Yeah right. Waste of time. It's only our careers and future job satisfaction we are talking about. Open your eyes, folks. You think the anxiety, needless pressure and dissatisfaction end at law school? I case-managed billion dollar transactions at the largest law firms for the last six years. Change begins at law school, and I encourage everyone to start to give it thought. Nothing changes unless you raise your voice. Sadly, few are willing to do so because of asinine attacks the likes of which you see on this board:The Third-Year Dilemma:
Why Firms Lose Associates
January 4, 2006
WALL STREET JOURNAL
This is the first installment of The FLaw, a new column about law-firm management, with a particular emphasis on the miscues, peculiarities and strange customs of law firms.
At their best, the country's largest law firms are magic-workers. They slip mergers past antitrust watchdogs, unlock revenue from dusty patent portfolios, yell "Duck!" as the Eliot Spitzers of the world are nearing mid-punch.But when it comes to solving their own problems, big law firms aren't exactly Penn & Teller.
Take, for example, a problem currently roiling Big Law, one we might call the Dilemma of the Third Years.
According to a study unveiled last year by the NALP Foundation, a group that examines law firm hiring trends and practices, law firms have little trouble hanging onto their youngest lawyers -- only one percent and 14 percent of entry-level associates leave their law firms by the end of their first and second years of practice, respectively.
But a whopping 37 percent of associates at big law firms, defined by the study as those employing more than 500 lawyers, quit their firms by the end of their third years of practice.
Taken alone, the percentage might not seem so troubling. Like other professional services firms, law firms are, in the parlance of organizational management, "highly leveraged." That is, they need vastly more associate worker bees -- the 20 and 30-somethings who handle the mountains work generated by a big lawsuit or merger -- than they do queen-bee partners, who on any given matter, mostly map strategy and draw up long to-do lists for others to carry out. In other words, associate attrition isn't a problem, it's a necessity.
But another statistic casts the 37 percent figure in a different light. According to a study released in 2003 by Altman Weil, Inc., a Newtown Square, Pa.-based large consultant to law firms, the average big law firm doesn't start recouping its cash flow investment in an associate until about midway through an associate's fourth year, around the time most start acquiring the skill and confidence to run their own cases and deals.
The costs associated with premature attrition don't end there. When too many associates bolt a given firm during that third year, firms have to replace them with lateral hires, which, according to the NALP Foundation study, runs about $300,000 per associate. Says Dr. Larry Richard of Hildebrandt International, Inc., a Somerset, N.J.-based consultant to large firms: "There's no slush fund for those expenses. You're really just sucking money out of the partners' pockets."
For managing partners everywhere, then, the goal is well-defined: Figure out how to keep more lawyers around until at least about midway through their fifth years, ensuring at least one profit-making year of work from each associate. Firms that can do this will also escape the hefty costs of hiring replacement laterals.
Can law firms change the status quo? Maybe. But first they'll have to unravel an increasingly entrenched idea among associates that they've got to figure out the rest of their careers by the end of their third years of practice.
Manfred Gabriel, a fifth-year associate at Latham & Watkins LLP in New York, says firms start to demand more of associates in their third years. "At that point, the perception seems to be that it's time to ask yourself whether you want to commit yourself to the firm -- maybe make a run at partnership," he says. "If not, it's a good time to leave. You've learned how to do some things, but you're not viewed as someone past [his or her] prime." He left his first firm, LeBoeuf, Lamb, Greene & MacRae LLP, as a third-year associate.
Professional recruiters play a big role in the third-year exodus, mostly by fostering a sense that associates have a limited window of marketability." The headhunters started calling early in my third year," recalls Jennifer Boatwright, who left a Milwaukee-based firm for Gibson, Dunn & Crutcher LLP in Dallas in September at the end of her third year of practice. Ms. Boatwright says she and her husband had long considered moving to a warmer climate, but the headhunters dictated the timing of the switch. "They told me that if I hadn't moved by the end of my fourth year, it would be nearly impossible to move" at all, she recalls. "I have no idea if that's true, but it certainly got me moving."
But it's the law firms themselves, not aggressive headhunters nor commitmentphobic associates, that deserve the lion's share of the blame for creating the Dilemma of the Third Years. According to David Maister, an author of several books on management at professional services firms, law firm partnership used to be something young lawyers aspired to. Not anymore. "Partners hate their lives," says Mr. Maister. "They're overworked and stressed out and slaves to the billable hour. Lots of associates see this first hand and can't run away from it fast enough."
Take the experience of Julia Hesse. Last year, Ms. Hesse left Boston's Choate, Hall & Stewart LLP for Ropes & Gray LLP at the end of her third year of practice even though the move cut her chances for partnership. At Ropes & Gray, a firm of 700 lawyers, seven associates made partner last year. "I don't want to be a partner," says Ms. Hesse, "and I don't know a single associate [at Ropes] who wants to make partner." Ms. Hesse says that Ropes's deep health-care practice, which promised good experience and introductions to a healthy roster of outside contacts, enticed her to Ropes. Bradford Malt, Ropes's chairman, agrees that partnership is tough to make at the firm, but boasts that "the experience and training a young attorney gets at Ropes is among the best in the country."
Given the problems associated with partnership, might law firms attack the Third Year Dilemma by reforming at the top?
A trickle are starting to. Pittsburgh-based Kirkpatrick & Lockhart Nicholson Graham LLP, for example, launched a "balanced hours" program in November to try to, in the words of Peter Kalis, the firm's chairman, "stop the bleeding" away of young lawyers.
Mr. Kalis stresses that the program -- which allows any lawyer to meet anonymously with an organizational sociologist and devise flexible working schedules (subject to the firm's approval, of course) -- is meant for both associates and partners. "Very few partners of AmLaw 100 firms are financially deprived," he says, "but a lot of them are still unhappy."
Happy partners, in Mr. Kalis's view, will solve the Third Year Dilemma and ultimately make for a more profitable firm. "When the people above you are happy, it has a tendency to rub off," he says. "And when associates are happy, not only are they more productive, but in my experience, they stay at your firm."http://accuracyblog.blogspot.com