« Supremely Empirical | Main | Judge Edwards: "no body of empirical evidence to support any claim to the contrary" »

11 May 2009

Comments

Cato Renasci

This is actually probably based on the way some of the "white shoe" Philadelphia law firms functioned before World War II. When I was a junior lawyer in New York, a then Simpson Thacher partner, Rick Dicke, recounted that after having graduated as a scholarship student from both Princeton and Penn law school just before the war, he was hired at a major Philadelphia firm. Money was never discussed. He said he was a farm boy from Montana, and he assumed that was how things were done.

After several months, he had received no pay. Being married and in somewhat straightened circumstances, he made an appointment with his mentor. The meeting went more or less like this, as he told it:

RD: Is there something wrong with my work?

Partner: Oh, no Rick. We're all very pleased with your work, and you get on with everyone - clients, partners, and the staff. Why were you concerned?

RD: Well, I've been here almost six months, and I've yet to be paid anything. As you know, I'm not independently wealthy...

Parter: (interrupting) Rick, the partners understand. The decision not to ask you to pay us anything during your first two years was unanimous.... You do realize that all of the other associates pay the firm during their first years.

He then recounted that he found through a classmate that Simpson Thacher & Bartlett might have an opening, wrote to them, interviewed, and went to work in New York within a fortnight.

I don't know when that changed, but I suspect it was after WWII.

Paul

I think this is a step in the right direction for law firms. Still, I don't understand why firms hire 1st years at all, when they can hire 3rd year associates who are much more knowledgable and typically more profitable for the firm?

(Disclaimer: I am a 3rd year associate).

Max Kennerly

As an associate in the Philadelphia region, let me note that the $105k is an essential element to keep the people within the confines of the corporate law firm system. A substantial number of non-AmLaw100 firms here start at $100k, and a huge number start at $80k.

If Drinker offered $80k, the most talented employees would pass it up for similar pay at firms offering far more interesting work to associates, faster partnership, and better lifestyles.

Thus, I'd be surprised if any corporate firm was able to go lower than that without destroying their talent pool.

Duane

Interesting model. I think the question above is key: how to keep the 3rd (and especially 4th & 5th) years in whom the firm has just invested so much from leaving.

I think the answer is something that has been posited by legal empiricists before on the opposite end of paying less than market to 1st years: pay more than market to the more senior associates. If 1st and 2nd year associates are currently overpaid, 4th, 5th and 6th year associates are probably underpaid for the value they contribute to the firm (especially the training of juniors).

If those using this model pay more than market to senior associates (who are huge profit centers and likely to *better lawyers faster* under this model) they will make it more attractive for them to stay.

(Of course there are other issues like natural advancement/attrition which would still have to be addressed)

will

this model would work fine . . . except that, how will drinker keep the people they've trained from jumping in 2 years to "prevailing rate" biglaw firms if the market picks up?

even if their lower billing rate covers the gap between 105K (what they're paying to work and train in biglaw) and 70K (stipend that others are paying to not work in biglaw), will it cover the full 105K?

if not, will drinker end up subsidizing the training of Dechert, Morgan and Ballard's new 3rd year laterals in 2011? although, of course, drinker could match those offers, one supposes.

Alex

One consideration is that firms can now distinguish themselves based on salary. There's a possibility that Drinker will lose out on "top students" who elect to go to the higher paying firm despite the greater risk they may lose their jobs. I wonder if Drinker factored this at all - or figures there really is no distinction among 1st year associates, no matter how well they performed in law school.

The comments to this entry are closed.

Conferences

August 2014

Sun Mon Tue Wed Thu Fri Sat
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31            

Site Meter


Creative Commons License


  • Creative Commons License
Blog powered by Typepad