Money

Bruce Stachenfeld

This is a continuation of the past three articles I published in ATL over the past month or so. My first article argued that Profits Per Partner is a great servant for a law firm but a bad master. In my second article, I set forth our Profits Per Partner Emancipation Plan as an alternative. In my third article, I set forth what I believe is the highest level in law firm profitability analysis, which is to “embrace” the volatility inherent in the practice of law. In this final article, I will give some thoughts on how a law firm could indeed Embrace Volatility.

Before getting to that, I will mention as an aside that I wrote a few weeks ago in this column an article entitled “Are Lawyers Only Happy When They’re Miserable?” That article largely dealt with how an individual might in fact Embrace Volatility. This article is directed not at individuals but at law firms.

If you have been reading my past articles, you may be open to at least considering how Embracing Volatility might be a good thing for a law firm. But is this whole concept just a fantasy, like it would be nice to not be afraid of snakes but you can’t help it and just reciting “I am not afraid of snakes” isn’t going to work? I don’t think so. I think the following simple steps would do it quite nicely:

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Melvyn Weiss

The rise and fall of Melvyn Weiss is one of the most dramatic stories within the legal profession. The Bronx-born Weiss, a graduate of NYU Law School, founded Milberg Weiss, which went on to become the nation’s top class-action securities firm. Weiss and his partners became millionaires many times over.

But it turned out that the firm rested on shaky ground. In 2008, Mel Weiss pleaded guilty to participating in a kickback scheme that helped him get clients and cases. Weiss got sentenced to two and a half years in federal prison and had to pay more than $10 million in forfeitures and fines. Milberg Weiss itself had to pay $75 million to settle charges relating to the racketeering conspiracy.

Too bad Weiss had to do prison time. House arrest would have been pretty sweet in his waterfront mansion on Long Island’s Gold Coast, now on the market for $18.8 million….

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In the simplest terms, it is fair to say that law firm starting salaries are flat. The fact that the incidence of $160,000 as the starting salary at the largest law firms is less than it was before the recession is really more a reflection of the changing contours of the large firm market, not the fact that law firms are paying entry-level associates less than they used to. Many law offices that are part of large firms, particularly those in the largest markets, continue to pay $160,000, but the data since 2009 clearly show that the large firm market now also contains many firms that do not pay $160,000. In some ways the data simply reflect the growing cohort of large firms, and it shows that they are not a monolithic entity. In many markets starting salaries of $145,000 or $135,000 or even less are the norm.

James Leipold, executive director of the National Association for Law Placement (NALP), commenting on the shrinking prevalence of $160,000 starting salaries for first-year Biglaw associates in NALP’s 2014 Associate Salary Survey.

(What other information can be gleaned from the 2014 Associate Salary Survey?)

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– Signs found taped to a window near York County Magisterial District Court Judge Ronald J. Haskell’s courtroom in York, Pennsylvania.

(What could have happened to necessitate these signs being posted?)

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If part of your reason for going to law school is that, well, there’ll be a good job that you like and will pay well afterwards, then you’re maybe mistaken. There’s more than 90,000 lawyers in Illinois, and I’m not confident there’s enough jobs. Law school is no longer a safe road to a successful career.

Matthew Willens, the lawyer behind the “Anything but Law School” scholarship, explaining why he created the monetary award last year.

(If you’d like to apply for this scholarship, you can find the details here.)

Bruce Stachenfeld

This is a continuation of the past two articles that I published in ATL over the past month. My first article gave my view that the profitability metric of Profits Per Partner is a good servant but a bad master and, as a master, it is a root cause of serious problems for Biglaw. In my second article, I put forth a Profits Per Partner Emancipation Plan as a different way of doing business that I hope will eventually be adopted. Now, here I am giving my theory on what I think is a higher level of law firm profitability analysis, which is to “Embrace Volatility.”

Let me start by asking you: what is it that we all crave in our hearts? I mean, we all want money and power and fame and to be cool and good-looking and talented at sports or music or acting — but in addition to that — I think it is one of the basest human emotions to crave:

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Since the Great Recession, it’s far too often that the public hears tales of horror about lawyers drowning in debt. We think it’s time for a change of pace. There are plenty of lawyers out there who have really made it financially — in case you’re mistaken, these people aren’t millionaires, they’re billionaires. These people would laugh at the thought of people suffering under the weight of six puny figures of law school loans.

As luck would have it, there’s a way to keep track of these luxurious creatures. Earlier this week, Forbes released its annual list of the richest people in America, the Forbes 400. Each year, we pore over the list to find the wealthiest lawyers, and in 2014, legal eagles continue to make a strong showing.

Which lawyers made the list this year? Keep reading to find out…

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Tracy Morgan

* Weil Gotshal is tired of winnowing its workers, so this time around, the firm is relinquishing some of its real estate. The firm will have the same address as usual, but its space will be smaller — 20 percent smaller. [WSJ Law Blog]

* It’s not just leaders of Biglaw firms who are looking to downsize. Leaders of midsize firms are trying to do the same thing, but with their management responsibilities instead of their people. Charming. [Pittsburgh Post-Gazette]

* Lawyers are typically stereotyped by the uninformed as being some of the richest people in America. As luck would have it, some lawyers are the richest people in America. Which ones? We’ll have more on this later. [Am Law Daily]

* “If I could redo a year ago, I would still go. Just because I know that [law school] still opens doors.” We’ve got a correction: Silly 2L, Columbia Law — not law school in general — still opens doors. [USA Today]

* Tracy Morgan has spoken out for the first time since his tragic accident this summer, but only after Wal-Mart blamed him for getting hurt in the first place. It’s a rollback on pure class. [New York Daily News]

Law school can ruin your life if you are not careful. It’s very expensive and the rewards are far from guaranteed. And even if you reap those rewards, you might not like what you’ve become.

But if you do everything wrong, law school becomes just a tragicomic microcosm of poor planning and bad luck.

Forbes has an article up about a woman who is $350,000 in debt and living at the poverty line. Oh, but she has a law degree, and people who haven’t been paying attention are surprised by that…

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Justice Ruth Bader Ginsburg

If there was one decision I would overrule, it would be Citizens United. I think the notion that we have all the democracy that money can buy strays so far from what our democracy is supposed to be.

– Justice Ruth Bader Ginsburg, explaining the reasons why she thinks Citizens United was one of the worst Supreme Court decisions of recent times, after being asked her opinion in a wide-ranging interview with Jeffrey Rosen of the New Republic.

(What do you think is the worst SCOTUS ruling in recent memory? Tell us.)

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