THE BIG LAW PARTNER LOTTERY

In last Sunday’s The New York Times Magazine, Adam Davidson suggests that many of today’s most intelligent and educated young people have entered an employment lottery. He draws on the best-selling Freakonomics by Stephen J. Dubner and Steven D. Levitt, who use the unlikely prospect of hitting it big to explain otherwise irrational economic behavior in drug dealer gangs: legions of foot soldiers seek to become kingpins someday.

Davidson focuses on the entertainment industry where people with solid academic credentials and big dreams go to work in mail rooms. In passing, he identifies large law firms as another example where, for most young attorneys, analogous dreams meet a similarly unfortunate fate.

The topic is particularly timely. The National Law Journal just released its annual list of the NLJ 250 “Go-to law schools” from which the nation’s biggest firms draw the most new associates. In 2007, the top twenty law schools sent fifty-five percent of graduates to big firms; in 2011, that percentage was down to thirty-six.

As the job market for new attorneys languishes, most of last year’s 50,000 law school graduates would count those new associates as already having won a lottery. But the real story is that they have actually acquired a ticket to one or two more.

The long odds

As more firms have developed two-tier partnerships, the big law lottery has become a two-step ordeal. Merit still matters, but attaining even the highest skill level is only a necessary and not sufficient condition for advancement. To get a sense of the odds against success, consider the most recent data on NLJ 250 associates who were promoted to partner last year (non-equity partners in two-tier systems).

In 2011, forty-seven Harvard law graduates went from associate to big firm partner. That sounds like a lot, except that five years earlier — in 2006 — Harvard sent 338 graduates into large firms. Although that fifteen percent rate isn’t as bad the lottery, winnowing the number down to include only those who will become equity partners gets closer. (A time lag of five years isn’t quite long enough for the groups of new and promoted associates to match exactly, especially as partner tracks have become longer. But it’s adequate to illustrate the point.)

Other top schools’ graduates face even worse odds. Columbia law sent 313 graduates to big firms in 2006; thirty-one of its grads went from associate to partner in 2011. In 2006, 143 Northwestern law grads got big firm jobs; in 2011, fourteen NU graduates advanced from associate to partners. The University of Pennsylvania’s 2006 class sent 187 into big firms; those firms promoted fifteen U Penn associates to partner last year.

A few schools fared better in this comparative sweepstakes: the University of Texas placed 194 of its 2006 graduates in big firms; last year twenty-nine UT grads went from associate to big law partners. Vanderbilt also broke the twenty percent barrier.

Irrational behavior?

Why do associates continue to play such long odds in a game that doesn’t yield any outcome for years and, for the vast majority of participants, turns out badly?

Understandably, some associates take big law jobs solely to burn off student loan debt before pursuing the dreams that actually took them to law school in the first place. But others are playing the big law lottery.

Meanwhile, those at the top of law firm pyramids have worsened the odds. They have pulled up the ladder by lengthening the equity partner track, reducing the rate of new equity partners, increasing leverage, and running their firms to maximize short-term equity partner wealth at the expense of long-run institutional stability and their colleagues’ personal well being.

Rationalizing these actions, many big law leaders have convinced themselves that the current generation of young lawyers is inferior to their own. They complain about those who act as if they’re entitled to everything and unwilling to work hard, as they once did. Three concluding points:

First, many large firm attorneys in the baby boomer generation act entitled, too.

Second, when today’s big law leaders were associates, no one was telling them to get their hours up.

Third, motivation and behavior follow incentive structures. If some of today’s young attorneys sometimes behave as if they don’t have a reasonable shot at winning the equity partner lottery, it’s because they don’t.

6 thoughts on “THE BIG LAW PARTNER LOTTERY

  1. Mostly true in that it has gotten harder to make partner, but I would say a couple of things.

    First, I would not agree that when today’s big law leaders were associates, no one was telling them to get their hours up. I recall getting that lecture in ’82 or so. (By the way, does anyone remember something called the Official Lawyer’s Handbook, a Preppy Handbook-syle thing from the ’80s and long out of print? It was funny because it was so accurate. I still remember some of the lines: “Every time a partner is embarrassed, an associate’s head rolls.” But it should be a reminder that some things have not changed all that much. Today’s associates should go to Alibris and buy a copy.)

    Second, when I was a young associate in a large Northeastern city at a very good firm that had its pick of law grads, I was surprised how many of my fellow associates took themselves out of the running for partner because they (1) had only intended to work for a few years to get the firm name on their resume and then move elsewhere, (2) really were not cut out for working a corporate job, (3) liked law school but did not like the actual practice of law, or (4) jumped ship for a job they thought would take them even farther (my place was practically secured when my main competition did just that). I’m not saying all you had to do was keep showing up and doing good work, but I was surprised how much of the turnover was voluntary. I would also not be so sure that would be as true at a firm that did not just hire from the top of the class at a few law schools.

  2. More evidence that law schools had better start preparing their lawyers to be self-employed. Whether “self-employed” is literal, i.e., hanging out a solo shingle, or being virtually self-employed at a small firm that doesn’t have the luxury of carrying you for 10 years before you begin contributing to client acquisition, graduating as a mere legal technician for which demand will continue to drop is now madness.

  3. I don’t remember the exact number, but have some recollection that the minimum was around the NALP average that the firm reported. It was probably less than today, but I’m not sure it was a whole lot less.

    Anyway, it wasn’t that hard to keep hours up in the ’80s. In that prehistoric era, we had a thing called “being at the printers”. Two weeks there pretty much got you your hours for the month (14 x 16 = 224). Also, our hourly rates were lower so it didn’t matter as much on the bill. We got to bill hours for just accompanying partners to meetings and that kind of thing.

  4. The solo practitioner is in desperate need of acquiring the necessary business skills to run their own firm. Unfortunately, law school only teaches a theoretical skill set that has no application to the real world. Young, newly admitted attorneys need to learn how to market their firm, run the daily operations, administer a support staff and work as a team to accomplish goals. Most new firms I encounter cannot survive beyond 12-18 months.

  5. Legal Advice’s 12-18-month lifespan seems generous, especially in reference to newly-minted lawyers with heavy law school debt and no capital. I don’t know how they’d finance themselves for even that long, even if they returned to their undergrad Ramen diet.

    It’s not only green lawyers who lack – and desperately need – the skills to get and keep clients. (I won’t comment on operations because I’m no authority on the topic.) On their own, few seasoned lawyers would survive 12-18 months unless they’d built up a cash hoard elsewhere first.

    A year ago we moved into a community of very nice homes that abuts a TPC golf course. Two neighbors in our cul-de-sac appeared to be noticeably successful professionals. One is a financial advisor and the other an architect who had designed a number of notable structures in our city. Each had lived here for the entire 16 years the community existed. Each had multiple cars, kids in private schools, membership at the exclusive TPC club, had traveled extensively, the whole American Dream.

    Recently, the architect acknowledged that his once-100-person firm had shrunk to 12, and his income had declined by 75%; the financial advisor’s home is now on the market as a short sale.

    What happened? Did these two smart, successful, nice guys suddenly get stupid, lazy or incompetent? No. As had many lawyers, they rode a 25-year wave of unbelievable demand that ended in 2008. When that went away, they didn’t have the know-how, skills or experience to get business. Worse, they didn’t know that they didn’t. Like many lawyers, they confused a sustained high tide with business development capability. It’s understandable. If you’ve “generated” a lot of clients for two decades, you must be good at it, right?

    IMO, this ignorance kept them in denial for the past four years, convincing them that the cause was either a business cycle or a personal slump. Either way, a temporary decline. They never entertained the idea that they lacked a capability absolutely required under the new conditions.

    Similarly, lawyers have not admitted that marketing and sales is an acquired skill set, and gotten serious about learning how to get business in a permanently competitive buyer’s market. Does that suggest similar ignorance or denial of what many now call “the new normal”?

    If, somehow, macro forces conspired in a way that, suddenly, lawyers were confronted with the requirement that they also practice medicine or accounting, would they assume that they had those skills, too? It’s equally laughable to assume that one has business development skills if one has never learned or cultivated them.

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