"Clients Won’t Pay For What Law Schools Churn Out"

[zaprowsdower]

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@sakky

And those other industries that you mentioned would be equally irrational with their money.

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<p>So how many industries, exactly, are totally irrational? It seems like it’s at least law, accounting, consulting and pretty much the rest of the financial sector. </p>

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For example, in many engineering disciplines, the response you would get from your existing firm if you obtained a higher-paying offer from another firm is that you should then go work for that other firm.The attitude seems to be that the firm’s salary structure is fixed, and if you don’t like it, too bad, as we’re not going to change it.

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<p>Which is probably what a law firm would tell you, too, particularly if it’s a biglaw firm, since they also have fixed salary structures. Most associates are gone within five years and firms generally do nothing to stop them. Do engineering firms really comprehensively re-evaluate their starting salaries every year, but without any consideration of what their peer firms are paying? Do they never raise salaries to gain a recruiting advantage over other similar firms? </p>

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Actually, it seems clear that they really have. From 1996-2011, median starting salaries for firms with over 251 attorneys in New York, Los Angeles, Chicago, and Washington DC increased anywhere from 88-120%.

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<p>Well, from 1967 to 1986, the starting salary at the biggest firms increased by over 600%, so again this “recent explosion” actually seems pretty minuscule.</p>

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So then why not just have a larger component of the pay be based on (fluctuating) bonuses? After all, that’s what the finance industry - for all their foibles - manages to do.

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<p>Maybe because eliminating their (relative) stability and predictability would make it even harder for them to compete with the finance and other fields.</p>

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Even the great Babe Ruth and Ty Cobb made the equivalent of only about $1 million in today’s dollars; a backup role-player on an MLB roster makes far more than Ruth or Cobb ever did, courtesies of a muscular union.

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<p>And free agency. And a massive increase in revenue for clubs, including from TV deals that were a little hard to come by in Cobb’s era. Again, this is an explanation that completely ignores the underlying economics of an industry.</p>

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Actually, it seems to me that the rational strategy for a law firm is to allow some other biglaw firm to incur the high salaries of training new graduates for the first few years, and then raid them once they’re fully trained and productive. Why not?

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<p>This is how a lot of smaller firms and most in-house legal departments function. Many of them hire few or no recent grads. It wouldn’t make a lot of sense to raid other firms for a ton of experienced attorneys when most of what you need them for is menial due diligence/doc review.</p>

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So why not have other law firms (stupidly) incur the costs of training, while you later reap the benefits?

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<p>Again, much of the work really doesn’t require training, and they bill the clients to recoup the costs. It would make no sense to bring on experienced associates to do doc review. For associates you want to handle more substantive work, it’s preferable to train them yourself, and have them develop relationships with your clients and other attorneys.</p>