<p>GB, if schools explained the tensions that exist in law firms, how many would choose the field? </p>
<p>The issues are real and difficult: who controls a client and how is that pie divided? who needs to get paid to be retained? what happens when a client needs work from another office? what happens when office a is doing better than b? what if banking is dying on the vine while bankruptcy is raking it in? </p>
<p>Kids don’t understand that lawyers in firms make money by selling individual services, even if the clients are huge institutions. If a company makes a product, then the entire company contributes to the production and marketing and accounting for it. Law firms are individuals putting in hours and these individuals have to be grouped together but with work crossing department lines and with contacts at different levels, etc. It isn’t easy and money is involved. My dad used to say there are two kinds of vicious arguments: about money and about academic politics.</p>
<p>Some of the formulas used by firms to determine compensation are mind boggling. There is credit for originating business, different credit for originating it and working on it, different credit for originating it and referring it to another partner in the firm, different credit for originating it and having associates work on it, different credit for mining existing firm clients to get new matters and on and on. There are different percentages for different levels of billing - a certain percentage for the first however much, then a sliding scale from there. After all the calculations are done, there are often committees that apply completely subjective criteria based on the person’s contributions to the firm. There are as many different ways of calculating income as there are firms. I’m not sure if any still do it the old way - a few people senior partners got together and just assigned numbers based on things that only they discussed. Being on the compensation committee was like being on the Supreme Court.</p>
<p>There used to be a decent sized NYC firm - not Marc Dreier’s - where the old man simply set the compensation for the other 100+ people.</p>