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29 June 2007

Comments

John Steele

Thanks. One thought experiment I've found useful is to imagine that there was an active public market in law firms. If that were true, what divisions (i.e., practice groups) would be spun off?

Presumably, they'd be spun off so that they could operate with lower cost (without downtown offices and high-priced associates). I assume that your new study will show that to some degree those areas are already being squeezed out of biglaw. At the same time, the profession's traditional guild approach (e.g., no public ownership) and the tradition of egalitarianism among partners will make that process slower than it would in a market setting.

Suppose this process continues. Will it reach down into the law schools? How will it affect law students? To some degree, the loan forgiveness programs alter the financial burden of law school for students headed into lower paying jobs. But if the firm market continues its differentiation, there will be pressure on law schools to do the same.

Bill Henderson

John,

Thanks for you comment. I painted with too broad a brush in my opening paragraph--note the strikeout I added.

Whatever theories I may have, they need to make sense to lawyers like you who are working in this marketplace. I am glad to know that I passed that test, at least this time. bh.

John Steele

Bill, I think you're right on the money. Please forgive me for noting that I did indeed see the bigger picture about the reasons for discriminating in pay, including the use of higher pay for higher demand and hence higher margin pratice areas. (I wrote, "I say 'formal' because firms can use hefty bonuses to reward associates in high-demand areas and to compensate star associates.") My point was that it's not news that firms are discriminating in pay this way; it's news that they are now being more open about it. I, like you, expect both the discrimination and the public acknowledgment to acclerate.

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