In my column last week, I talked about how BigLaw needs to address its personnel model.
Then I read Bruce MacEwen’s post, Growth is Dead: Part 5. The entire series is must-read material, but in Part 5, Bruce makes several points that are worth reflecting upon. Among them:
The BigLaw industry suffers from excess capacity on several levels, including:
• a surfeit of J.D. graduates being churned out by U.S. law schools
• too-high levels of leverage among traditional associate ranks
• overpopulated ranks of non-equity partners
• underperforming equity partners
In a normal business world, excess supply would result in lower prices, or here, lower salaries for the workers in an excess supply market. But salaries of new lawyers have not decreased. Why does BigLaw confound the market?
Billy Crystal–well, actually one of Billy Crystal’s “Saturday Night Live” characters–has the answer. Remember Fernando? Perhaps his most famous catchphrase was “you look mahvelous.” But a close second was “it is better to look good than to feel good.” These phrases sum up BigLaw’s approach to associate hiring.
As I said in my prior piece, a business leader would take advantage of the marketplace to drive down the wages paid to people doing rudimentary work, and more generally restructure the delivery model so that people were not automatically advanced to a new, more demanding role simply by dint of the passage of time. But then law firms might have to report that lawyers doing entry-level-work (they may or may not be “first years”) were being paid a sum that pales in comparison to the firms paying $160,000 to new lawyers. Ooooh, that doesn’t look good, so those firms would be acting contrary to Fernando’s wisdom. While clients might see the firm as visionary and acting in the client’s best interests, law students might see such a new approach as evidence of failure, or simply determine to go elsewhere for a few years. Because most of these new lawyers will switch firms at the drop of a hat, I am not sure how this really hurts, because targeted lateral hiring in the fifth year and above can produce a far more reliable crop of senior associates than the current crapshoot.
Fernando is now relegated to the dustbin of history. We remember the character fondly and can find some clips of him on YouTube so we can relive some of our favorite memories. But he no longer plays a role in our lives and younger generations have never even heard of him. Law firms that continue to espouse the Fernando approach to personnel issues may well find themselves joining him.
Patrick Lamb is a founding member of Valorem Law Group, a litigation firm representing business interests. Valorem helps clients solve their business disputes and coping with pressures to reduce legal spend using nontraditional approaches, including use of nonhourly fee structures, coordination with LPOs or contract lawyers, joint-venturing with other firms and implementation of project management tools to handle lawsuits or portfolios of litigation.
Pat is the author of the the book Alternative Fee Arrangements: Value Fees and the Changing Legal Market. He also blogs at In Search Of Perfect Client Service.