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September 08, 2008

Recap: "Should associates pay their law firms in the first 2 to 3 years?"


Two first years relax after a day of thinking, researching, writing, cite-checking and proofreading, as more senior lawyers stay late to re-do their work, and then write off time, lest they commit major interstate mail and wire fraud when bills are sent out.

Posted by Holden Oliver (Kitzb├╝hel Desk) at September 8, 2008 03:27 AM


When is the partnership going to open the books, proving that associates do not bring the partnership a profit? Or are we Gen-Y slackers just supposed to take their word for it?

Posted by: Mike at September 8, 2008 05:26 AM

Mike: Thanks for the comments. We post without editing and eventually read them all. We especially appreciate comments by those with the class and character to disclose (small thing but rare, I guess) their real identities.

This blog is primarily about Clients. It really is about "what clients get", not about what firms and employees get. The associate compensation issue turns on whether or not starting associates (1) add value to firms, and (2) add value to firms' problem-solving capacities It's not a Gen Y thing. That's a different issue, and an important one--but just a wrinkle in the associate compensation problem for firms.

Lots of Gen Y people we've had/have are brilliant and work hard. But they don't know much and can't do that much at first. They are worth something at first--but not much, and certainly not more than a good legal assistant. Assistants and paralegals routinely roll their eyes and hold in laughter around many associates; it's Spaz City during those first 18 months.

It's like watching a brand new half-bright Congressman with a drinking problem regularly get stuck on an Longworth HOB elevator after too many drinks on the way to a big vote. He worked hard, he got elected to Congress all right, and he even knows a few things about the legislation he's supposed to be voting on--but he just can't do his job until he gets organized, sobers up, and begins to really understand his job. He needs a new way of looking at things.

Most associates don't see the light for a while. And Boomers and Gen-X were/are the same. None of us (including me) know jack when we start; and some to die-for grads are alarmingly non-functional, even spectacularly incompetent, at first.

The question for me is--since "seeing the light" takes a pretty long time for most--who should pay for this significant and risky investment and down-time? Especially when the associate is the only legitimate and honest beneficiary (certainly associates can't be directly blamed for robbing clients of value for the cost of their long-suffered training) of the down-period.

Firms? Clients? Associates? Clients and honest firms of all sizes seem to be the big losers.

Finally, firms don't generally open time records and books to employees. But "new" associate time is written off routinely and massively by honest law firms. I'm not a saint, but I have done that for 20 years and will always do it. It's a given.

Dan Hull

Posted by: Dan Hull at September 8, 2008 06:31 AM

For the sake of argument, let's take your assertions as true: (i) the market (especially at biglaw) is mispricing the value of junior associates, (ii) clients and/or partners are picking up the tab for that mispricing, and (iii) the most efficient way to solve this mispricing would be to introduce an apprenticeship (which is the way most 19th century (or pre organized law school) lawyers were trained).

Having assumed and/or proven all of that, your work is not yet done; you still need to define this elusive "training" you are offering so that associates can adequately price it (otherwise, the mispricing simply flips around, the same inefficiency exists but it's now borne by the people who are least able to afford it).

What exactly are you and your senior lawyers going to do: are you going to spend billable hours helping juniors understand exactly how underwriting agreements reflect '33, '34 (even '40) Act concerns; are you going to sit down with juniors and go through case studies of previous deals, pointing out business issues and the negotiation or drafting that resolved them; are you going to carefully walk junior associates through litigation strategy and give them opportunity to take depositions and argue in court; are you, in effect, going to engage in actual mentoring, keep your door open, stay light to respond to their questions?

Unless you are willing to do all that and more, you may find that very few of juniors are willing to pay for the privilege of being dropped into a room, given a deal and told to sink or swim, or occasionally being invited to cursory training sessions given by bored partners checking their blackberries.

If you focus on the value of the training, you might find that most partners don't want to spend time mentoring associates (at least, not all associates that they hire). In fact, you may find that juniors start demanding that partners pay for the privilege of not having to train them. Hm, how much do you think partners are willing to pay?

Posted by: JT at September 9, 2008 07:56 AM

JT. Let's not take anything as true; I am trying to figure this out, so clients and firms "win", too. Right now, the regime certainly scams most clients. Clients of any size should not have to pay this much to get this little. Fortune 500 GCs are already telling us all that.

These WAC? posts on associates are not a publicity stunt--and we don't get clients or any $ from blogging. We are serious about sane ideas (yeah, I know, sounds crazy, paying associates little or nothing BUT honest/sane ROIs on associates are pretty bad all around). So let's make associates valuable quicker, so neither GCs or firms have to pay for hours where no significant value was added. The best argument for allowing great law students to be a drain/inefficient for a few years is that it's all an investment in talent, and the market already says that's okay. What the market "will bear" and all that. Sure, fine--but it's still madness, as some of the best law students are especially helpless at first...and most partners will tell you it's frustrating. (I talk to tons of them at firms between 5 and 1000+).

How about this--which others have mentioned: "Shorten" law school so that pure classroom ends after first year. Law school is critical but it can't "complete" you, or even give you a clue about lawyering. First year stuff is the basic blocks--was spread out over about 3 years 60 or 70 years ago. Can the main event of the second 18 months of law school be commuted to a real job?....clerkships and part-time jobs tell us very little. We need better ideas on this. And no, I am not forgetting about student debt, either.

Ideas which even up the risks of associates, firms and clients. Anyone have any?

Training: It's you and associates working, talking and doing--then repeat; it's always been a mentoring system as we have nothing better. Hard on both juniors and seniors. Hard, intimate, frustrating for both. The process requires encouraging creativity and strong life-long habits on hard things. It's like having kids. At the same time, associates need to "practice" client care by treating senior lawyers as their best clients. They are responsible for much of their own training. A great new lawyer requires zero baby-sitting.

Posted by: Dan Hull at September 9, 2008 10:23 AM

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