For those of a certain age, the phrase “I read it for the articles” will resonate. Well … I was reading Above The Law this week and stumbled on a substantive article (since I read it for the substantive articles) on law schools. It was actually a thoughtful piece on how ABA accrediting standards have locked law schools in to their current model – which everyone seems to agree is broken. The author had been to a conference on the subject and not only did everyone agree, they were offering viable alternative models that unfortunately run counter to the current accrediting model. 

One statement particularly stood out to me, “Does any school want to sign up to be the first “second tier” practitioner law school that only gets one year of tuition from would-be lawyers instead of three?” It stood out since I read something similar-sounding from the NY Times Economix blog on lawyer salaries, “Not paying the standard top-tier salary is a tacit admission that you’re no longer top-tier.”

So law firms and law schools are in what appears to be a no-win situation (a.k.a. The Kobayashi Maru). If you are the first firm or law school to embrace a new model, you lose. But if you don’t embrace a new model, you still lose. Before you jump to the comments section at the end of this post, let me further explain my thinking.

Now many people feel $160k is outrageous for first-year lawyer salaries. For argument’s sake, suppose something like $80k might be a more reasonable number. But imagine a large firm that drops its starting salary to $80k. Even if this firm provides candidates with significant bonus opportunities, an intensive professional development program and no billable hour requirements for the first three years, how many and which graduates will opt for the $80k deal? And remember, these people have $100k in law school loan debt.

Or imagine the firm that tells its partners their comp is being changed to a base salary, performance bonus, and equity reward program. Will partners with sizable books of business sit back and accept that, or are they more likely to jump to another firm and retain their current (known) incomes?

Those who know me know I am a strong voice for change. But seeing these statements brought home the challenge of being the first to change. Yes – eventually these changes will bear fruit for market participants. It’s just that being first may have extreme risk, with only moderate short-term rewards.

And we all know how lawyers love taking risks.

  • I can't resist: if you've seen The Wrath of Khan or had to endure listening to a Trekkie natter on about it (guilty as charged), then you 'll recall that Lieutenant Saavik was "looking at the only Starfleet cadet who ever beat the no-win scenario": James T. Kirk. He did it by hacking the program and rewriting the source code to produce a different ending to the simulation.

    "I changed the conditions of the test. Got a commendation for original thinking. I don't like to lose."

    Follow that parallel to the end: the only way that law firms can defeat their own private Kobiyashi is to break the system and rewire how it works. Axiom, Neota, Kiiac, LPOs et al are in the process of trying to do just that. Law firms? They have too much invested in the old regime — financially, culturally and reputationally — to try, let alone succeed. I can see Romulan Warbirds on the long-range sensors….

  • Anonymous

    Actaully, Howrey did exactly that for the junior associate experience … and took a lot of heat for it. Then the firm failed. Did Howrey kill the category?

  • I don't know if associate compensation is the root of the problem here or if changes to it are really needed.

    There are a lot of elements of the problem:

    1) A surplus of law schools with high tuition and very high acceptance rates.

    2) A surplus of unemployed graduates from a bad economy who believe or believed that Law School was a safe place to go during a recovery.

    3) That the nature of legal work and analysis really can require the "best of the best" and that clients will need to know that your firm has them.

    When you combine these things you get:

    1) A flood of students graduating who are not qualified to deliver the level of legal performance that clients want.

    2) Extreme competition for the students who have demonstrated the ability to execute on that level of legal performance.

    So, that creates the associate salaries.

    Law Schools are often profit centers for other institutions because everyone has been willing to pay the price.

    This is being solved on the demand end– with the number of unemployed law graduates and the horror stories of graduates.

    I am not sure if you have ever outsourced the drafting of a brief or complaint. No one does. The tasks that get outsourced tend to be quasi-legal in nature anyways (Contract Admin/Review, Discovery).

    There is a lot of opportunity for current market leaders to use creative staffing solutions in addition to their traditional associate programs. Both can be designed to meet the different needs of clients.