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29 July 2008

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anon

Sigh

Marc

"The economics of the bi-modal distribution take the pressure off elite law schools--indeed, they can raise tuition!"

I don't think I agree with this statement. Non-top-14 schools have felt free to raise tuitions, sometimes at double digit rates.

Big Mike

NYC Attorney says: "In this current job market, its either biglaw or bust. There is no in between."

That might be true in NYC. I'm not familiar with that market. But there may be those sorts of somewhat-lower-pay-but-greater-experience jobs in other markets.

I just accepted an offer in Phoenix at a firm I've been at since my 2L summer. It pays $77,500, and I've had a huge range of experience (a couple trials, client meetings, all sorts of motion practice).

Maybe my experience isn't typical. But maybe these sorts of jobs are more common outside of the biglaw strongholds of NYC, LA, Chicago, DC, SF, etc.

colin

I agree with you that caste systems can be very unhealthy, and I'm not suggesting that the current system is in any way ideal. I just think that it makes a lot of sense for a law firm to be able to hire lawyers for different jobs with different levels of responsibility and different pay grades. That work that contract attorneys do has to be done by someone. If you were hired as a straight associate and were given unending doc-review assignments, I'm sure it would lead to the same result of boredom and lack of career advancement. Isn't that, and the resulting expense of higher attrition levels among valuable associates, one of the various reasons, along with straight cost savings, for instituting the current system? The partners realize that most associates won't become partner, which is nothing new, but they don't want to be actively driving away good talent and hurting their own reputations as good places to work.

It is unfortunate if anyone with contract attorney on their resume is untouchable for a straight firm gig, though that seems to be a problem currently. That's a problem that will need to be corrected if this business is going to avoid implosion, and I'm positive that it will be corrected given the extreme importance of a healthy and happy labour supply in the field of law. If there is untapped profit to be had by hiring the unhirable contract attorneys, then someone will start hiring them to perform other jobs. These are just growing pains as the profession adjusts itself to a rapidly changing global marketplace. As for whether there is anything to the notion that they should get the same job because both the contract attorney and the 1st year associate paid the same amount for their law degree, i'll withhold comment until I can stop laughing.

ERB

Also, I would like to see these stats broken out by "legal niche". I suspect someone practicing IP law or M&A is making a higher salary than someone representing indigent clients or practicing as an Assistant DA.

Bill Henderson

NYC Attorney,

My "long run" comment is directed at firms. You are right; there is a paucity of $95K jobs. But if some large firms were brave enough to offer a long-term proposition to young lawyers and clients, the could build a more sustainable, attractive model that does not waste talent. At $95K, the economics permit more training, mentoring, and lower billable hours targets.

The clients are really holding the cards here. High attrition is not, in the long run, good for them.

I want my students to be happy and successful. But making $160K and doing all document review (while a handful of others get good training) is not the best way to achieve that goal. bh.

NYC Attorney

I take issue with your statement that, " It would be better in the long run to start at $95K, learn your craft, and become a great lawyer who commands top dollar." In this current job market, its either biglaw or bust. There is no in between. Most lawyers start out earning 40-60 in small and mid sized law firms, and then gradually move up to the 60-100K salary bracket.

Corey

The contract attorneys paid as much for law school as the 160K kids. The job has no benefits, no long term prospects or month-to-month security, and you are being managed by newly minted 160K kids who don't mind the existence of an underclass. The 160K kids have a false mythology already developed by which the contract attorneys chose and are happy in their positions. It astounded me the first time I got staffed supervising a large review.

Caste systems are bad for social harmony even if they are (arguably) efficient. Even Adam Smith opposed stratification taken to its extremes:

"In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of people, comes to be confined to a few very simple operations, frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible to become for a human creature to become."

But if you need an answer that appeals to your own self-interest, look back at H.G. Wells and remember that the Morlocks eat the Eloi.

colin

I don't understand the complaining about an underclass. Seems to me like having a more tiered system in biglaw would be a good thing if it helps bridge the bi-modal distribution. It's not like it ever made much organizational sense that everyone should be on the same partner-track, and it makes even less sense in this age of 100-1000 lawyer megafirms. The world is full of crappy jobs, and contract attorney/doc-review is better than almost all of them.

Corey

Do you have anything other than anecdotal evidence that clients are refusing to allow firms to staff $160K attorneys on their matters? My anecdotal experience suggests nothing has changed. Billing rates are NOT bimodal within a firm, and the $160K attorney is still the cheapest option if you want to use Firm X and their intimidating global brand name.

I think you would find that there are increasingly two types of firms, large ones that can access the Fortune 500 client base---clients that will pay $300 an hour for a first year and $800 for a partner without blinking---and mid-level firms that are chasing the mid-level clients who want to be big time but just can't afford it. Those mid-level firms doubtless feel the pressure you describe, but I don't think Skadden is having trouble billing. (I do think they are investing more into their biggest clients.)

The one area that clients won't pay $300 an hour for is electronic doc review, and all the big firms have created relationships with third party contract attorney sweatshops. The $160K attorney ends up supervising and performing quality control over 5 of her peers from lower tier schools who make $30 an hour, ten hours a day.

But electronic doc review would be too pricy at $125K as well, there is just far too much data that can be produced far too easily. e-Discovery is a plausible leading factor in the creation of a new underclass of pseudo-biglaw attorneys.

Bill Henderson

Baron, your insight on regional practice is certainly true. The big markets are going the fastest, which is a factor in the salary level and size of the second mode. The Jobs & JD monograph does provide some of that useful information by giving salary ranges by geography and practice setting. bh.

Baron

I wonder how this holds up in different regions. Are graphs available that eliminate the inflationary effects of LA, Chicago, DC, and NY? Are graphs available for individual small to mid-market cities?

I doubt this graph is of much use to a Tulsa or Oklahoma law school student wishing to practice in Tulsa or Oklahoma City, just to use one state without a large market as an example.

Bill Henderson

Christine, I think you are right. The size of the modes will very by school. The left mode will be smaller at Harvard/Yale/Chicago/Stanford et al.

Going down the hierarchy, the left mode gets larger and the right mode eventually disappears.

This school level data is very important to entering students. And it is important for professors to understand and empathize with their students and the pressures they are under. thx. bh.

Christine Hurt

Bill, as you know, I find this topic fascinating. One aspect that I've been debating in the halls around here is this -- how bimodal are starting salaries for individual schools? I can imagine a prospective law student looking at the distribution and thinking "Yes, but that's the fourth tier over to the left and my first-tier school is on the right." But I bet that's not true. I would hypothesize that for most top-tier schools, the distribution is still bi-modal. Some of that might be more voluntary at a top school -- graduates going into public interest jobs, which may be very prestigous and hard to get, but don't pay well. Do you know if it's possible to get distributions from individual schools? I would love to see one.

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