When challenged to tell a story in as few words as possible, Ernest Hemingway replied with six: “For sale: Baby shoes — never worn.”
I’m not Hemingway, but in his spirit of brevity, I offer five phrases — totaling eight words — distilling a recent Wall Street Journal article, “Law Firms Hold Line In Setting Bonuses,” by Vanessa O’Connell and Nathan Koppel. It appeared on the Monday after Christmas, so you might have missed it.
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HOURS UP: “Average hours billed by associates at the nation’s top 50 law firms by revenue rose by 7% in 2010.”
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BONUSES FLAT: “At New York-based Milbank, Tweed, Hadley & McCoy LLP, where bonuses were only slightly above last year’s payouts, hours billed by associates were up about 6%.” [According to Above the Law, the firm’s 2010 bonuses ranged from $7,500 for first-year associates to $35,000 for those in the class of 2003. That’s a big drop from 2006, when first-year associates received “special year-end bonuses” of $30,000. Student-loan repayment requirements have not experienced a similar decline.]
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MANAGERS RATIONALIZE: “‘The actual number of [billed] hours is still low compared to what it has historically been,’ [says Milbank’s Chairman Mel M. Immergut].”
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PARTNERS WIN: “Revenue at Milbank Tweed will be up by about 3% on flat expenses, Mr. Immergut says, adding that profit per partner will be up by 8% to 10%, depending on year-end collections.” According to The American Lawyer, Milbank Tweed’s average profits per partner in 2009 were $2.230 million. How much is enough? The answer appears to be “More.”
The Belly of the Beast 
Plus ca change, plus c’est la meme chose.
In May, 2009, during the associate layoff frenzy, I read an article talking about the putative savings from headcount reduction. Toward the bottom of the article, a BigLaw managing partner acknowledged that 70% of that was actually eaten up by outplacement costs. Using AmLaw-published averages for BigLaw revenue, PPP and headcount, I wrote a post that calculated the actual net-savings-per-equity-partner from the bloodbath: $410 for each lawyer; $164 for each staffer.
Average PPP at the time? $2.3 million.
The WSJ LawBlog picked up my post and ran with it under a headline I wish I’d thought of: “For the Cost of Just One iPhone, You Too Can Save a Lawyer”
http://blogs.wsj.com/law/2009/03/05/for-the-cost-of-just-one-iphone-you-too-can-save-a-lawyer/