Monday, April 30, 2007

Money Falls From the Sky, Right? At Least That is What Associates Think!

This may be the first time in the history of this blog that I am preaching to the big-firm choir! Why would I do such a thing? While I am sure that the partners at BigLaw agree with the problem, I believe that the solution (communication and education) will actually work in our favor, of course. No pressure there!

Problem: Young attorneys entering the Corporate Law profession actually seem to think that money falls from the sky! They have no idea about the economics of law firms, how profitability is achieved, etc. Law firms are doing a horrible job explaining the economics to their young. What is the consequence of this behavior? Explore below:

Big Law firms are facing significant problems providing a lifestyle to their Associate attorneys. To the Partners, they find it distasteful that they are competing on price for the top associates from top law schools only to have them complain that they want a better "lifestyle." Apparently, they never heard the saying that price competition is a "fools game" so they continue to engage in the bidding war ever believing that the highest salaries are what their associates are really looking for, even when they have been screaming loudly for years that what they really want is to enjoy their work and see their children and loved ones every once in awhile. Are they mutually exclusive? YES!! The winning bidder in this auction is definitely the lifestyle LOSER because it is pure economics.

Partners need to wake up!!! They really should know better than to think that new lawyers are trained or even remotely aware of law firm economics. When I started Exemplar I recall the front page article in Lawyers Weekly, "6 years after big firm Partners promise better work-life sensitivity, it seems nothing has changed!" Why? What they are really missing is that they are engaging in a pricing practice (bidding war) that prevents them from being responsive to their people later on. Once Associates have been hired, it is far too late! Work-life balance is a problem of firm economics first and foremost. Partners know that an Associate must work 2-years before they are profitable to the firm. At the same time, firms have known for over a decade (see the ABA's Commission on the Billable Hour Report) that Associates would take a "large" pay reduction in exchange for a better work-life sensitivity. In order to retain their best talent firms will actually need to PAY LESS for them!!! Why? Money does no fall from the sky. . . it is one thing if Associates don't get it, but for Partners there is NO EXCUSE. Work-life balance means leverage/retention balance for Partners and they will need to first take a stand to adjust starting salaries to account for the needs of today's work­-force. Today's Associates are not law firm economic experts and having interviewed over 350 young attorneys I can tell you that they are counting on you to know (and act on) what is good for THEM (NOT JUST YOU)! They think money falls from the sky and have little appreciation for how law firms as a "business" are run. To be a Partner means, to me, that you owe a duty of care to Associates, like a parent, to look out for their well-being and professional development. New attorneys enter this profession and are counting on having training and guidance that can sustain them and the firm in the future. Partners at BigLaw need to STEP-UP or STEP-DOWN! It is time to act on your DUTY to CARE for the Associates will act on their right to vote with their feet.

Associates need to understand that money does not fall from the sky. . . that higher salaries in a billable hour firm will mean longer hours. It is simple economics when you operate on a cost-plus model like the billable hour. Don't be afraid to ask questions, demand answers, and don't count on Partners to look out for you or your careers. They have yet to do so in our profession and show little signs of changing. By the looks of it, they will die with their books of business before leaving them to you. We are the future and have the power to change it. Exemplar has taken a stand for positive change in the industry and I am right here behind each and every one of you who want to make it better. It all starts with believing that the power to change is within you and nobody else. . . You've got to stand for something or you'll fall for anything. Stand with me and let's create a better vision for the future of the professions!!

No comments: