The evolving costs of young lawyers

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In conversation the other day with a longtime friend of mine, a mother of three on hiatus from the practice of law, the subject of articling students came up (for those outside Canada, articling year is a required apprenticeship period after graduation but before the call to the bar, and no, it doesn’t work as well as it sounds). She opined that the annual salary for such students in Toronto (circa $70,000 — almost twice what my friend and I made in that city when we articled 14 years ago) was outrageous, especially considering how little new graduates actually know and can actually do.

My response was that (a) people pay what the market requires for a product or service, and that (b) if law firms needed to pay three times that much for articling students, they could (the amount of money swimming around in most law firms is astonishing) and they would (especially if they could price such students out of the range of rival firms). That’s why I think a lot of talk about starting associate salaries, including the latest volley from London, is so much hot air.

The same goes for the dreaded associate attrition trend, about which people continue to fixate. Most associates leave their law firms by the end of five years! Why, yes, they do. If they didn’t, you’d have quite a problem come partnership time, wouldn’t you? A group of lawyers from Stikeman Elliott made this and other good points at a presentation during the NALP meeting last week — firms need associate attrition. Not all your early hires are going to work out — people change, especially during their 20s and early 30s when you first hired them.

The amount of money firms spend on young talent, and their evident disinterest in taking serious action to staunch associate outflow, just confirms to me that talent has been almost a discretionary spend for law firms up until now. Young lawyers would need to cost a lot more than they currently do before partners really started feeling the pinch, and in no way would that cost threaten the overall financial viability of the enterprise. And considering how little rigour is brought to the new lawyer recruiting process generally, it’s no wonder there are so many more misses than hits over the first several years.

Two things are going to happen to change this. The first is that talent will become scarce, and good talent even more so, driving its real costs through the roof and making its departure much harder to bear. This, in turn, is going to force firms to pay much more attention to the new lawyer intake process and give much closer scrutiny to exactly who leaves. As the traditional pyramid structure of heavily leveraged associate starts crumbling, firms will hire fewer new lawyers, but they’ll need to keep them longer.

And firms will realize that the most important thing about associate attrition is not how many young lawyers leave, but whether the wrong ones are going.

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3 Responses to “The evolving costs of young lawyers”

  1. Bob Tarantino

    The fundamental dynamic which has led to “outrageous” articling student salaries is the same which permeates, I think, most of the problems besetting the entire practice: the transformation from profession to business. Working at a large business firm (particularly those in the major US commercial centres) involves a vicious, and self-defeating, circle: we’re going to pay you an inordinate amount of money in order to entice you to work absurd hours with punishing levels of stress, and because we’re paying you so much (and spending so much on recruitment), in order to realize on our investment before you skip town, we’re going to ask you to work increasingly absurd hours with increasingly punishing levels of stress, which will prompt you to require an even *more* inordinate amount of money in order to be willing to undergo the aforementioned, which will prompt us to ask you to work increasingly absurd… etc. “Talent” will never become scarce – talent which is willing to put up with modern large law firm practice might.

  2. Jim

    14 years ago! Uhm inflation, including the outrageous cost of housing and fuel.

  3. Catherine

    In fact, a large firm in the Toronto market is presently paying the “market” salary of $75,400, plus $4,000 “pre-articling bonus” plus salary and tuition throughout the licensing process, plus medical and dental benefits, plus fitness membership. A total package well in excess of $85,000, and an increase not, I think, attributable solely to inflation.

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