
The modern law firm: not all partners are created equal, data and billings rule - troydavis
https://www.wsj.com/articles/being-a-law-firm-partner-was-once-a-job-for-life-that-culture-is-all-but-dead-11565362437?mod=rsswn
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taurath
Isn’t any job for life basically gone now? It’s the clarion call of the
millennial generation - don’t expect loyalty from any company you work with or
for.

My understanding is that those with law degrees see a ton of competition in
the market, because it’s such a prestigious professional calling on the order
of doctors but with better work environments. Why wouldn’t it affect those at
the partner level?

~~~
dmix
Law degrees, even from the best schools arent in finite supply like they used
to be. Every lawyer now has tons of competition for a small amount of cases,
which mostly just plea out these days.

There was some literature in the past showing the legal fields prices haven't
been reduced to reflect the new reality of the marketplace supply as it has an
insular and protective group who want to maintain an aura of "masters of some
dark arts" and maintaining their "prestigious" class which is heavily self
regulated. There's a lot of pressure on smaller-time lawyers not to undercut
the rest of the firms.

If the prices got reduced there would be a lot more case supply to go around
as lawyers would be far more accessible to the average person widening the
market. It's not just going to stay the same size, just with lower rates.
Instead today it's kept artificially high and while the best work is limited
to a small group, while other law degree holders fade into other fields or
niches.

A reduction in prices and eliminating the lawyer's false perception of
exclusivity and class would also reduce the amount of people getting law
degrees [1] which would offset the decline in price so it doesn't entirely
cannibalize itself, still being a decent middle class job.

Plus there will always be some cushy law gigs available, especially in
corporate law, but it will be a status no longer applied to everyone with a
law degree, which limits the entire market as a result.

[1] assuming we don't even further disconnect both the financial costs of an
expensive education + lengthy time investments they require (aka opportunity
costs) from post-graduation job prospects. Especially when compared to other
degrees, industries, and alternative job training/apprenticeship
opportunities.

~~~
javajosh
I'd guess that if prices fell the pressure on the justice system would grow
even more, and I've heard they are already stretched to breaking. So, the
government is probably also against lowering prices and making "justice" more
accessible.

Such an interesting, and horrible, time, when justice is de facto denied to
all but the wealthiest of us. If this was explicit that would be one thing;
but we still pay lip service to principles that we have long since abandoned.

My belief is that the justice system, in particular jury trials, should become
shorter, more frequent and exclusively online. You should be able to file a
lawsuit and have it resolved in a week.

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rland
No surprise at all. They heydey of litigation is over -- everything settles,
what doesn't goes to arbitration, and the sliver of work that doesn't go to
arbitration goes to trial. In the meantime, the market is absolutely flooded
with new grads who are eager to live the life. In addition, the old guard is
retiring later. At the same time, there is a tremendous amount of legal work
to be done in our ultra regulated economy.

The end result is pretty predictable. Salaries are abysmal. Associates compete
brutally with each other to handle mind numbing hours of document review 7
days a week. Trial experience is very rare making it difficult to move up and
do 'real' litigation.

I think the starting salary for an attorney fresh out of school in my city is
around $40-50k, 60-80hr weeks. Hardly what most people imagine when they go to
law school!

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bradknowles
The traditional law firm pattern is that the Partners at the top are “rain
makers”, and its their job to find and bring in new business. That’s it.

In the middle layer, we have Associates. The senior Associates work closest
with the Partners, and supervise the junior Associates. But they’re too busy
learning how to “make it rain” and supervising clueless junior Associates to
do any real work.

The junior Associates do most of the real work that involves stuff where a law
degree would help.

Below that, you have legal secretaries, etc...

In essence, the amount of real legal work you do goes up as you go further
down the stack, but also you get lower pay. All the money the Partners make
has to be paid for somehow!

In essence, it’s a Ponzi scheme. And you know who the only people are who make
any real money in a Ponzi scheme, right?

There are law firms that get rid of the unnecessary overhead, and where you
have Partners doing real legal work, but charging the same rate as the larger
firms do for their junior Associates. And those Partners are still taking home
a much higher percentage of what they bring in, because the firm has much
lower overhead.

Those Partners choose to work this way because it gives them more control over
their work-life balance. They’re done being the General Counsel of some
financial services company with over 22 trillion Euros of assets under
management, and want to have some time they can spend at home on occasion with
their spouse and their cats. Or travel for pleasure, or any of those other
things “normal” people might want to do.

Get rid of the Ponzi Scheme law firms. Find one of the smaller firms with a
high concentration of very talented lawyers who don’t want to have to deal
with the “big law firm” kind of shit.

~~~
afarrell
> In essence, it’s a Ponzi scheme.

Calling it a ponzi scheme is a distraction to your point because you're
mistaken about the essence of a ponzi scheme.

The key element of a ponzi scheme is that it captures resources primarily by
in the process of new people being recruited to join. But junior associates
don't need to "buy in" to a law firm when they get hired. They get paid a
salary. The firm captures resources by getting paid by clients. It just seems
that their salespeople are also former junior associates.

Your argument has nothing to do with ponzi schemes. It has much more to do
with the efficiency of hierarchies. This point becomes more clear if you think
about your use of the phrase "real legal work":

\- How much code is written by the CTO of a company with 120 engineers?

\- How many burgers are flipped by the owner of a restaurant with 12
locations?

\- How much coal is shoveled by owner of a coal mine?

You can argue that because the manager of a mine isn't gathering resources at
the coalface, he's not creating value. But that is a different argument than
saying the coal mine is a ponzi scheme.

~~~
vidarh
Top law firms are somewhat special, though. I agree it is not a precise fit
for a ponzi scheme, but I can see where the comparison came from.

My ex worked for one of the largest law firms in the world in London. She was
billed out at 200 pounds+ and hour fresh after qualifying, but her hourly
salary accounting for unpaid overtime was lower than that of her secretary,
because graduates to top law firms "buy in" by quietly accepting accepting
working conditions that at least in the UK means meeting expected billable
hours that are close to physically impossible without violating working time
regulations, even after signing a "voluntary" opt out of the parts that can be
opted out of.

These companies are only able to post the profits per partner they do because
graduates work at well below their market hourly rate for years as a "buy in"
in the hope of making it back as partner years down the line. The vast
majority never make it, of course.

Someone who is capable of getting a graduate position in one of the Magic
Circle firms in London for example, can earn far more _per hour worked_
elsewhere, but at a lower yearly salary. For starters they could get a job as
a secretary or other support staff in a Magic Circle firm... It takes years
before the effective hourly salary of lawyers in those firms outpace the
hourly rates of support staff or lawyers at many less aggressive firms.

These graduates are not directly buying in by paying the firm, but they are
indirectly buying in by accepting those reduced hourly rates in the hope of
that future payoff that most of them will never see.

This kind of milking salaried employees to boost payoff at the top certainly
happens in other business too, but the big law firms have elevated it to an
art. I've never had a tech company try to sell me on what my salary will be 10
years down the road to get me to work massive amounts of overtime, for
example. Some do try to play up their expected value of stock options, though,
which is somewhat similar, but where in tech it tends to be startups that
can't afford to pay high salaries now, in law it tends to be the big firms
that _are_ paying out high profit shares to partners now, which feels
distinctly different.

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pravda
Can someone explain why those big profits don't get competed away?

Why don't the corporate employers of the big firms negotiate better prices?

~~~
gnicholas
A couple reasons:

• If you have a bet-the-company litigation matter, your GC will choose an
expensive, well-known firm. They may be somewhat price-sensitive, but they
will be more sensitive to picking a firm that is very prestigious. That way,
if the litigation doesn't go well, the GC can say: "well, I went with [super
pricey firm], so it wasn't my fault we lost!"

• Some lawyers are just better than others, and the legal profession has
gatekeepers (bar associations) that prevent a flood of new entrants. Equally
importantly, there is just a limited supply of (for example), battle-tested
litigators with experience in a particular field. Ditto for seasoned corporate
transaction attorneys who know your company's space. People pay a premium for
that experience, and competitors can't pop up overnight because it takes
decades to accumulate the experience.

source: I'm a former corporate lawyer

~~~
patentatt
Underscoring the value of “battle-tested” lawyers is the implicit and very
real factor of hidden information. These top litigators have tons of it,
relationships and reputations with judges and courts, knowledge of poorly
documented procedures, etc. it’s not that they’re smarter or better lawyers
than anyone else, just a most protected class of people who have done it
before. And the only way to be admitted to the club is to work under someone
in the club. It’s protectionism through bureaucracy at its purest. The drivers
of this, of course, are the judges. Who through hubris and incompetence foster
these conditions. It’s not that they’re in on the game, really, it’s just that
they’re dictators of their own court and have no motivation to make their
courts accessible to anyone, and feel empowered to punish clients represented
by attorneys that don’t know their preferred formats and fonts. It’s a silly
situation that should be dealt with

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myrandomcomment
Did anyone else find this hard to read? The story jumps all over the place
with no flow. The subject was interesting and I was reading it to compare to
the valley VC structure and startup % ownership. I expected better from the
WSJ.

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cperciva
It sounds like the right answer the next time VCs complain about startup
salaries is to ask how much the partners at their lawyers' firms take home.
Total compensation in the millions per year is pretty nuts, even if it does
take ten years to get there.

Mind you, I think some of the salaries software developers get paid are nuts
too. I don't feel like _I 'm_ worth $300k/year, but I hear plenty of stories
of people getting more than that...

~~~
danjayh
Curious - what do the people making > 300k/year do? According to GlassDoor,
even in San Francisco you have to be a director or VP to get that. Even
Software Architects seem to be in the $150-$250k range, and that tends to be a
high-paying post on the technical side.

~~~
wikibob
Salaries of $300,000 are common among the top companies, at 1-2 promotions
above entry level.

See [https://www.levels.fyi/charts.html](https://www.levels.fyi/charts.html)

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hooloovoo_zoo
I wonder if this will have a destabilizing effect on these "big law" firms. If
you're compensated based on how much business you bill for, it's in your
interest to poach from your "partners."

~~~
DannyBee
Speaking as a lawyer with a lot of big law friends -

Big law firms did not need any help being destabilized already :)

(Google around and you'll see they have been going bankrupt/etc at an
accelerating rate)

Something like this is just a drop in the bucket compared to the larger issues
around how their client base is changing.

~~~
slap_shot
> compared to the larger issues around how their client base is changing.

Can you expand that on that. Very curious.

