Feature Article |
The Last Days of the Philadelphia Lawyer
By Tom McGrath
The impact of the American Lawyer rankings over the past two decades is tough to overestimate. For starters, they’ve transformed the mind-sets of many lawyers — or at least those who run large law firms. Twenty years ago, a partner at a Philadelphia firm might have been very happy making $150,000 per year — until he saw that lawyers at a firm in, say, Boston were making $250,000 per year. Telling competitive people like lawyers how much their peers were making was like giving someone with an addictive personality his first hit on a crack pipe.
Just as important, though, is that over the years, large firms have come to realize that the Am Law rankings are their best marketing tool when it comes to attracting the best law-school graduates and, now, the best partners from other firms — partners who bring with them books of clients that contribute handsomely to the bottom line. After all, why stay at a firm with profits per partner of only $400,000 per year when folks at the firm down the road are making 20 percent more?
Now, a case can — and should — be made that Steve Brill was merely the personification of a force already on the loose in the culture. But whether Brill was a chicken or an egg isn’t really the point. The point is that the Am Law rankings — both literally, in the sense that firms care enormously about where they fall on them, and figuratively, in the sense that they represent a legal world all about the Benjamins — have become the dominant measuring stick in the legal industry.
If there’s an irony in law having become a business, it’s that law, it turns out, isn’t a very good business — or at least doesn’t have a very efficient business model. While manufacturers typically make money through economies of scale, and other service professionals, like investment bankers or architects, make money by taking a percentage of a deal or the cost of a project, lawyers for the most part still work for an hourly wage. In short, they’re in the business of selling their time.
The problem, of course, is that time is finite, so even if you’re selling those hours for an exorbitantly high rate — a handful of lawyers in Philadelphia can charge up to $1,000 an hour — it can be tough to build a successful, globally competitive business.
To compensate for that labor-intensive business model, firms have adopted various strategies. Strategy number one: Make young lawyers — associates — bill as many hours as humanly possible. In the 1960s and ’70s, associates at big firms were expected to bill between 1,600 and 1,800 per year; today, the expectation is generally around 2,200 hours per year. And since not every hour you spend at the office can be billed to a client, associates typically end up putting in 80-to-90-hour weeks. With starting associate salaries approaching $150,000 at Philly’s biggest firms, this might not be so bad — if the work was consistently challenging intellectually, and if the path to becoming a partner was as fast as it used to be. But some associates complain that they spend their days locked in the office, pushing through paper. As for partnership, it’s a reward that takes longer and longer to realize these days.
Just as important, though, is that over the years, large firms have come to realize that the Am Law rankings are their best marketing tool when it comes to attracting the best law-school graduates and, now, the best partners from other firms — partners who bring with them books of clients that contribute handsomely to the bottom line. After all, why stay at a firm with profits per partner of only $400,000 per year when folks at the firm down the road are making 20 percent more?
Now, a case can — and should — be made that Steve Brill was merely the personification of a force already on the loose in the culture. But whether Brill was a chicken or an egg isn’t really the point. The point is that the Am Law rankings — both literally, in the sense that firms care enormously about where they fall on them, and figuratively, in the sense that they represent a legal world all about the Benjamins — have become the dominant measuring stick in the legal industry.
If there’s an irony in law having become a business, it’s that law, it turns out, isn’t a very good business — or at least doesn’t have a very efficient business model. While manufacturers typically make money through economies of scale, and other service professionals, like investment bankers or architects, make money by taking a percentage of a deal or the cost of a project, lawyers for the most part still work for an hourly wage. In short, they’re in the business of selling their time.
The problem, of course, is that time is finite, so even if you’re selling those hours for an exorbitantly high rate — a handful of lawyers in Philadelphia can charge up to $1,000 an hour — it can be tough to build a successful, globally competitive business.
To compensate for that labor-intensive business model, firms have adopted various strategies. Strategy number one: Make young lawyers — associates — bill as many hours as humanly possible. In the 1960s and ’70s, associates at big firms were expected to bill between 1,600 and 1,800 per year; today, the expectation is generally around 2,200 hours per year. And since not every hour you spend at the office can be billed to a client, associates typically end up putting in 80-to-90-hour weeks. With starting associate salaries approaching $150,000 at Philly’s biggest firms, this might not be so bad — if the work was consistently challenging intellectually, and if the path to becoming a partner was as fast as it used to be. But some associates complain that they spend their days locked in the office, pushing through paper. As for partnership, it’s a reward that takes longer and longer to realize these days.
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