When ex-associates sue their former firms, a fun time is had by all — with the possible exception of the litigants. Dirty laundry is aired, often for the amusement of onlookers. Here are some classics:

• Aaron Charney v. Sullivan & Cromwell (gay associate who accused partner of directing him to “bend over”);

• Jennifer Braude v. Maron Marvel (allegations of lesbianic / girl-on-girl sexual harassment); and

• Charlene Morisseau v. DLA Piper (African-American female associate filed $250 million lawsuit against her former firm; firm accused plaintiff of rudeness and insubordination, e.g., throwing a partner out of her office).

Today’s Lawsuit of the Day, Alan Levy v. Sedgwick Detert Moran Arnold LLP (PDF), is a similar suit. Alan Levy (pictured), a former associate at Sedgwick, alleges that his employment was terminated on the basis of disability — to wit, severe depression and a breakdown, brought on in part by the abusive treatment he received at the hands of a partner, Scott Haworth.

So, what was the alleged abuse inflicted upon Levy by Haworth?

Last week’s Career Center survey asked whether you think there will be enough work for the class of incoming associates at your firm.  The good news is that, despite the all the hype about some firms indefinitely deferring new associates, the vast majority — 91% — of new associates are starting at their firms in Fall 2009 or are scheduled to start in the first half of 2010.   The bad news is that a majority of respondents think there won’t be enough work for all this new blood, at least not in the practice areas they want to work in. 

Check out the full survey results after the jump, and visit the Career Center, powered by Lateral Link , for more on which firm unexpectedly pushed up start dates, the latest firm to offer new associates "walk-away" money, and a firm that has made major changes to their lock-step compensation structure. 

Survey results, after the jump.

In an environment where hours are scarce, a new report shows that white attorneys are coming out on top. A new survey suggests that African-American attorneys — and minority attorneys in general — are experiencing a greater pinch for hours than their white counterparts. The Minority Law Journal reports:

[M]inority lawyers surveyed said they posted fewer billable hours on average last year than their white counterparts. The average hours billed figure in 2008 was 1,862 for black midlevels, 1,925 for Asian Americans, 1,965 for Hispanics, and 1,976 for whites. And minority lawyers are unlikely to boost their relative output much in 2009. Projected billables for this year were just under 1,825 hours for Asian Americans and African Americans, about 1,840 for Hispanics, and roughly 1,890 for whites.

Hours are low all over, but these numbers indicate the pain is not being shared equally.

Are minority attorneys being “out-hustled” for work, or are these numbers just another manifestation of the old boys’ network?

More numbers from the report after the jump.

Are billing disputes between law firms and their clients on the rise in the recession? We feel like we’ve seen a lot of them lately.

The most recent disagreement involves Bingham McCutchen. A Boston-area investment company, Tuckerbrook Alternative Investments, has sued Bingham, claiming it was overcharged for legal services provided in connection with preparing an SEC registration statement.

The case isn’t that exciting — it seems like a garden-variety fee dispute — but this aspect struck us as interesting. From Massachusetts Lawyers Weekly (subscription):

The Sept. 16 complaint accuses Bingham of stacking the case with young associates who had “inadequate” experience. “The billing statements reflect that these junior lawyers in essence were enjoying the benefits of on-the-job-training at Tuckerbrook’s expense,” the complaint states.

So the allegation is that young lawyers were being trained on the client’s dime. But is that an indictment of Bingham McCutchen, or of the billable hour?

Grumpy in-house lawyers regularly complain about paying for the training of Biglaw’s junior associates. This is why some corporate counsel explicitly refuse to pay for first- and second-year associates (and provide for that in their retainer agreements; presumably Tuckerbrook could have done that here).

More news about Bingham, including its summer associate offer rate and its real estate needs in New York, after the jump.

Do you have any friends who used to work with you at your Biglaw firm before moving on to a sweet in-house position? Do you complain to them about the financial problems at your firm?

If so, you should probably stop — because your colleagues turned clients really do not care about your problems. Bisnow hosted a conference about the future of the billable hour (gavel bang: ABA Journal). Washingtonian reports:

Michael Helfer, general counsel of CitiGroup and a panelist at the Bisnow event, put it bluntly when he said CitiGroup’s inhouse legal department has been reduced during the past few years by nearly 300 employees, many of whom were laid off. The lawyers who are left have had their compensation slashed by as much as 60 percent. Helfer says he’s consequently lost his patience for paying his company’s outside lawyers premium fees. “The amount of sympathy I have for the argument that $1,000 an hour is a reasonable rate … is nil.”

This is why firms like O’Melveny are putting together five-year strategic plans that contemplate alternative billing structures. But will these new fee arrangements still lead to enormous profits? Some D.C. details, after the jump.

Thanks to the over 3,000 people who voted in our ATL Caption Contest. We now have a winner. Many of the proposed captions associated the shovels and bare soil with grave-digging, specifically the grave of Biglaw in the current troubled economic climate. But the winning caption tapped into a more evergreen joke in the world of law: screwing the client.

Here’s the winner:

ASSOCIATE: There’s a backhoe right there. Wouldn’t that be more efficient?
PARTNER: F**k that. We get paid by the hour.

Hats off — or not off, rather — to Austin attorney George Lobb (at far right) for crashing this photo of legal dignitaries and giving us caption contest fodder. More on that story here.

Did lawyer crash courthouse groundbreaking photo? [Austin American-Statesman]

Earlier: ATL Caption Contest Finalists: We Dig This
ATL Caption Contest: We Dig This

When we delivered our talk yesterday at Santa Clara Law, discussing various trends sweeping through the legal profession and what they mean, we were honored to have Professor Eric Goldman in the audience. Professor Goldman is one of the nation’s leading scholars in the areas of internet law and intellectual property. (We especially appreciate his continuing coverage of derivative liability and Section 230, a statutory section much beloved by blog operators.)

Professor Goldman’s excellent recap of our remarks appears here. We were especially interested in his thoughts, as a former corporate general counsel, on the billable hour and fixed-fee arrangements. Check out his post at the link below.

David Lat Talk Recap [Eric Goldman / Goldman’s Observations]

Many of our Biglaw friends have been biting their nails over hours this year. Lawyers are not worried about making bonuses at the end of the year. They’re worried about keeping their jobs. Last week, we invited you to share your hours’ outlook for 2009 and to see how you compare with fellow anonymous ATL readers.

One astute commenter pointed out:

Has it dawned on anyone that people billing solid hours aren’t taking the time to take ATL surveys?

This survey will be less reliable than my balls.

We’re not sure how reliable that reader’s balls are, but the poll results might shrivel them. The percentage of those looking at less than 1600 hours for the year is staggering. Check out the results after the jump.

The billable hour may be under attack, but for now, it still rules the lives of most lawyers slaving away in Biglaw offices around the country.

An ATL reader recently wrote to us and asked if we would do a survey of the health of associate hours this year. With the work slowdown, we imagine hours for 2009 are on track to be a bit lower than last year.

Most people have had their mid-year reviews. How are your hours looking? Is 1600 the new black? Are you trailing the pack?

Take our survey and obsessively compare your hours discuss after the jump.

Is there really blood in the water around the billable hour? Or are we simply hearing an updated version of a familiar refrain? This morning the Wall Street Journal took another look at killing the billable hour (subscription):

People who follow the world of law firms know, among so much else, two things: 1) that billing-by-the-hour has long been the way law firms get paid and 2) companies have over the years had only limited success in getting firms to agree to do it any other way.

That’s changing. In a big way. Companies are starting to ditch the hourly structure — which critics complain offers law firms an incentive to rack up bigger bills — in favor of flat-fee contracts and other types of arrangements.

Of course, we’ve heard all that before. Heralding the death of the billable hour is much like predicting the end of the world: eventually somebody is going to be right.

Has anything fundamentally changed this time around to make the billable hour more susceptible to death? Here’s the best argument.

We’ve been extensively chronicling salary cuts for associates. One consistent firm rationale for cutting salaries is that firm clients are no longer willing to pay for junior associates. The consistent counter-argument is that clients don’t care what associates get paid, clients care about what clients are charged.

Unfortunately, there has been precious little information about what law firms are doing to reduce their billing rates. It seems that firms want to get the information out that they are cutting the salaries of their attorneys, but do not wish to discuss what they are charging their clients.

Today, Incisive Legal Intelligence released its 2009 Billing Rates and Practices Survey Report. Unfortunately, you have to pay for it. But here is the top-line summary from the press release:

The average hourly billing rate reported was $284. Nationally, plaintiffs’ contingency litigation is the practice area with the highest average hourly billing rate ($413), followed by labor/employment ($302), general law ($295) and real estate/land use ($294). The billing rate survey data represents a sample of more than 14,000 lawyers throughout the 50 United States, drawn from responses from 255 law firms.

More notes from the report, after the jump.

Many of the events we attended at last week’s NALP conference were on the depressing side. After a decade, or perhaps two decades, of growth, the legal profession is experiencing a painful contraction.

But perhaps the current carnage, and the challenge it poses to the existing law firm business model, could give way to reform. As James Jones of Hildebrandt explained, the economic crisis could lead to positive changes in terms of the cost-effective delivery of legal services. “A financial crisis is a terrible thing to waste,” he quipped.

Jones is not alone in this assessment. We attended a panel discussion entitled The 21st Century Lawyer: New Models for Practicing Law, in which three pioneers of the profession — Audrey Bracey Deegan, of Deloitte Consulting LLP; Deborah Epstein Henry, of Flex-Time Lawyers LLC; and Mehul Patel, of Axiom — discussed the alternative models of practice represented by their organizations. These models could become more compelling as the Great Recession forces firms to rethink how they do business.

An account of the panel, which was ably moderated by Professor Carole Silver of Georgetown, after the jump.

As many of you know, part of the problem firms are facing during these challenging times is that clients won’t pay their bills. Lawyers can’t get paid unless clients pay.

Whether or not clients are willing or able to pay, it certainly won’t happen unless they are billed. Hence, as most associates already know, the days of delinquent time entry are at an end.

But Fried Frank is taking it to a whole new level. Instead of making sure your time is up to date every month or every couple of weeks, Fried Frank wants attorneys to accurately close out their time every single day. This is from a firm-wide memo that went out last week:

The importance of accurately billing and recording time - both from an economic and an ethical standpoint - cannot be overemphasized. Accuracy is essential both for the Firm and its clients. To ensure accuracy, it is Firm policy that attorney time must be entered and released on a daily basis. This memorandum covers the Firm’s current client billing policies and guidelines.

Most of Fried Frank’s billing policy is pretty standard and common sense stuff (you can download the full policy after the jump). But there are some significant changes.

We received about 1500 responses to last month’s ATL / Lateral Link survey on how much of your billable work in 2008 was really for “client billable” time, as opposed to pro bono or administrative matters.

Earlier in January, we had noted that more than a quarter of you couldn’t bill 1800 hours last year, but commenters pointed out that even these numbers were probably too rosy:

It is hard to tell how busy associates really were based on this data. One problem is that “billable hour” may mean different things at different firms. At some firms “billable hour” = client billable hours only. But many firms give billable hours credit for pro bono, recruitment and professional development work. I would be curious to see how much CLIENT BILLABLE hours associates had in 2008 and what they are expecting for 2009.

On the pro bono front, it turns out that the heart is only half empty. About a third of associates spent 100 hours or more on pro bono last year, and roughly 14% had more than 200 hours in pro bono:

Results: How many hours did you did you devote to pro bono matters in 2008?

Since relatively few associates had more than a hundred pro bono hours, there was generally only a one or two percent difference between the levels of “client billable” billable hours in 2008 and the overall billable hours reported. So, for example, while 14.32% of respondents fell short of 1600 billable hours last year, that percentage rose to 16.65% of respondents when only “client billable” hours were counted.

The table below compares your 2007 hours and predictions for 2008 (from our November survey) with the overall billable hours we reported last month and the “client billable” hours from our latest survey results.

Results: How many hours did you bill in 2007 and 2008?

These numbers are, as commenters predicted, a bit bleaker than last month’s results, but about 42% of respondents still managed to bill at least 2000 hours to clients last year, as opposed to pro bono or administrative matters.

Will that hold true this year?

Some commenters thought hitting 2000 hours was actually pretty easy:

4, 18: Um, I definitely billed way over 2000 hours last year… and that’s client billable. In litigation it’s pretty easy to do. I had four appeals (one of which was a bet-the-industry appeal that I was working 48 hour stretches on), like countless depositions, unending motion practice, and two full-blown trials. Do you know how much time you have to bill preparing for a 20 day trial? And then for the trial itself?

It’s easy to rack up crazy hours in litigation when you’re busy.

Other commenters disagreed:

Hitting 2000 hours for 2008 was doable because the bulk of the slow-down didn’t occur until September/October. Only because I had very high hours before then was I able to just barely hit 2000 hours for the year. 2009 will be much worse. I’m worried.

Among survey respondents, pessimists outnumbered optimists about 1.5 to 1:

  * Roughly 44% of survey respondents expected 2009 to bring fewer billable hours than 2008, with 21% expecting much lower hours.

  * About 29% of respondents, however, expected at least a few more hours this year, with almost 9% expecting many more hours.

  * About 27% of respondents expect 2009 hours to be about the same as 2008.

—
Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.

President Obama made a pretty interesting statement in yesterday’s inaugural address:

Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished.

But based on last week’s ATL / Lateral Link survey, which asked you how many hours you billed last year, these words of inspiration might not quite fit the legal profession. As we noted last week, more than a quarter of respondents were unable to bill even 1800 hours last year.

And many commenters suggested that the situation will be more dire in 2009:

Hitting 2000 hours for 2008 was doable because the bulk of the slow-down didn’t occur until September/October. Only because I had very high hours before then was I able to just barely hit 2000 hours for the year. 2009 will be much worse. I’m worried.

what are these “billable hours” of which you speak? i keep hearing they’re good to have, but i can’t find them anywhere. i’ve looked under the rug and everything!

Other commenters pointed out that even 2008 was probably a worse year financially than last week’s survey suggests:

It is hard to tell how busy associates really were based on this data. One problem is that “billable hour” may mean different things at different firms. At some firms “billable hour” = client billable hours only. But many firms give billable hours credit for pro bono, recruitment and professional development work. I would be curious to see how much CLIENT BILLABLE hours associates had in 2008 and what they are expecting for 2009.

Also, pro bono hours are way up, which is great for our day-to-day feeling of some accomplishment, but not as great for our future viability.

In today’s survey, we’ll focus on both issues: how much of your “billable” work last year was really for “CLIENT BILLABLE” time, and what do you think 2009 will look like?

Update: This survey is now closed. Click here to see the results.

—
Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.

We received over 2,200 responses to Monday’s ATL / Lateral Link survey, which asked you how many hours you billed last year.

In fact, we received more responses than most of you billed hours.

Although today’s Am Law Litigation Daily points out that litigation in federal courts actually rose by 9 percent last year, that doesn’t appear to have done much for your timesheets.

The table below compares your 2007 hours and predictions for 2008 (from our November survey) with the actual experience you reported on Monday.

Results: How many hours did you bill in 2007 and 2008?

Back in 2007, roughly 70% of respondents billed at least 2000 hours last year (not counting associates with stub years), with over a third billing at least 2200. And over 11% — almost one in eight associates — were in the 2400+ zone.

But by November, almost 20% of associates thought they would fall short of 1800 hours for 2008. Even so, less than 8% feared they would not make 1600. And roughly 56% of associates still expected to hit at least 2000 hours in 2008. More than a fifth of respondents thought they would even reach 2200.

Reality was a bit less kind:

• A crushing 14% of respondents fell short of 1600 hours, almost twice the number predicted back in November.


• More than a quarter of respondents, 27%, could not make 1800.


• And a little less than half of associates, 49.6%, broke 2000.

I billed over 2000 hours, but had over 300 pro bono this year.

Another suggested that this year’s performance will be much weaker than last year’s:

Hitting 2000 hours for 2008 was doable because the bulk of the slow-down didn’t occur until September/October. Only because I had very high hours before then was I able to just barely hit 2000 hours for the year. 2009 will be much worse. I’m worried.

Feel free to share your own thoughts in the comments.

You know, as long as you’re not billing anything today.

—
Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.

Back in November, we asked you to predict what your hours would look like for 2008, and we reported some worrisome results:

This year, the mighty have fallen, and so have their hours. While roughly 56% of associates still expect to hit at least 2000 hours in 2008, the number reaching 2200 is expected to fall from 35% to about 21%.

Meanwhile, the number of associates who won’t even make 1800 hours has roughly doubled, rising from 9.86% to 19.54%. Almost one in twelve associates don’t even expect to make 1600 hours, way up from 3.29% a year ago. (Remember, these numbers exclude stub years.)

But as gloomy as those results were, many commenters expected a much more dire view:

These reported hours seem WAAAAAAYYY high. People here are averaging maybe 80-110 hours per month. I myself would be happy to hit 1200 or 1300 by year-end.

These numbers are still too high. Everyone I talk to at my firm and others is super slow in corporate. The fact that only signle digits are below 1600 for almost all class years is suspicious. People hitting 1400 are having an above average year at many firms.

If I hit 1100, it’ll be a miracle (and a shitty Christmas).

Oh, and my small corporate group at a satellite office is looking at a range of approximately 700 - 1200. I think the group will likely be getting smaller…

Um, some of us are padding our hours and are still coming in at under 1600. There was literally no work for months, though things have picked up somewhat in the past couple of months.

And, let’s face it, you know last year’s billable hours must have been awful if the presiding partner of Cravath wants to scrap the system.

So, now that 2008 has come to an end, let’s see if last year’s predictions hold true. Today’s ATL / Lateral Link survey will focus on what your billable hours actually were.

Update: This survey is now closed. Click here to see the results.

—
Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.

Evan Chesler, presiding partner at Cravath, is the latest to raise his voice against the billable hour. In an op-ed piece he penned for Forbes magazine, Chesler says:

I’m a trial lawyer. I bill by the hour. So do the associates who work for me. I have lots of clients, so I can pretty much work, and bill, as much as I want. This needs to be fixed. Yes, you read that correctly.

Of course, partners and clients and even journalists have been calling for or predicting the death of the billable hour for years. As Chesler himself contends in his piece, nobody really likes the billable hour:

The billable hour makes no sense, not even for lawyers. If you are successful and win a case early on, you put yourself out of work. If you get bogged down in a land war in Asia, you make more money. That is frankly nuts.

Of course, there is a reason that the billable hour won’t die. More on that after the jump.

It’s December, and the bills are due. But many firms are finding clients reluctant to pay up. The American Lawyer reports that firms are having a tough time recovering any money from the graveyard of busted 2008 deals:

Firms that were working on one of the many deals or financings that have been postponed or terminated may never get paid for the significant hours they did log. That’s because in most instances, law firms don’t get paid until a deal closes….

When a deal fails, the law firms generally don’t have a contractual right to any money. And that can make for messy negotiations. These days most firms don’t want to drive too hard a bargain with clients they want to hold on to.

“If it’s an ongoing client we may be a bit more generous,” says one partner. “We’ll ask them to pay us a fraction of the fees, but there’s an understanding that when the market turns around they owe us.”

While the broken-deal fee will always be subject the dance between rainmakers and their clients, fees for litigation and general corporate work should be freely flowing. Right?

For matters billed on a regular basis, like standard corporate work and litigation, firms stand on firmer ground, although payment isn’t assured this year. September was particularly scary, says Jay Zimmerman, the chairman of Bingham McCutchen.

“Even the best clients were holding payment,” he says. “Everybody was sitting on cash and we had a build-up in receivables.” Since then, he says, the money has been flowing in fairly normally. “The September bills did get paid. October turned out to be very good and November is looking very good.”

The “stuff” flows downhill. Clients stiff firms, management stiffs associates, associates stiff… law school loan officers? Why not? We can’t be that far away from the “Fight Club scenario,” in which everybody gets their credit rating set back to zero.

Whoops. I’m not supposed to talk about Project Mayhem.

Collecting, but Hardly Calm and Cool [American Lawyer via Law.com]

We’ve received about 1,000 responses so far to last Monday’s ATL / Lateral Link survey on bonuses, which is still open here.

On Wednesday, we told you about when bonuses were paid for 2007, and when (and whether) associates expect to receive bonuses in 2008.

Today, we’ll focus on another key component of the bonus equation: your hours.

In the past, we’ve asked you whether work was slowing down, but those surveys didn’t ask you what your billable hours would actually be at the end of the year.

Last week, we decided it was time to ask … and we’re, um, sorry.

Results: How many hours did you (or will you) bill in 2007 (and 2008)?

As you can see, 2007 was a pretty good year for killing time. Roughly 70% of respondents billed at least 2000 hours last year (not counting associates with stub years), with over a third billing at least 2200. And over 11% — almost one in eight associates — were in the 2400+ zone.

This year, the mighty have fallen, and so have their hours. While roughly 56% of associates still expect to hit at least 2000 hours in 2008, the number reaching 2200 is expected to fall from 35% to about 21%.

Meanwhile, the number of associates who won’t even make 1800 hours has roughly doubled, rising from 9.86% to 19.54%. Almost one in twelve associates don’t even expect to make 1600 hours, way up from 3.29% a year ago. (Remember, these numbers exclude stub years.)

See nervous breakdowns by class, by year, and by market, after the jump.