Fear and loathing in the law firm

By Published:

Many law firms’ insistence on treating their newest associates as adversaries continues to baffle me.

Law firms know very well that the associates they hire fresh out of law school (or even after a year of articling) are sufficiently unskilled that they don’t merit the salaries they make or the rates they bill. Equally, firms traditionally haven’t cared about this, because (a) the tasks churned out by most new lawyers in firms require more stamina than skill, (b) most partners learned their craft by osmosis rather than training and are quite content to continue that approach, and (c) firms could always afford to throw money at associates because the cost could always be passed on to clients.

These days, of course, the current that keeps (c) lit up is flickering, as clients balk at associates’ bills and some order firms not to assign first- or second-years to their files. So firms are squeezed between incoming associates’ expectations of high and rising salaries and clients’ refusals to foot the bill therefor. That means the cost of associates is showing up not in bigger client bills but in partners’ smaller profits — and hey, suddenly, firms are decrying the cost-value imbalance of their newest lawyers. Funny how that works.

In this respect, the best thing that ever happened to these firms is the recession, as suggested by this article in The Recorder about the latest news from the associate salary front. The recession is the new Red Menace — the all-purpose justification to lay off scads of low-level employees and thereby put the fear of God in the survivors, who are suddenly thinking less about bonuses and more about keeping their jobs. (The ABA’s recent blessing of offshore legal work has also been another effective way to keep those uppity youngsters focused on survival, not salary.)

These are real market forces at work, of course — but rather than use them as a catalyst for change, most firms exploit them to keep doing what they’ve always done, but spend less doing it.

The crazy thing is that firms feel they need these excuses and fear tactics — they know they’re acting irrationally, but the force of traditional practice and the pressure to imitate rivals is so strong that they can’t or won’t act against it. It’s like that now-famous quote by Citigroup’s Chuck Prince when the liquidity crisis was starting to break: “[A]s long as the music is playing, you’ve got to get up and dance. We’re still dancing.” Many firms just don’t have it in them to be honest with themselves that their associate compensation systems (and related billing structures) are broken, so they look for someone or something else to take them off the hook — a tourniquet instead of surgery, intimidation rather than straight talk.

Anyway, I’m not really here to lecture these firms — I’m here to talk about how you can take advantage of this irrational and hidebound behaviour by your rivals in the talent wars. This is a market vulnerability — exploit it. Large firms continue to believe, despite their public words to the contrary, that enough money makes every associate complaint go away eventually. Prove them wrong, by actually listening to what today’s new lawyers are looking for, and chart a course accordingly.

Here are three things lawyers care about, and that I’ll bet they’d be willing to trade high salaries in order to satisfy.

1. Family does matter. It’s instructive that the two most recent rankings of law firms’ openness to lawyers with family priorities have come from Working Mother magazine and, yesterday, Yale Law School, not from the bar or the legal press. Growing numbers of lawyers are genuinely concerned with family issues. Right now, the buzz is about moms and dads who want to spend more than breakfast and bedtime with their kids; the next buzz is going to be about lawyers (of all ages) with parents who need home or institutional care. Either way, adopt a mantra that your employees are people first, professionals second.

2. Pay them what they’re worth. As The Recorder article notes, and as other analysts have pointed out, lockstep compensation makes sense only in intensely focused law firms. Abandon lockstep, as Howrey LLP did last year, and instead institute a system whereby associates are regularly assessed on their progress and achievements and can earn more than their “year” would normally entail. This requires a lot of work, especially by partners, who’d be held accountable for setting and assessing associates’ goals. But you would be shining a beam of rationality into the murky dark of compensation systems and showing your associates that they can be masters of their own destiny.

3. Training is not negotiable. As I noted a little while ago, associates’ biggest fear is being turned out on the street with no marketable skills. They know they need experience, but they’re too expensive for large firms to provide it. Here’s one way to do it: strike a deal with a local legal clinic that’s understaffed (they won’t be hard to find) and arrange secondments for your newest lawyers to work there. Law firm gets battle-tested lawyers and positive PR; associates get priceless experience; clinic gets desperately needed help; community gets better. What’s not to like? (Edward Wiest tells me via Twitter that some Boston firms, Foley Hoag among them, “loan” three or four associates to prosecutors’ offices, and that the best of the bunch jump at the opportunity.)

Let your competitors frighten their associates into submission. You can do better, and succeed, by treating them as adults, as professionals, and as colleagues equally interested and invested in the success of your enterprise.

Print Friendly

2 Responses to “Fear and loathing in the law firm”

  1. Omar Ha-Redeye

    I’m still waiting for you to launch your own firm Jordan. There are many who would be willing to take a pay cut in exchange for real training.

    Any HR expert will tell you that turnover comes with tremendous costs.

    But this area of cost containment is too frequently overlooked by managing partners. The excess supply of eager, newer lawyers meets any demand that any vacancies from turnover creates.

Leave a Reply

  • (will not be published)

 

Post Categories