More on the Wild World of Law Firm Business
The legal profession continues to evolve. Those who have practiced in a big to medium size firm know that some practices thrive while others struggle. Then a change in the economy reverses the roles. In addition some practices seem never to generate the same billings as others. Now, Luce, Forward has decided to use a sliding scale for associate pay. At first it sounds fair in that one can receive $145,000 at 1,950 hours [up] to $165,000 for 2,100 hours. (note that the hourly rate varies a little for these totals but that is likely rationalized as the more an associate works the higher the profit margin). Still the other dimension of the scale may be more significant. One part of the explanation is it will “maintain flexibility for attorneys who work in lower-billing rate practices or who prefer to work fewer hours.” And there is the other shoe. Lower-rate billing practices suggests a second tier of worth. Once a ranking based on income is clearer that may be the only metric people consider (think of the horrible effect box office numbers have on film marketing and quality). In one sense, the group may not generate as much so the differentiated system makes sense especially if a firm is thinking of ditching the practice area altogether which does happen. Still if one wants to be a partner, always earning (and bringing in) less and always working less hours will most likely kill any chance of making partner.
The odds that a firm will have a culture where some high-hour, high yield partners will say sure add a few of those less-hours, less pay people to the letterhead seem low. As the article notes some question what will happen when a practice area starts well but crashes (anyone hear a credit/transaction crunching noise recently?). Others suggest that students will be drawn to high paying areas and thus the lower paying ones will have less quality. That may be an overstatement.
First, remember that this is still a rarefied area of income and practice. So, as one employment attorney put it, the system allows her to build an employment practice at lower billable rates and so she “would, in a heartbeat, take a lower salary as an employment attorney than as an IP attorney.” That idea may be the key. The eat-what-you-kill model (which this move seems to parallel) can cause trouble. But by recognizing that not all practices can have the same rates, a firm may allow people to grow their practice area as fits the market and still retain the benefits of scale that go with a larger firm in general. Last, a note to those entering the profession: pick an area you want to be in. Law practice is difficult enough. Choosing one area over another based solely on the pay scale fails to see that the long-term high-pay practice will flow from being excellent in your area. To reach that status you will slog through enough nonsense that it is more likely you will make it to the end if you like the practice. Then again if you just want to pay off law school debt, there are enough jobs for you that will let you take the money and run.