Casualties of the salary war

Dan Hull at What About Clients has stirred the smouldering embers of the associate salary debate with a post suggesting that new lawyers should pay law firms to apprentice with them. It’s a provocative idea, and while I voiced my disagreement with it in a comment there, I do appreciate the frustration he and other legal employers feel when the marketplace requires salaries that don’t correlate to the value they can realistically expect from rookie practitioners.

The problem, though, is that new lawyers don’t generally leave law school primed to deliver serious value to employers, and the largest law firms don’t have a lot of economic incentive to provide them with any real training — what they want are billable drones. So let’s be clear: it’s no accident that our current system delivers this result — it’s exactly what we should expect. It’s a problem we could ignore when times were good, but not anymore.

This is going to come to a head sooner rather than later, and it’s going to be the new lawyers themselves leading the charge, as this article in The Recorder about the tough lateral marketplace demonstrates: “[F]or a partner who isn’t holding a big book of business, moving may not be so easy — and for associates it may be impossible — as firms increasingly look only at the most productive partners.” [Emphasis added]

When large firms’ profitability is threatened, associates are the first ones cut loose and the last ones picked up elsewhere, and a lot of them are finding to their dismay that they’re simply not that employable. Their primary skill — a willingness to work long hours on middling-level tasks — isn’t in huge demand by large firms right now and is never of any use to smaller ones. These new lawyers are going to be squeezed hard, and they’re going to start asking hard questions: why are we left holding the bag? How is it that the law schools and the large firms, to which we had entrusted our development as lawyers, are sitting pretty, and we’re left banging on doors trying to get work?

In point of fact, it isn’t fair — and it’s no way to introduce the next generation of practitioners to our profession. A few of us have been saying for a while that the lawyer education and training system needs a massive overhaul. Expect to hear many more voices join that chorus over the next several months — those of the thousands of stranded new lawyers who are starting to pay the price of our cavalier approach to bar admission.

Results, not résumés

Professor William Henderson, who teaches at the University of Indiana Faculty of Law and blogs at Empirical Legal Studies, has written a watershed treatise on how large law firms recruit and use associates. The ELS blog summarizes it, the ABA Journal reports on it, and Bruce MacEwen and Gerry Riskin have already flagged it as an extremely significant contribution to the ongoing evolution of the traditional law firm business model. With apologies for a brevity that glosses over some important points, here’s a summary of Are We Selling Results or Résumés?: The Underexplored Linkage between Human Resource Strategies and Firm-Specific Capital, and some ideas that flow from it.

Large US law firms are deeply tied to the “Cravath system” of hiring new lawyers, generally defined as recruiting the most outstanding law students from the top law schools and giving them the best training. This was a great idea when Cravath Swaine & Moore first developed it early last century, because it was a branding strategy: Cravath deserves your business because we hire only the best of the best. But because the firm became so successful — for a variety of reasons — other firms copied its hiring strategy, and the Cravath method, once an innovation, became narrow-minded standard operating procedure.

Today, demand for corporate legal work has skyrocketed, exhausting the talent pool to which firms — because of their adherence to the Cravath method — have restricted themselves when recruiting the associates who do this work. Accordingly, with rising demand overwhelming a fixed talent supply, the cost of new lawyers has risen as high as $160,000 a year, well above the value of the services they provide.

This has numerous negative effects. Firms either pass on these cost increases to increasingly incensed clients, or absorb them in lower partnership profits, leading elite partners to decamp for more lucrative firms. Worse, top clients order firms not to place these overpaid associates on their files, meaning young lawyers are trapped in the most dead-end work from the least interesting clients, hurting morale, exacerbating attrition and damaging the firm’s future leadership development.

The most obvious solution for the firms — increase supply by hiring outside the “elite” group — is verboten, because these firms fear a loss of prestige associated with hiring “second-rate” graduates from “second-rate” schools. (Firms have already conceded ground by digging deeper into the graduating classes of elite schools for new recruits). A recruit’s “pedigree” now holds entirely disproportionate importance in law firms’ hiring decisions, and no major firm seems prepared to risk breaking ranks to try something different.

Henderson proposes something different, a new approach premised on a groundbreaking productivity study at Bell Laboratories in the early 1990s. In a nutshell, the study found that knowledge workers’ productivity was not tied to traditional measures of excellence such as IQ and self-confidence, but to a series of work strategies such as taking initiative, sharing knowledge, and managing work commitments, most of which are trainable. Continue Reading

Core competence: 6 new skills now required of lawyers

Up till now, the necessary and sufficient skill set for lawyers has looked something like this (in alphabetical order):

  • Analytical ability
  • Attention to detail
  • Logical reasoning
  • Persuasiveness
  • Sound judgment
  • Writing ability (okay, that one’s apparently optional for some)

This list doesn’t include such characteristics as knowledge of the law, courtroom presence, or integrity — these aren’t “skills,” per se, so much as information one acquires or basic elements of one’s character. Even innovation, which I prize so highly, is first and foremost an attitude and willingness to think and act differently.

Rather, I’m concerned here with actual skill: a ready proficiency or applied ability acquired and developed through training and experience. Your degree of character, diligence and intelligence are innate characteristics; skills are what you acquire through their application. If you possessed these six skills in sufficient abundance, you were fully qualified to practise law.

Well, not anymore. From this point onwards, while these skills remain necessary, they’re no longer sufficient: they constitute only half of the set necessary to practise law competently, effectively and competitively. Here’s the new six-pack, the other half of tomorrow’s — no, today’s — minimum skills kit for lawyers (again in alphabetical order). Continue Reading

Interview with the publisher

I recently had the pleasure of being interviewed by Cole Silver of The Silver Group, Ltd. for his well-known Expert Audio Series. Cole and I talked about finding careers within the legal profession outside of the default mainstream jobs — one point I focused on in particular was that many new lawyers consider a law firm position to be the standard career choice, and when that choice is unavailable or unsatisfying, they don’t know what to do next. The more these lawyers know about the tremendous array of fulfilling jobs that they can pursue, the better off they, and the profession, will be. I’m Exhibit A.

The Expert Audio Series has a lot of these kinds of stories — scroll about halfway down to find my entry in a section featuring people I greatly admire like Stephanie West Allen, Carolyn Elefant, Susan Cartier Liebel, and Arnie Herz. Other luminaries featured in the EAS include Burkey Belser, Larry Bodine, David Maister and Gerry Riskin. It is definitely worth your time to look into the resources Cole offers through his series, and I really appreciated the opportunity to speak to his audience.

A note to regular readers: personal matters are taking me out of the office and the blawgosphere for the next couple of weeks, although I’ll do my best to post intermittently if I can during that time. To stay updated on when I get back to regular publishing, and to every new post thereafter, sign up to Law21’s RSS feed. Looking forward to being back with you soon.

How to work with Boomer lawyers

Dan Hull at What About Clients? has apparently had it with the ruckus over Generation Y. In a post yesterday (HT to Legal Blog Watch), Dan responded to a seminar pitch on “learning to work with Millennials” with this riposte:

It’s your problem, Gen-X and Gen-Y. Not ours. Work, figure it out, ask questions, and we’ll help you–but it’s your job to adjust to “us” and the often hard adventure of learning to solve problems for your employer and its clients.

This is a great distillation of the frustration and resentment many Boomers feel about all the fuss being made about Millennials, whom many Boomers widely perceive as complacent and arrogant beyond their years. As a Gen-Xer, I don’t share that sentiment myself, and I don’t really care one way or another which generation is friendly with whom. But I do think there are a couple of useful points to be made here.

The first is about market inefficiencies. Like them or not, Millennials are entering the legal workplace, and they represent the thin edge of the talent wedge for which employers will be competing very hard in years to come. If you have problems with Millennials — with what you perceive as their attitude, ambition, enormous self-regard and “sense of entitlement” — that’s your right. But it puts you at risk of a competitive disadvantage with your rivals who are unburdened by these difficulties. Disliking Millennials is a market inefficiency, and employers who can approach Gen Y with a clean slate will accordingly be ahead of the game. That might not matter much right now, with Millennials still in the first few and least useful years of practice. But soon enough, it will matter a lot.

The second is the fact that Dan is right, on a couple of points: the amount of attention paid to Gen-Yers is disproportionate to their current presence in the legal profession, and Boomers still hold the reins of power in almost every legal institution (law firm, legal department, government office) you care to name. Understanding Millennials enough to get the most out of them is becoming an important advantage in the talent wars, but at least right now, it’s not as important as figuring out the ambivalent Gen-Xers overrepresented in the non-equity partners ranks or, especially, the aging Boomers hanging onto their files and practices with tight fists.

So the balance of this post is for Generation Y lawyers, and aims to answer the question: how can you adjust to Boomers and, to a lesser extent, Gen-Xers in the legal workplace? Here are four quick points to keep in mind. Continue Reading

The evolving costs of young lawyers

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.

The seven-year law degree

There are a couple of well-known phenomena about legal careers that, when juxtaposed, might give us better insight into how lawyers enter the profession.

The first is the common assumption that a law degree is far easier postgraduate degree to obtain than, say, a medical degree or Ph.D. Would-be doctors spend four years in medical school, which is extremely hard to get into and not exactly easy to graduate from; thereafter, they spend anywhere from three to eight years in internship and residency. To acquire a Ph.D, you need a Master’s (usually two years) and a Doctorate, which is at least another four, and you need to be extraordinarily bright. Other degrees with various specializations can be equally daunting.

Law, on the other hand, requires just three years of law school, and either the passage of a one-time Bar exam (e.g., the U.S.) or the completion of a one-year apprenticeship period (e.g., Canada). Moreover, the failure rate in law school is far lower than in other postgraduate programs. Once you’re admitted, you’re almost guaranteed to graduate and very likely to be called to the Bar soon thereafter, at which point you have the means to stay employed pretty much as long as you want.

Depending on the region where you work, your employer, what kind of law you practise, how good you are at it, and how attached you are to a well-rounded life outside the work sphere, you’ll then generate an annual income ranging anywhere from $30,000 up to millions of dollars. Even if your debt load leaving school is upwards of $100,000, that’s a pretty fine return on investment and a fairly low-risk and low-demand route into what is still a respected profession.

The second phenomenon is the disconnect and dissatisfaction experienced by many new law graduates during their first few years of practice, especially in large firms. A recent Hildebrandt study seriously questioned the perception that big-firm associates are an altogether miserable lot, but many of these lawyers nonetheless experience angst, unhappiness and disillusionment as they make the adjustment from law school and from the promises of flexible, family-friendly environments these firms increasingly make. Continue Reading

Authenticity and lawyer recruitment

The editors at LegalWeek blogged recently about the results of the Sunday Times“Best Company to Work For” survey, which, remarkably enough, saw eleven law firms crack the Top 100. I think this probably signals not so much a renaissance in law firm working conditions, so much as that many UK law firms are getting pretty good at using workplace reputation rankings for their own ends. It’s a phenomenon not limited to the eastern side of the Atlantic.

The thing about “Best Employer” lists, as LegalWeek‘s editors point out, is that law firms consider them enormously important recruiting tools for new lawyers and lateral hires. A solid ranking adds lustre to a firm’s marketplace brand and reinforces the strength of its hiring pitch, especially to new lawyers who consider (accurately) that law firms are all pretty much the same. Anything that can help a firm stand out from the faceless crowd, especially on “soft” criteria like flexibility, mentorship and socializing, has a lot of value.

The trouble with third-party marketing and recruiting tools like this, of course, is that they’re destined to be gamed. Savvy firms figure out how the system works and take steps to ensure they do well. Some law firm associates know this first-hand, because they receive a memo “encouraging” them to fill out the “Best Employers” survey and help improve the firm’s standings. It strikes me as odd that firms expect these rankings to impress potential lawyer hires when their own lawyers have been directly involved in what amounts to a manipulation of the results.

In fact, it’s this “gaming” element of such rankings that raise what I think is going to become a problematic element of law firms’ recruiting efforts down the road. Young lawyer recruits, when deciding which firm to work for, are going to start zeroing in very clearly on the authenticity of firms’ marketing and recruitment efforts. This is a generation weaned on word-of-mouth recommendations, and they give a lot of weight to a friend’s or reliable acquaintance’s testimony that something is worthwhile or not. Failing those kinds of first-hand recommendations, they will tend to go, not to press releases, newspapers or magazines, but to collaborative knowledge portals to test the judgment of the crowd. This is where new lawyers are heading now, and law firms need to go with them. Continue Reading

Give up on anything but yourself

A thought-provoking post by Seth Godin today that isn’t really about politics, even though it asks whether Hillary Clinton should quit the Democratic race. What it’s really about is quitting, which Seth endorses in a book (that I endorse) called The Dip, and the danger of changing who you are in order to achieve your goal. Here’s the ending:

For a long time, we’ve created a myth in our culture that it’s worth any price to reach your goal, especially if your ego tells you that you’re the best solution. We’ve created legends of people and organizations that pursued transformative long shots to achieve great results.

I need to be really clear: pushing through the Dip and becoming the best in the world at what you do is in fact the key to success. But (and it’s a big but), if you’re required to become someone you’re not, or required to mutate your brand into one that’s ultimately a failure in order to do so, you’re way better off quitting instead.

This got me thinking about lawyers. Many lawyers are happy with their working lives — or at least they’re content, having decided happiness was too high a target to aim for. But a lot of lawyers are unhappy, sometimes deeply, with their job or career. A lot of them talk about quitting, and a growing number of them do — either to find another job in a more fulfilling environment, or to keep looking until they eventually leave the profession altogether. Neither the law, nor every job in the law, is for everyone.

But many others stay where they are and grow more unhappy by the day. Some do it out of financial necessity, especially recent graduates with mountains of debt or a family to support. Some stick it out in the stubborn hope that things will improve, despite the absence of supporting evidence. Some convince themselves that the intangible benefits (social status, professional prestige, family pride) cancel out the misery. And some subscribe to the fallacy of “sunk costs,” that they’ve invested so much time, money and soul into a legal career that they can’t give up now.

One way or another, the unhappy lawyers in this second group are going to wind up in the same place as the unhappy ones in the first group: in a different job or out of the profession. They don’t have a strategy for finding fulfillment where they are, and they probably don’t have the motivation to execute such a strategy if they had one. Sooner or later, they’ll have to give it up; from my perspective, it might as well be sooner, and I recommend The Dip for more on that subject.

But there are worse things than being in a career that goes against your grain; there’s changing your grain to go with your career. Continue Reading

Ontario bar admission overhaul, part 2

Continuing from yesterday’s post, here’s the conclusion of a two-part running commentary on the Interim Report To Convocation from the Law Society of Upper Canada’s Licensing and Accreditation Task Force. Again, this won’t be a blow-by-blow account of the report, but I do recommend you read the whole thing. This article (which is also appearing today at SLAW) will simply touch on some of what I regard as the more relevant and noteworthy paragraphs on articling in an altogether remarkable document. Here we go.

83. The Law Society’s articling program has been an established part of the licensing process for decades. It reflects the transition from the earlier legal education system that was predominantly an apprenticeship system to the university model that replaced it. It has provided students-at-law with an opportunity to experience and learn about the practice of law in a relatively risk free context of supervised law firm placement. In the Law Society’s current licensing process the articling term is 10 months. Candidates may begin articling at any time after the end of the skills and professional responsibility program.

84. Unlike the medical model of education, however, articling is not interwoven into the framework of legal education. There is little direct link between the education candidates receive during law school and the “clinical” component that is articles. The profession has long viewed the articling program as a bridge between the two worlds of education and practice.

Just setting the stage here.

90. [I]ncreased law school enrolments, possible establishment of new law schools, increasing numbers of internationally trained candidates [are] problematic for the articling program…. [I]n a system that appears able to place approximately 1,300 articling students in a stable economy, it is likely that the number of candidates seeking articles in 2009 could be approximately 1,730. This does not reflect additional candidates that would come from any new law schools.

To put that in its proper perspective: in 2001, the number of new applicants for articling positions was just 1,247. The system is being overwhelmed. Continue Reading