Money, Small Law Firms, Solo Practitioners

Why Solo Practitioners And Small Firms Pay So Little To Their Associates

Solos and small firms have been pushing the envelope (or pinching the penny) trying to find out how little they can pay associates and get away with it. But why?

By  
on

It is generally understood that small firms pay less than Biglaw in exchange for better hours and more hands-on experience. But for as long as I can remember, solos and small firms have been pushing the envelope (or pinching the penny) trying to find out how little they can pay associates and get away with it.

Occasionally, a colleague asks what would be fair pay for a newly admitted or junior attorney. Most older attorneys believe newbies should be paid modestly for reasons which I will discuss below. New attorneys with big dreams, expectations, and student loans will strongly disagree, but because of the pathetic job market, can do little about it.

Today, I want to discuss the reasons why some solo practitioners and small firms are reluctant to pay large salaries to associates.

They don’t want to pay to train new, unprofitable attorneys. Training new attorneys can be a time-consuming endeavor. Biglaw, the government, and public interest groups have the resources to provide formal and lengthy training programs for their new hires. Because of this, smaller firms prefer to hire Biglaw and government refugees because it is believed that they can hit the ground running.

Most solos and small firms have no formal training program for associates. So when a newbie is hired, she typically shadows her boss. The boss will have to spend a lot of time supervising the associate’s work. Assignments must be scrutinized and reviewed. The employer will have to accompany the associate to court to make sure that she doesn’t screw up a continuance motion. And even then, mistakes will be made and the employer must spend time remedying it.

While some firms can bill out a new attorney’s time, others cannot or limit the amount billed. This means that the associate will be unprofitable in the beginning stages of employment. To minimize the loss, employers justify paying a minimal salary until the associate is up to speed.

They don’t want to invest in someone who will jump ship to another firm. I heard about a small law firm that invested heavily in a new associate. The firm paid her a competitive salary. The firm also paid her bar dues, memberships to numerous organizations, expensive CLEs, and costs to attend several out-of-state conferences. The partners spent a great deal of time teaching her the tricks of the trade that only they knew. The firm even gave her time to write articles and network. As a result, the associate blossomed into a great lawyer respected by her peers and clients. Then one day, a larger firm offered her a position with a huge salary and better benefits. She took it. Her former employers were upset by this act of disloyalty and vowed to cut pay and reduce benefits to future hires.

Sponsored

On one hand, the associate may have made a foolish decision. She left a firm that treated her very well, cared about her professional growth, and would have likely provided her with a stable career for the rest of her life. The bigger firm may end up being a miserable place to work.

But small law firms have to understand that their employees are as loyal as their options. If other firms are offering six-figure salaries to one of your best associates, you cannot play the loyalty card to demand that she stay with your firm at her $75,000 salary. You’ll have to match the competing firms’ offers or find another way to convince your associate to stay.

They don’t want to pay an associate unless she can bring in business. Some firms only want associates who are able to bring in clients. Firms like this pay a pitiful base salary and augment it with a percentage of the billings collected. This might not be a bad arrangement if the associate can bring in a lot of cases. But most do not.

They only care about the bottom line. Finally, the lowest of the low. Some small firms do not care about their associates’ well-being and professional growth. They pay them the absolute bare minimum and make them work long hours. They are always looking for attorneys who are willing to work for less.

Needless to say, firms like this have a high turnover rate because of the low pay and high pressure. But a disgruntled employee can be easily replaced. If they put out an ad, they will get at least 20 responses from desperate applicants.

Sponsored

While employers have some good reasons for keeping associate pay low, others are just taking advantage of the oversupply of unemployed attorneys. I would be very hesitant to refer business to firms that do not pay their employees well because the low morale and high turnover tends to result in a shoddy work product. Small firms will occasionally hire a dud but generally, they get what they pay for.

Shannon Achimalbe was a former solo practitioner for five years before deciding to sell out and get back on the corporate ladder. Shannon can be reached at [email protected].

Topics

, , , ,