.

90 - That is your guess. I and (many others, apparently) think it is more like 130. Only one firm ever 165, right? Why throw that out there?

Good post!

12 - You're right, but it was sure a hell of a lot of fun making Harvard money as a BC grad who moved to Atlanta!

82 - maybe you should become a civil rights lawyer like you wanted to. There is no shortage of clients and the lodestar rate in the cities is pretty good.

Altman Weil is right! It is absurd to pay someone $160k per year when they have no job experience. Great. You went to law school. So did a million other people. It's your problem that you have massive student loan debt. It's not the responsibility of the firm or its client to pay it off for you. Sorry - not crying for people who are still making 6 figures when hundreds of thousands of people are out of jobs. I'm more concerned for the secretaries who got canned after 20+ years of services. GET A GRIP! You are attorneys. You are a dime a dozen and anyone who would pay an attoreny more than $40/hour for document review is an idiot!

Altman Weil is right! It is absurd to pay someone $160k per year when they have no job experience. Great. You went to law school. So did a million other people. It's your problem that you have massive student loan debt. It's not the responsibility of the firm or its client to pay it off for you. Sorry - not crying for people who are still making 6 figures when hundreds of thousands of people are out of jobs. I'm more concerned for the secretaries who got canned after 20+ years of services. GET A GRIP! You are attorneys. You are a dime a dozen and anyone who would pay an attoreny more than $40/hour for document review is an idiot!

Altman Weil is right! It is absurd to pay someone $160k per year when they have no job experience. Great. You went to law school. So did a million other people. It's your problem that you have massive student loan debt. It's not the responsibility of the firm or its client to pay it off for you. Sorry - not crying for people who are still making 6 figures when hundreds of thousands of people are out of jobs. I'm more concerned for the secretaries who got canned after 20+ years of services. GET A GRIP! You are attorneys. You are a dime a dozen and anyone who would pay an attoreny more than $40/hour for document review is an idiot!

Altman Weil is right! It is absurd to pay someone $160k per year when they have no job experience. Great. You went to law school. So did a million other people. It's your problem that you have massive student loan debt. It's not the responsibility of the firm or its client to pay it off for you. Sorry - not crying for people who are still making 6 figures when hundreds of thousands of people are out of jobs. I'm more concerned for the secretaries who got canned after 20+ years of services. GET A GRIP! You are attorneys. You are a dime a dozen and anyone who would pay an attoreny more than $40/hour for document review is an idiot!

Law firm consulting is the largely the art of superimposing graphs and pie charts onto aphorisms and proverbs to make recommendations that seem "sciency."

Occasionally, a nugget of wisdom emerges, but mostly I am guessing the engagements demonstrate the partially-sighted are leading the blind.

A strategic plan developed by one of the top law firm consulting firms for an AmLaw 100 firm just before the Great Recession recommended that particular firm increase its rates, shed "commoditized" practices, and increase associate's overall compensation because of projected continued growth and consolidation of major law firms that would create greater demand in peer firms for graduates of top law schools than there would be graduates of such schools. How wise was that advice over the short term?

82 hang in there and seriously don't say that about Levy. He was my professor and I can't tell you how wrong he was in choosing to end his life. There are people in your life who love you and depend on you, and you shouldn't even entertain that thought for yourself. If you truly want to be a civil rights lawyer, check out the civil rights division or join a non-profit for a bit and do contract work on the side. Your school might also have a decent loan forgiveness program. Best of luck to you and don't let the assholes at your firm get you down.

91, the non-lawyer analogue would be paralegals, and they're not paid anywhere close to $130k.

Partners will try to pay associates as little as they can get away with. This has nothing to do with what client's demand and everything to do with the fact that any dollar taken out of an associate's hand goes into a partner's pocket. That said, I don't think associates working at vault ranked firms need fear too much. No matter how many lawyers are minted in any year, there will always be a premium for the top talent. Since, all other things being equal, the best associates follow the highest paycheck, firms will always have an incentive to compete with each other on salary.

Salaries are down because the economy is down generally. Law firms, alas, are not immune from general economic trends. But when the economy recovers, look for associate salaries to creep back up.

That's a great post! Altman Weil is certainly carrying the banner for salary reductions. As for reverting to 1998 levels, consider the impact of inflation since 1998 like I do here:
http://thelegaldollar.blogspot.com/2009/11/lawcom-article-on-where-salaries-are.html

In fact, when you consider inflation, instead of the massive growth in legal salaries that people think took place, salaries were actually FLAT since 2000. You can check my math here.
http://thelegaldollar.blogspot.com/2009/11/did-starting-lawyer-salaries-really.html

60: refusing to look at economic realities will not serve you well. Do we expect partners to educate/invest in associates as you say, and have them sit around playing cards until some new matters come in through the door? How long do we wait for the new work? Should the law firm simply pay everyone at least $150,00 per year and then dissolve when the money runs out in 6 months?

101 - See the second portion of 88. Thank you.

105, brush up on what kind of work actually requires licensed attorneys. Hint: not that many. Remember when you were an unlicensed summer associate and you did all that work? or when weren't admitted to the bar for months and you did all that first-year work?

A 2LT of law is still just a 2lt of law, whether from West Point or ROTC. Why pay more for people who are trained by people who didn't want to practice in the first place and became law professors. Them that can't do--teach---whether at 1L or 4L schools. When it's all about the bottom line, buying Clorox at Wal Mart or your neighborhood store, it's still the same Clorox. Law is a commodity----biglaw is trying to sell the same product that smalllaw and shitlaw is. The truly intelligent don't get bought in the first place, so all of this product differenciation is just birdshit in a cookoo clock.

21 - I fear for your increased practice group meetings. What a moronic suggestion. God forbid you're lucky enough to have billable work, now you have to spend 50 hours a year in some non billable BS circle jerk.

22, except those people who really "want" to be attorneys will choose to work at the DAs office or in government. Nobody will work 60-70 hour weeks for $90k (isn't that what associates made in 1998), especially after 7 years of school.

The problem is the government subsidizing law school debt.

No subsidy = less debt available = lower demand = lower tuition = lower starting salaries = lower billing rates. A virtuous cycle.

Too funny...I dont remember too many big law Ahole associates upset for their fellow law grads who were forced into temp work. They had the same amount of debt. Why not cry for them? All of you are scum and deserve what you get.

Right on Elie! Great rant!!!

11 - no one forced you to borrow the money...now pay it back.

40 ==> NO - if you don't like the salary offer don't accept it.

Hey 4 - buh bye.

I generally agree that law firm "consultants" are mostly useless. Having seen some pieces of garbage they've produced over the years, most of the crap can be boiled down to obvious realities such as "pay more money/pay less money for [X}" or "go after clients/work that supports greater rates." Any idiot whose taken a basic undergrad econ class could come to the same conclusions. If you are looking for sophisticated market analysis and/or long term strategy, you are barking up the wrong tree with consultants. They are, for the most part, walking around blind without canes just like the rest of law firm management.

The thing is, law firms are one trick ponies, at least when it comes to comp. They pay out cash. That's it. A tiny bit goes to staff. A little more to associates. And the partners take the rest. How to divvy it up isn't rocket science.

Anyone giving kudos to Elie for this piece = a person who has no clue about how law firm economics works. Elie, your "rant" has no basis in reality. My firm's two biggest clients (in terms of billings) require prior approval for ANY first or second year associate to bill anything on one of their files. These clients refuse to pay to "train" newbies. First years (and many second years) are drags on profitability. We lose money on most first years and are happy to break even on second years regardless of what arbitrary billing rate we assign to them. So, a first year's billing rate is only relevant to creating a starting point to justify third year and up rates.

Now third-sixth year associates? The good (and above average) ones usually are very profitable. In my opinion, that is when associates should be getting paid. First and second years, not so much.

117 -

So what do you propose? Do you really want anyone who's willing to work for free for 2 years? Will you at least be donating some of the money you made but didn't deserve as a "newbie" so they can pay their loans and keep working for free?

I might take a 1998 salary (adjusted for inflation) but I would also like to have back the 1998 benefits. In 1998, my firm had a singer tier partnership, required 1,800 hours of billables, did some lower margin/lower priced workers comp. work to give associates a chance to get courtroom experience, contributed to the 401K for each associate, had attorney retreats and allowed for several other pluses that are long gone.

Where is the story on the Baron & Budd lawyer sent to jail for contempt in Philadelphia?

82 - the world doesn't owe you a living or anything else. Keep the complaining to yourself. No one cares.

121, you are an asshole. I pity your parents for having reared someone like you. If you haven't been laid off yet, wait for it! Karma's a bitch. You should care about secretaries, factory workers, and even lawyers who have been laid off in this economy. The logical extension of the arguments about people not bitching about student loan debt, is that if you aren't independently wealthy or (somehow) can work your way through it, you don'r deserve to go to law school, when creates a very problematic cycle of the wealthy (largely white) elites holding the keys to power. Which probably a lot of people like 121 are perfectly happy with, but alas, is at odds with the biblical imperative: justice, justice, you must purse."

Amen, 122. What we really need is a "student loan bailout." I feel like my JD is under water. Relieve me of the morgage on my brain, and I will do public interest law and spend 10% of my salary on consumer goods. That's a stimulus plan we can all believe in.

Amen, 122. What we really need is a "student loan bailout." I feel like my JD is under water. Relieve me of the morgage on my brain, and I will do public interest law and spend 10% of my salary on consumer goods. That's a stimulus plan we can all believe in.

Altman Weil has a product to sell, and they need to convince firms that their product is needed. They aren't sages of when firms need new compensation models any more than when used car salesmen are sages of when you actually need a used car.

The simple fact is that doc review and other junior associate bullshit work is so god damned boring that no one would do it unless they were paid boat loads of money.

Am I going to do this shit job for 100k when I could make that at some 9 to 5 job? Hell no.

Firms may slightly modify the pay scale, but there's no way they can make any huge cuts.

Suck it, Cotterman

117,

You, sir, are a douchebag.

Fair pay for a 1st year at a biglaw firm should be around $100K/yr. No more.

Maybe a good bonus if the associate bills a lot of hours.

Junior associates do mostly BS work anyway. They should be happy they are getting paid while they learn. I don't get where the entitlement comes from. Junior associates don't know shit.

The real culprit is lockstep compensation. There are first years at my V10 firm who should be making 80k and first years who should be making 200k.

yeah, all i have to say is this:

good fucking luck trying to find people who will toss away their lives to make 115K. Its not worth it when you can work half as hard at other places and make 80.

Laughing my ass off at 126's notion that s/he can make $100k at a 9-5 job. Good luck with that!

"good fucking luck trying to find people who will toss away their lives to make 115K. Its not worth it when you can work half as hard at other places and make 80."

Says the spoiled law school brat who has never worked a day in his/her life.

I think that there would still be plenty of people who would work for that amount (especially if there is a good bonus to first-years that bill a lot of hours).

It is not the firm's problem that law school cost so much to attend.

Maybe lower starting salaries will encourage law schools to lower tuition and also encourage law student to borrow less.

Actually 133, it is, indirectly. Law schools are so expensive in part because they're run by anti-american liberals who use the money to engage in social engineering and in part due to liberal government policy that makes it very easy to borrow money to go to school. Now those partners at the firms, who do they usually vote for? Hint, they don't have Rs next to their name.

No 122, you are an asshole. Factory workers, secretaries, chiminey sweeps, mimes and aren't special. Like everyone else, they aren't owed anything other than what they go out make for themselves. What I earn isn't defined by what is in your pockets. You signed up for an education(?) that needed to be paid for. You went with your hand out to a lender and struck a bargain--they give you money and you give money back. Your Robin Hood speech is just basically the whining of a deadbeat.

Also, much like the tooth fairy, karma doesn't exist. It is a lie that failures tell themselves to not feel like failures. You want to be rid of your debt? Sorry, you will have to work, make money and pay it off. No free ride for you.

I wholeheartedly agree with Elie's posting. I have read with amazement the string of inflammatory and frankly bizarre comments by Altman Weil on compensation over the past few months. It is unfortunate that the ABA Journal, in particular, is so prone to quoting this outfit. Altman Weil encourages and provides a patina of respectability to partner attempts to apply further salary cuts and lay-offs, even as the markets - and the market for legal services - are beginning to recover. One point to consider: Altman Weil pushes for a roll-back to 1998 salary levels without pushing for a commensurate decrease in billable hour expectations (or taking into account the massive increase in student loan and cost of living that has occurred in the interim). The draconian cuts proposed by Altman Weil would, of course, inflict tremendous hardship on associate ranks (esp. if applied to mid-to-senior level associates) and be contrary to the long-term interests of any law firm that attempted to impose them.

117 here

118, my suggestion is that newly minted lawyers should not overestimate their value in the marketplace right out of law school. Starting salaries got completely out of whack starting in the early part of this decade. I started in BigLaw in the 90's, and my starting salary, adjusted for inflation, would be less than $100,000.00 today.

128, if giving facts makes me a douchebag, then you can call me a douchebag. But you, sir, are an idiot.

These guys have told parnters to lower their own comp and lower their rates. http://corcoranlawbizblog.altmanweil.com/2009/04/06/a-note-on-reducing-law-firm-associate-compensation/

121/135, you really are doucebags. But that's between you and your God, although it sounds like you don't have one---maybe you think anyone who believes in something bigger than themselves is a failure? 118 doesn't seem to be a first year associate, it seems like he is a mid-level associate who got laid off. Are you really saying that someone who has worked their way up from law clerk to mid-level is a loser? Nice message! 118 seems to be paying off his loans, he just needs a job to keep doing it. 118, don't commit suicide as 121/135 is suggesting. Patent attorneys are the first people hired when the economy picks up. It's always that way. You will get another job, and people like 121/135 will cheat on their wives,get divorced and remarried and divorced, and one day be put out to pasture from his firm. This isn't karma, but statistically speaking it's likely to happen, with the depression/divorce rate among partners so high.

It’s funny 117 because you’re actually making Elie’s point. I’m sure that clients do say they don’t want juniors working on their projects, but that is because they’ve got the likes of Altman Weil coming in and telling them that cutting associate salaries will “chang[e] the value equation to clients.” They’re the ones who have no clue how law firm economics works. Clients do not pay to “train” junior associates. To the extent junior associates take an excessive amount of time because they’re learning, their hours are written off. The type of junior work that does get billed to clients (e.g., doc review) is not something that clients would want to pay a higher rate to have a more senior person do anyway.

You say junior associates shouldn’t overestimate their market value, but it is the market that drove their salaries up to $160K. And it’s not because first years brought in huge profits in the past. It is because the people that you want to attract have (had) a lot of options coming out of law school and, since what you’re generally offering is a soul-sucking life dealing with assholes like you 24/7, salary is really the only enticement you’ve got going for you. Obviously the market is slow and you don’t need to entice people now, but what are you going to do when it picks up and you’ve gotten rid of all your juniors, and all your midlevels, who saw the way you treat associates, start leaving for greener pastures?

I agree.

This is one of the best posts by Elie. Commentary is spot on. I've had 6 years + at law firms and from day one saw the bills billed to the client since the partner wanted me to write them up, and my time was NEVER written off.

Also, the Altman dude's thoughts don't account for fixed fee arrangements.

Yes, in-house don't want to pay for first years doing work a paralegal could do, but the fact is, as has been already mentioned, that same idea flows to senior associates and partners as well. Not to mention the ridiculous idea that any partner is worth $800+ an hour or thaty their profits should be $2 million + in an economy that is deep in recession.

133,

131 here - you obviously misunderstand my comment:

im saying that you cant expect people to work the way they do now, in places like new york - where the cost of living is quite high - if you are going to cut salaries by 30ish percent.

lifestyle makes a big difference to a lot of people.

and i have worked plenty in my life. I worked for 7 to 10 dollars an hour for 5 years and received an education (while continuing to work for 10 dollars an hour), in part, to increase my ability to earn and be able to provide for my family.

If im going to get a salary cut of 30% - id rather get it cut by 50% and get a much better lifestyle. And i would be shocked if many other talented attorneys-to be wouldnt think the same way.

you cut salaries to that extent, and there will be a dropoff in talent.

I'm a clerk hoping to go into biglaw next year. I think it's true that 145K is still way too much for LS grads with no frigging experience doing anything meaningful. Keep those starting salaries that high and we will definitely see an outsourcing coup.

Altman Weil appears to be "Experts of the Obvious." Given the economic climate, supply and demand, and other realities - clients have turned the tables on the formerly untouchable Uber law firms. Now its time to adjust, which is painful and will cost associates and partners alot of money. The low hanging fruit (associates) will be clipped first. The trunk and limbs of the tree (partners) will be whittled away, as legal work becomes even more scarce. Until there is a fundamental economic change, there is no alternative to this reality. Calling more experienced and realistic attorneys "douchebags" may be fun or ease the pain, but won't help the situation. Altman Weil is a joke, I agree - but is probably the least of our problems.

@ 129 - "I don't get where the entitlement comes from. Junior associates don't know shit."
--------------

It's not simply "entitlement." If you have a job or have accepted a job offer for $160k in law or any other field, why is it not reasonable to expect to be paid $160k? If that gets cut by 30%, any reasonable person is going to be looking for a different job that pays closer to $160k or a more interesting/less stressful job that pays the same. This is not unique to junior associates.

Nobody gets paid what they "deserve." The sooner you realize that the more realistic you will be.

This is just an example of a consultants telling their clients (law firm partners) exactly what they want to hear: cut associate pay. I bet this study does not mention lowering rates across the board or expecting lower profits per partner.

What a moron. Management consultants currently earn about 140k w/ bonus -- these power point and excel jockies, many of whom can barely communicate and are even more worthless than the lowliest T4 law grad. Their salaries should be cut to about 50k -- when that happens, law grads might be willing to go to 145k