Some have wondered whether Bingham might “fall victim to its own strategy” — i.e., whether the firm, which grew in power and profitability by swallowing up other firms, might itself get eaten up by a rival.
So what’s the latest on the Bingham merger talk front? And what might happen if the talks go further?
And, of course, we have covered compensation. We’ve done two posts so far looking at associate comp in the 1990s, in New York and in other cities — Atlanta, Boston, Chicago, Dallas, Houston, and Los Angeles.
Today we’ll close out the series with an overview of associate pay in the remaining markets of Philadelphia, Pittsburgh, San Francisco/Palo Alto, and Washington, D.C….
Hop in the DeLorean and travel back in time with us.
Labor Day weekend is here. So let’s talk about… labor! In the Biglaw salt mines.
In response to our earlier Flashback Friday posts about associate compensationin the 1990s, we received a few requests for information about billable hours back then. People wanted to know how hard associates had to work back in the day for that $83,000 starting salary.
It’s a good question. You hear anecdotal evidence going in both directions. Sometimes people who have been in the profession for a long time talk about how hard they had to work before technology made things so much easier, recalling the bad old days of never-ending, hard-copy due diligence or document review. On other occasions, though, old timers reminisce about the good old ways when law was more of a profession and less of a business; sure, lawyers earned less, but they had lives — or , at least, better work-life balance.
Which picture holds more truth? Here’s some data….
A year ago, in writing about how major law firms performed in the first half of 2013, I wondered whether Biglaw might be the proverbial frog in boiling water. I now wonder whether the analogy might still hold, but in a good way: could we be witnessing a quiet boom for Biglaw, happening so gradually that we don’t even realize it’s here?
In the past few weeks, a slew of mega-mergers have made headlines — which will hopefully turn into contributions to law firm coffers. But even if you focus just on the first six months of 2014, excluding the busy months of July and August, there’s good news to report.
Our friends at Citi Private Bank, a leading law firm lender, just released their report on how Biglaw fared in the first half of 2014. What are the key findings?
“Low overhead is great!” That is one of our sayings. We recite it all the time — yes, even out loud at meetings — as it is a powerful competitive advantage for a law firm. It seems pretty obvious, but if so, why doesn’t everyone get with this concept?
There is a term informally used to describe how overhead impacts a law firm called “Implied Overhead.” The “Implied Overhead” of a law firm is the cost of everything except the lawyers divided by the number of lawyers. So if you have 50 lawyers and the cost of “everything” except the lawyers is $10,000,000, then you have implied overhead of $200,000 per lawyer.
Our Implied Overhead for last year was about $165,000. Anecdotally I believe that Implied Overhead for major law firms averages about $300,000. (I admit I don’t really have this data for sure; it is just what I have heard.) If your firm has 100 lawyers and implied overhead of $200,000 and the average for major law firms is $300,000, then you have a $100,000 per lawyer competitive advantage over your major law firm competition. Multiply that by 100 lawyers and you just made $10,000,000! And this flows right to the bottom line! If there are, say, 30 partners at this firm, then each partner just got a check for $333,333!
Yikes — did I do that math right? Was that $333,333 per partner merely by reducing the implied overhead? I just double checked and $10,000,000 divided by 30 partners does indeed equal $333,333. That’s a sizable number, so maybe you should read the rest of my article….
During a time when demand for legal services is flat, average revenue per lawyer is down, and managing partners’ overall confidence in the market is slipping, the proper keeping of time for all of those billable hours generated by toiling associates has never been more important. For better or worse, law firms are desperately trying to incentivize associates to submit their hours on time.
As we mentioned way back in 2010, “Time keeping is more accurate when you do it every day (as opposed to trying to recreate your days at the end of the week or month). Firms are struggling to collect from their clients. And, for what it’s worth, billing hours is part of the job for attorneys.”
Another part of an attorney’s job is the ability to follow rules. One Biglaw firm just rolled out a new time entry policy, and if its associates don’t follow these rules, they can expect some pretty negative consequences when bonus season comes around…
You don’t often hear many good things about diversity in the legal profession. Women lawyers continue to be told how to dress themselves, and minorities have to grapple with racist typos.
Despite the negativity that exists in the law when it comes to issues of gender, race, and sexual orientation, there are some law firms that are doing their best to make sure their attorneys are as diverse as their practice areas.
Which law firms came out on top in terms of diversity? Check out Vault’s rankings to find out…
For our purposes, we split “reputation” into two distinct aspects: 1) the reputed strength and quality of a firm’s practice, and 2) the perceived desirability of the firm as a potential employer. For some, these factors will be functionally equivalent. For others, these are less overlapping considerations.
To date, we’ve received not quite a thousand survey responses and today we share some preliminary findings. What are you telling us thus far about which firms have the strongest practices? Which firms are some of the most coveted Biglaw employers in major markets?
The average high temperature for Houston in July is a scorching 94 degrees. It’s one hot legal market.
Figuratively as well as literally. Back in April, for example, we talked about Kirkland & Ellis opening a Houston office — and prying away partners with $5 million pay packages. You don’t need to be a high-powered partner to get in on the fun; even junior to midlevel associates are getting offered signing bonuses when they lateral.
And this hot market is only getting hotter. Who’s the latest major law firm to land in Space City?
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past seven years. You can reach them by email: firstname.lastname@example.org.
Things have changed recently in Korea – a few of our US and UK client firms are looking, very selectively, for a lateral US associate hire. Until just recently, there was not much hiring like this going on in Korea, since US and UK firms started opening offices there. We have already placed two US associates in Korea in the past month at top firms. Most of the hiring partners we work with in Korea do not actively work with other recruiters.
If you are a Korean fluent US associate in London, New York or another major US market, 2nd to 6th year, at a top 20 firm, with cap markets or M&A focus (or mix), or project finance background, and you are interested in lateraling to Korea to a top US or UK firm, please feel free to reach out to us at email@example.com or firstname.lastname@example.org. Our head of Asia, Evan Jowers, was just in Korea recently, and Evan and Robert Kinney will be in Korea in a few weeks. We are in the process of helping several firms open new offices in Korea (a number of which are interviewing our partner level candidates) and also helping existing offices there fill openings.
Professor Joel P. Trachtman has developed a unique, practical guide to help lawyers analyze, argue, and write effectively.
The Tools of Argument: How the Best Lawyers Think, Argue, and Win is a highly readable 200-page book, available for about $10 in paperback or e-book. Chapters focus on foundational principles in legal argument: procedure, interpretation of contracts and statutes, use of evidence, and more. The material covered is taught only implicitly in law school. Yet, when up-and-coming attorneys master these straightforward tools, they will think and argue like the best lawyers.
For most attorneys, time spent managing the books is a necessary evil at best. Yet it is undeniably a crucial aspect of running a successful practice. With that in mind, we invite you to view or download a free webinar by Above the Law and our friends at Clio to learn how to better manage your finances.
Take this opportunity to learn what it takes to streamline your accounting and get the most out of your time. The webinar agenda:
● The basics of accounting for lawyers.
● How legal accounting differs from regular accounting.
● Report and reconciliation issues surrounding trust accounts.
● How to pick and integrate the best accounting tools for your practice.
● Steps to prepare your tax return for your firm’s income.
Do not miss this crucial chance to optimize your accounting practices. Save time and get back to billing!