Biglaw, Small Law Firms

Underpaying Associates Can Be Costly For Law Firms

Underpaying associates means that a firm likely has less-experienced attorneys who are more prone to messing matters up.

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This website has covered at length how associates in Biglaw make insane sums of money because of their fat paychecks and crazy bonuses.  Due to this coverage, and because of flawed assumptions about how much money attorneys are paid, many might think that the salaries in Biglaw are the norm in the legal profession rather than the exception.  However, most of us understand that few attorneys are paid exorbitant sums, and many attorneys are paid less than individuals who enter a number of non-legal professions.

From my own personal experiences, I can attest that numerous law firm associates are paid relatively low salaries, especially at the beginning of their legal careers.  There are many reasons why some lawyers are underpaid, including the fact that certain insurance carriers pay low hourly rates, and partners need to decrease their expenses as much as possible.  However, underpaying associates can be extremely costly to law firms for a number of reasons.

After leaving Biglaw, I worked at a law firm that paid me nearly $100,000 a year less than I earned in my prior role.  Because lawyers were paid lower salaries, attorneys usually only stayed at this firm for 10 to 12 months before seeking more gainful employment elsewhere.  I stayed almost twice as long as others, since I genuinely loved the hands-on experience offered by this smaller shop, and I was developing a few clients I helped originate.  However, the firm was mostly a revolving door, since many attorneys left for more lucrative opportunities as soon as they could.

The revolving door at this shop had a number of negative effects on the firm.  For one, hiring new associates because attorneys were constantly leaving meant that new attorneys needed to be trained on a regular basis.  Training lawyers was always a time-consuming process, and each new attorney usually couldn’t bill too many hours for a month or two until they got familiar with their files.  In addition, new attorneys at the firm were more likely to make mistakes that would take hours to fix.

For example, many of the new attorneys at the smaller firm at which I worked frequently missed deadlines to serve responses for notices to admit.  As many New York attorneys are aware, practicing law in the state’s courts is like the Wild West.  Judges are infrequently bothered about discovery issues, and deadlines are rarely followed.  However, for some reason, parties must usually respond to deadlines for notices to admit, or the facts in a notice to admit are deemed to have been admitted by the party that fails to timely respond.

Newer attorneys at the small firm at which I worked almost never knew that this one deadline must absolutely be adhered to, and they failed to timely respond to notices to admit frequently.  As a result, the facts were deemed admitted, and we usually spent hours filing motions and reassuring our clients to make up for these mistakes.  There are, of course, other important missteps that newer attorneys were bound to make, and underpaying associates means that a firm likely has less-experienced attorneys who are more prone to messing matters up.

In addition, underpaying associates creates a number of accountability issues.  If people do not think they will stay at a law firm for too long, they have little incentive to do good work on their files, or meet deadlines.  Indeed, I once inherited a file from an attorney who had left the firm, and he never filed a summary judgment motion even though the deadline was less than a week after I started at that firm!  While working in Biglaw, I never learned the nuances of filing motions, so there was a steep learning curve while I reviewed the facts of the case and developed strategies for our summary judgment motion.   My predecessor probably figured that he could just hold off on filing until he left the firm, and people are way more likely to pass the buck along if they are paid little and know they will soon be leaving.

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Furthermore, constant transition because attorneys are underpaid can create a number of other issues.  It is harder for clients to deal with new contacts after an attorney departs when they have been communicating with a lawyer on a case for months.  Furthermore, it is difficult to train new associates on internal processes related to billing, client communications, and other issues, and new attorneys can make mistakes until they are properly trained.  In addition, constant transitioning just looks bad.  Colleagues and clients are much less likely to view a firm in high esteem if they see attorneys leaving in regular intervals.

In the end, I understand why many shops underpay their associates.  Numerous firms face a variety of financial pressures, and this makes it more difficult for them to pay associates higher salaries.  However, underpaying associates can be costly for many firms, and law firms can realize a number of benefits by paying associates more reasonable salaries.

Jordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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