Last week I discussed the associate bonus process from your typical partner’s perspective. I want to talk a bit more about ways firms can take advantage of the glut of prospective associates out there, while increasing the odds of finding those rare jewels who will make partner — with each associate making less, but getting a better lifestyle (and a shot at a Biglaw career) in the bargain.
Some caveats. First, the ideas below are not intended for the Simpsons — this Simpson, not those Simpsons — of the world. They will continue to attract the very best, and should continue their current structure. Why? Because the Cravath model that the elite firms instituted makes for great partners and strong law firms. The problem is that almost every Biglaw firm adopted the Cravath model, and not all of them should have. Most firms do not have the institutional client base of the elite firms, and therefore don’t need the tremendous fixed costs and inflexibility with respect to associates that the Cravath model brings. As firms expand, contract, or just struggle to stay afloat post-Biglaw Breakdown, it seems like a great time to try some new approaches to talent structures and compensation. There is nothing wrong with some experimentation, as long as the protocols are transparent, and management is prepared to cut bait quickly if things are not working out.
Now over the years we have seen firms experiment with their junior associate hiring models. Most of these programs involved trying to turn junior associates into some form of quasi-apprentices. None seem to have taken root. And in my mind there is no sense in implementing a drastic, global overhaul of your associate model, before trying some more limited changes on the practice group level.
Here is what I would try….
I will keep it simple and limit it to first-year hiring and not laterals (though you could do this for bands of associates, like all juniors or mid-levels). Take your second and third most-prestigious and profitable practices. Let’s say you are a San Francisco office of a global behemoth, and your premier San Francisco-based practice is corporate — as in, that is the practice that your office is best known for, and where you have your best talent (and the easiest time attracting top-level replacement talent). Don’t mess with that corporate group — yet.
Instead, take your trademark litigation practice, where you have a strong stable of partners and senior associates, and where you have a steady stream of institutional work. I am sure your partners in that practice are under a little pressure to cut costs from clients, even as they continue to deliver world-class results. Everyone is, in one way or another.
How many junior associates do you need in San Francisco trademark litigation? In a normal year, due to attrition, assume the practice needs two first-years, to do research, first drafts, document review, whatever. Plus the law review guy you hired last year who takes forever to do anything. He’ll be gone soon. So trademark litigation needs three first-years to meet expected demand. And your third-best San Francisco based practice? Tax? They need two juniors to handle the upcoming changes in the tax code. So you would normally be adding five first-years to two of your profitable, market-recognized practices. This is work your firm is known for doing, with a stable client base, involving practices that any first-year would be happy to join (on top of their joy at getting a job in the first place).
But this year you won’t be hiring five associates at $160,000 each, plus benefits and nice offices downtown. Instead you will hire fifteen. Ten for trademark litigation, and five for tax. Pay them $50,000 each, with another $15,000 in loan payback money guaranteed each year. Full medical benefits, and commuting costs covered through a car lease and gas allowance. With no hours requirement, or set bonuses. And instead of having them all work in your expensive downtown office, they will be based out of your much cheaper Santa Cruz facility. Where you are moving accounting and other back office people anyway. You set aside three shared offices for them in San Francisco. Each of the 15 comes in once a week minimum. For face time, and so they don’t feel super-isolated. Otherwise they come into the main office as needed. With partners and senior associates rotating through the satellite facility as well, so that there is at least one senior person on site every day.
Publicly they are regular associates. Internally, they are regular associates, just with a different financial arrangement. A three-year arrangement. You make it clear that it is a competition, and that in all likelihood only four or five of them will make it to mid-level status — max. But they are free from the pressure of doing anything other than their best work. And they will be working on good cases and deals for good solid clients. And they will be eligible for “spot bonuses” payable quarterly, at the discretion of the partners they work for. The maximum would be the total compensation of “regular” first-years at the firm. Win a case on summary judgment, and you did good work on the brief? Here is ten grand. Put in 250 billable hours this month, and had all of it paid by the client? Here is another ten grand. Keep it up.
Savvy associates would jump on this deal. Sure, the guaranteed money is lower, but the quality of life promises to be better. Cheaper living expenses too, since you can live farther from the city. There is also tremendous long-term career value in working in a particular practice from the get-go. Where the work would be constant and pretty much guaranteed to be there. Good marketable experience, in case you want a change of scenery. More young lawyers getting a chance too. Making a living wage, and without needing to deal with much of the usual Biglaw nonsense. There would be takers.
For firms this is a no-brainer experiment to try. Costs stay the same or even go down, and instead of picking five graduates and hoping they are good, you increase the odds of finding a gem by hiring fifteen. And you can get a little creative with your hiring. Maybe take a flyer on one or two (or five) people who seem really street-smart and motivated, but don’t have the perfect credentials. You want a diverse group. Full of people that will push each other. It would almost be a luxury for the partners. No need to share juniors. Give them an assignment, and encourage them to exhaust all angles in getting it right. You would be providing cost-is-no-object service to clients for what you are currently charging. And there is nothing wrong with giving your partners more choices about whom to work with. Might help keep them around.
What about clients? Most don’t care about junior associates at your firm anyway. But now your trademark litigators have a selling point. More juniors available for spot secondments. That is a good thing for firm-client relations. More juniors, free of billable hour requirements (and the padding pressure that comes along with it) to work on your matter at lower cost. Better responsiveness by the firm as a result of having more people to throw at an issue. More quality control, through less need for contract attorneys. Clients should be at worst neutral to this. Many will like it.
Would I have taken this deal as a junior associate? I don’t know. But I would have considered it. For most of Biglaw, the Cravath model is dying anyway. Experiment away.
What changes do you foresee with respect to associates in Biglaw? Let me know your thoughts by email or in the comments below….
Anonymous Partner is a partner at a major law firm. You can reach him by email at [email protected].