ABA: Downturn’s Losers: BigLaw, ‘Entitled’ Associates, Top Schools

[nealric]

These firms can recruit from the rather large pool of above the curve students, who have spent their law school career doing everything they can to soak up experience and build skills, but do not come with the entitlement complex to feel that 80k directly out of school is an insult.

There it is again.

On what basis do you conclude that there is an "entitlement complex"? Just saying it over and over again does not make it true.

[TheReasonableMan]

My comments above were centered around the idea that law students sitting at or above the curve are what they are: a fungible commodity. We are all cut of the same cloth, educated in the same subjects, and put through the same trials. Until people actually get out and begin their careers, there is really no predicting who will be successful and who will fall flat on their face.   I just happen to believe that the people who have to go out and market themselves hard are more acutely aware of that than those who have the luxury of being recruited.  Most of the people that I know who fit into the former category are devoting substantially more of their off time to building profitable skills than those who are spending their summers going to baseball games and firm cocktail parties.  That is not intended as a dig, or a cut down. I freely admit that I was not offered an SA position. If I was, I would have taken their ridiculous pay and never looked back.  That being the case, I think that there is no defensible argument for paying a person directly out of school $160k per year, and I have heard more than a few top students (especially on this board) lament that they deserve that kind of pay for bringing their godly talents to their particular firm.  If I were in a hiring position, I would certainly prefer paying a generous salary to someone who has been on their grind and understands their value as a market commodity to paying an obscene salary to someone who has had it all come to them.   

[Matthies]

Until people actually get out and begin their careers, there is really no predicting who will be successful and who will fall flat on their face.   

why is this the case?  if you're saying that there aren't perfect or even great predictors then i agree with you, but why is it so far-fetched to suggest that success at the undergraduate level, law school level, or even a standardized test of reading comprehension and logical reasoning has predictive value in terms of how a person will perform professionally?

I think because all of those are indicators of performance in an educational setting, not a work setting. We all know of classmates who are great students but just suck at real world life. Not saying there maybe not be some predictive nature to school = work, but I think a better predictor would be an indivuals past work performance would better indicate future work performance.
For those without any past or negligible work performance I don’t know if I would personally equate ones ability to do well in an academic environment to doing as well in a work one.

I sure lots of people make the transition from school to work and become great employees, I’m also equally sure many don’t (or take a few years of work experience before they become decent employees).

Just like it takes some for some folks to ramp up to be great academics it takes time for employees to ramp up to be good workers. Lord knows I was not employee of the month at my first every real job.

I just personally think some folks are better able to adjust to the realities of the work force than others. And I’m not sure past academic perfoamce is any real quality indicator of that. It could be one part of it, dedication to a cause maybe, but if I was looking for predictors of future performance in the workplace the first place I would look would be past workforce performance, not academic performance. At least that’s how I see it.

[TheReasonableMan]

I would not go so far as to say that academic performance is irrelevant to career success, but I would say that if I ever find myself in a position to hire law school graduates, class rank will not be in my top three factors.  It is true that grades, standardized tests, and academic ability are key signs that a person is intelligent.  It is also likely that intellect is a necessary condition for career success.  That being the case, it is certainly not sufficient, and does not come close to actual professional experience in terms of predicting actual career performance.  When I was interviewing for big firm SA positions, I was actually told to "play down" my prior professional experience.  Apparently, big firms prefer young, pliable recent graduates with little to no work experience, who can be "molded" to fit their culture.  It's certainly their prerogative, but it seems foolish (at best) that they shun potential hires because of their experience.  Again, if it were up to me, I would just prefer to hire the "hungry" applicant who rides just above the curve, but who has piled up on moot court, journal, and internship experiences, and who will work for a reasonable salary.  The firms that wake up and learn this lesson will likely find themselves with a crop of motivated, successful attorneys, who are elated to work for half of what big firms pay.  

[Matthies]

Not saying there maybe not be some predictive nature to school = work, but I think a better predictor would be an indivuals past work performance would better indicate future work performance.

i agree with this and like i said, i don't think that these things are great predictors.  at the same time, given the way salaries are segmented, it seems inevitable that even weak predictors will be heavily relied upon.

maybe a consensus position is that given the lack of really great predictors for the majority of law school graduates, such salary segmentation is not really justifiable?

Not quite sure what you mean by salary segmentation? You mean like as in salary for grads at different schools? Guess I’m not clear on what your saying. My personal belief is the 160k starting salary was never considered as being necessary or resulting in hiring the “best” lawyers. I.e. it was never the case that everyone (or perhaps even a majority give the high turnover rate) that gets 160k is a good or even decent lawyer (and likewaise not everyone who gets 40k is a bad (or good for that matter) lawyer)

 Its just the nature of the starting salary wars to support the cravath model. I don’t think much of it was based on merit. The entire idea of hiring a whole summer class is that A) the firm can afford to lose money on them individually because in the totality their pedigrees allow for hire average billing and that B) most of them would not make it past year 3-4 or four, so the best of the best out of say the original 20 would end up staying and the rest would leave or be forced out.

In the new economy neither A or B are workable strtaragies for a lot of firms anymore. Will that mean only the best of the best, those that really shine over the summer on real world work projects get the $160k jobs? Yes, to a degree, but still given the nature of the profession and how little real legal work most law students do before they start their first real job, some people are just not going to be good at it even though all predictors would say they would.

One would hope the clinical training and residency requirements of say an MD would keep the bad doctors out of the professions, we as JD’s don’t really have that, you can start at the principle of the profession (at lease salary wise) with nothing more than the name of your school or your GPA to say you can actually do, much less be good at, what your hired to do.  And up until recently that has been the hiring method, hire all and let the few rise to top after a few years with most not suceeding. With this economy that mentality seems to be changing for all but the very largest firms. The profitability is just not there to let time determine who is good and who is not – after the fact.  I think we will see far more decisions made on the base of actual perfromce over a summer than then a whole class getting offers as before.

So it may b in the future,  that they best predicatable sucessful lawyers make the most money out the gate, but that's not really what has been drving the salery up till now

[Matthies]

Not quite sure what you mean by salary segmentation? You mean like as in salary for grads at different schools? Guess I’m not clear on what your saying. My personal belief is the 160k starting salary was never considered as being necessary or resulting in hiring the “best” lawyers. I.e. it was never the case that everyone (or perhaps even a majority give the high turnover rate) that gets 160k is a good or even decent lawyer (and likewaise not everyone who gets 40k is a bad (or good for that matter) lawyer)

yes, i meant the "some people get $160k, most others get $40k" model.  i don't think it's driven by merit, but the fact that the market looks that way drives the resulting emphasis on school, school rank.

I don’t know, at least from what I have seen/heard its not so much that employers think it works that way. I mean they don’t think they have to pay $160k to get the best employees as much as the best pedigrees, and the pedigrees are worth it simply because they allow to bill more. I've had partners tell me as much, its all about the billing over anything else.

I.e. it’s the bill structure rather than the perception of quality that drove the old market. Hence why I think the new market is a game changer all the way around. As demand from large clients changes to value added legal services the need for firms to populate themselves with as many lawyers from X’s school so as to bill top dollar is drying up.

Hence without clients willing to pay the premium any more firms don’t need to pay the premium anymore for talent. Some firms of course will continue to make money using the Crvath model and thus will continue to pay top dollar, but not near as many as we have in the past.

Thus I guess that’s where we differ, I have never seen/been told the salary had anything to do with quaintly over just being able to bill hire. I.e. if for some reason tomorrow Denver grads could bill twice as much than Yale (and clients would pay it) Denver grads would suddenly get hired at $160k over everywhere else, not because they are any better lawyers, but simply because the firm can bill more by having their schools name (and NOT the individual lawyer’s abilities) on the letterhead.

So that’s my question then, with the valued added thing seemingly (according to all the articles I have read) what’s going to be the gold standard anymore? Is it going to be he who bills the most gets paid the most? Maybe, or maybe he who works the fastest get paid the most? But I think the days of he who has the best pedigree alone gets the most are gone for most of us. Perfraomnce on the job is going to matter most in an economy that bills for results rather than pedigree now.

[Matthies]

I think the days of he who has the best pedigree alone gets the most are gone for most of us.

well it didn't ever apply for most of us, right?  i'm in agreement with most/all of what you said actually.  i don't mean to emphasize that firms are paying for probable quality.  more like they're paying for probable safe bets (for school name or otherwise).

Yea..agreed. My plan: lottery tickets...

["Legapp" Stands for "Legal Application"]

I would not go so far as to say that academic performance is irrelevant to career success, but I would say that if I ever find myself in a position to hire law school graduates, class rank will not be in my top three factors.  It is true that grades, standardized tests, and academic ability are key signs that a person is intelligent.  It is also likely that intellect is a necessary condition for career success.  That being the case, it is certainly not sufficient, and does not come close to actual professional experience in terms of predicting actual career performance.  When I was interviewing for big firm SA positions, I was actually told to "play down" my prior professional experience.  Apparently, big firms prefer young, pliable recent graduates with little to no work experience, who can be "molded" to fit their culture.  It's certainly their prerogative, but it seems foolish (at best) that they shun potential hires because of their experience.  Again, if it were up to me, I would just prefer to hire the "hungry" applicant who rides just above the curve, but who has piled up on moot court, journal, and internship experiences, and who will work for a reasonable salary.  The firms that wake up and learn this lesson will likely find themselves with a crop of motivated, successful attorneys, who are elated to work for half of what big firms pay.  

In my law school class, the students who "piled up" the most extracurricular achievements were largely the same people who received some form of honors.  The #1 person in our class, for example, was on the LR board, got to the finals of our school-wide moot court competition, and interned with a legal services organization. Another magna/coif was on LR, interned for a legal services org, published several articles, and started an international human rights organization.  People who work hard to get good grades tend to work hard at life, as well.  I would further add that all journals are not created equal; our LR publishes 3x as many issues as our secondary journals.  If someone can work 20 hours per week on LR and still get good grades, that sends a positive signal about that person's work ethic.

While such people may have once expected salaries of $160k, everyone understands the market has changed.  People--even those at T14s--will be happy to get any type of job that enables them to pay their bills.  If you doubt this, consider that at my T14 our LRAP programs has encountered problems covering students' loan burdens this year because so many people in my class chose to go to job that pay less than $45k.

The assumption that is most problematic in your analysis, however, is that these new firms will hire grads straight out of law school.  Why would they?  The contraction in the legal market has thrust hundreds of experienced lawyers into unemployment.  Right now, these people are happy just to do doc review for an hourly wage, when that work is even possible.  They would gratefully accept $80k to do proper legal work again.  These new firms, going forward, can then adopt the model that midlaw firms currently use, which involves laterally hiring burned-out Biglaw associates.

Bottom line: law students and recent graduates are in big trouble.  The best option, if you can get it, is to obtain a clerkship and hope that real-world experience will count for something.

[ISUCKATTHIS]

"The assumption that is most problematic in your analysis, however, is that these new firms will hire grads straight out of law school.  Why would they?"

Very good point.