Law firms report lawyer oversupply and 'chronically underperforming lawyers' Forum

[Nebby]

This has already been said, but fucking of course the law firms, i.e. the self-described "productive" partners, would blame their shit on people "not pulling their weight."

For the dead-weight equity partners, boo fucking hoo, that's the risk you took when you made an equity partner. The possibility of a couple people spending their time on their new boat is priced into the model so not "under performing."

And literally FUCK the firms for saying any associate is under performing. It's a job that people do for money. There is no skin in the game other than the continued paycheck. If management doesn't like performance, the answer is not to passive-aggressively waive "underperforming" at people through some poll - management should work with folks, figure out whether expectations are reasonable, etc. or, alternatively, put on grown up pants and accept it as life, we aren't automatons. People can only work as much as people can work/are given opportunities.

If law firms are systematically hiring idiots/the wrong people who can't mentally do the work, that's not the fault of the associates in question. Revisit hiring models. Ask a fucking battery of consulting "thought process" questions regarding how someone would tackle a legal issue. If hiring is the problem, that's all on the firms, not the employees (and i seriously doubt this is the problem).

You mean to tell me a 20 minute interview discussing fly fishing or college football isn't the best way to judge a future associate's legal skills?

[elendinel]

And literally FUCK the firms for saying any associate is under performing. It's a job that people do for money. There is no skin in the game other than the continued paycheck. If management doesn't like performance, the answer is not to passive-aggressively waive "underperforming" at people through some poll - management should work with folks, figure out whether expectations are reasonable, etc. or, alternatively, put on grown up pants and accept it as life, we aren't automatons. People can only work as much as people can work/are given opportunities.

If law firms are systematically hiring idiots/the wrong people who can't mentally do the work, that's not the fault of the associates in question. Revisit hiring models. Ask a fucking battery of consulting "thought process" questions regarding how someone would tackle a legal issue. If hiring is the problem, that's all on the firms, not the employees (and i seriously doubt this is the problem).

But why can't a firm say an associate is underperforming? Certainly some are going to be better than others. To me, a firm should help lawyers that are struggling (some probably do), but obviously there must be some limit to how far a firm should go.

Because in this instance "underperforming" is their way of saying "not making us as much money as we want," not, say, "Is not capable of outputting the kind of work we require them to do." And, as the report suggests, a large part of underbilling can be blamed on partners' refusal/inability to adapt to the reality of the world in which these associates operate (e.g., refusal to adjust billing requirements or performance standards for groups that heavily rely on fixed fees; inability to properly monitor work and make sure everyone is getting as much work as they can handle; etc.). To be sure, there are always going to be associates that are legitimately inefficient/unskilled/etc., but what this survey is showing is that there's also a great deal of ineptitude in the higher ranks of many firms, where a lot of partners assume they can just do what's always been done and rake in millions, and where this just doesn't match up with the reality of the legal field these days--causing said partners to blame their associates on underperforming instead of evaluating their strategies and learning how to create better strategies.

Almost like how every generation calls the generations after it lazy/entitled/etc. as they continue to do things that screw the new generations over.

[Npret]

^^^
Exactly. Underperforming in this report means billing hours, not quality of work.

Also every one of these reports has been saying similar things and strongly criticizing law firm management.

[run26.2]

And literally FUCK the firms for saying any associate is under performing. It's a job that people do for money. There is no skin in the game other than the continued paycheck. If management doesn't like performance, the answer is not to passive-aggressively waive "underperforming" at people through some poll - management should work with folks, figure out whether expectations are reasonable, etc. or, alternatively, put on grown up pants and accept it as life, we aren't automatons. People can only work as much as people can work/are given opportunities.

If law firms are systematically hiring idiots/the wrong people who can't mentally do the work, that's not the fault of the associates in question. Revisit hiring models. Ask a fucking battery of consulting "thought process" questions regarding how someone would tackle a legal issue. If hiring is the problem, that's all on the firms, not the employees (and i seriously doubt this is the problem).

But why can't a firm say an associate is underperforming? Certainly some are going to be better than others. To me, a firm should help lawyers that are struggling (some probably do), but obviously there must be some limit to how far a firm should go.

Because in this instance "underperforming" is their way of saying "not making us as much money as we want," not, say, "Is not capable of outputting the kind of work we require them to do." And, as the report suggests, a large part of underbilling can be blamed on partners' refusal/inability to adapt to the reality of the world in which these associates operate (e.g., refusal to adjust billing requirements or performance standards for groups that heavily rely on fixed fees; inability to properly monitor work and make sure everyone is getting as much work as they can handle; etc.). To be sure, there are always going to be associates that are legitimately inefficient/unskilled/etc., but what this survey is showing is that there's also a great deal of ineptitude in the higher ranks of many firms, where a lot of partners assume they can just do what's always been done and rake in millions, and where this just doesn't match up with the reality of the legal field these days--causing said partners to blame their associates on underperforming instead of evaluating their strategies and learning how to create better strategies.

Almost like how every generation calls the generations after it lazy/entitled/etc. as they continue to do things that screw the new generations over.

Btw, I agree with what you said, to the extent that is a general categorization of associates' work or a particular associate's work who is making the partnership money but just not as much as the partners want, as opposed to characterizing the work of "any associate."

My point is to say that it doesn't make sense to say that a firm can never say an associate is underperforming, or that all instances of underperformance are attributable to faults in how partnerships are run. There are plenty of instances where associates come in to collect a paycheck and do as little work as possible. Those would in all likelihood be instances of underperformance.

[jkpolk]

And literally FUCK the firms for saying any associate is under performing. It's a job that people do for money. There is no skin in the game other than the continued paycheck. If management doesn't like performance, the answer is not to passive-aggressively waive "underperforming" at people through some poll - management should work with folks, figure out whether expectations are reasonable, etc. or, alternatively, put on grown up pants and accept it as life, we aren't automatons. People can only work as much as people can work/are given opportunities.

If law firms are systematically hiring idiots/the wrong people who can't mentally do the work, that's not the fault of the associates in question. Revisit hiring models. Ask a fucking battery of consulting "thought process" questions regarding how someone would tackle a legal issue. If hiring is the problem, that's all on the firms, not the employees (and i seriously doubt this is the problem).

But why can't a firm say an associate is underperforming? Certainly some are going to be better than others. To me, a firm should help lawyers that are struggling (some probably do), but obviously there must be some limit to how far a firm should go.

Because in this instance "underperforming" is their way of saying "not making us as much money as we want," not, say, "Is not capable of outputting the kind of work we require them to do." And, as the report suggests, a large part of underbilling can be blamed on partners' refusal/inability to adapt to the reality of the world in which these associates operate (e.g., refusal to adjust billing requirements or performance standards for groups that heavily rely on fixed fees; inability to properly monitor work and make sure everyone is getting as much work as they can handle; etc.). To be sure, there are always going to be associates that are legitimately inefficient/unskilled/etc., but what this survey is showing is that there's also a great deal of ineptitude in the higher ranks of many firms, where a lot of partners assume they can just do what's always been done and rake in millions, and where this just doesn't match up with the reality of the legal field these days--causing said partners to blame their associates on underperforming instead of evaluating their strategies and learning how to create better strategies.

Almost like how every generation calls the generations after it lazy/entitled/etc. as they continue to do things that screw the new generations over.

Btw, I agree with what you said, to the extent that is a general categorization of associates' work or a particular associate's work who is making the partnership money but just not as much as the partners want, as opposed to characterizing the work of "any associate."

My point is to say that it doesn't make sense to say that a firm can never say an associate is underperforming, or that all instances of underperformance are attributable to faults in how partnerships are run. There are plenty of instances where associates come in to collect a paycheck and do as little work as possible. Those would in all likelihood be instances of underperformance.

Doing as little work as possible to earn the offered paycheck is literally what labor should always do.

That fundamental point aside that's not really how it goes at law firms. Say you have 100 units of work and 20 associates. 4 units of work is the bonus. Seems fair right? Until 4 associates do 28 units of that work due to staffing, deal flow, etc. Well, some of the rest are probably fucked regardless of their "work ethic." And when your review says "did not meet hours: under performing associate" it's the biggest fucking pile of lols ever (except that you count on that review for your livelihood, womp womp).

[elendinel]

My point is to say that it doesn't make sense to say that a firm can never say an associate is underperforming, or that all instances of underperformance are attributable to faults in how partnerships are run. There are plenty of instances where associates come in to collect a paycheck and do as little work as possible. Those would in all likelihood be instances of underperformance.

I'm an overachiever, but even I think it's kind of weird to characterize someone who does the minimum they're supposed to do as "underperforming." Doing what is required of you and nothing further shouldn't be considered underperformance; at worst it's adequate-but-not-exceptional performance.

And I don't think anyone's actually saying associates that are legitimately too inept to even get the bare minimum done should never be criticized, so much as people are pointing out that (1) even the hiring of an inept associate is at least somewhat attributable to partners and the choices they make in determining how to hire people, and (2) the vast majority of associates in biglaw don't fall into that category of being woefully inept anyway--they're just not all billing as much as partners want them to bill. And most issues of underbilling are caused by partner errors, not associate errors.

[Monochromatic Oeuvre]

ITT: Long-winded arguments caused by an inability to distinguish between "underperforming" and "underutilized."

[los blancos]

ITT: Long-winded arguments caused by an inability to distinguish between "underperforming" and "underutilized."

TBF it seems like that's a result of firms refusing to make this distinction.

[Anonymous User]

Law firms are making the best profits they have ever made.

Partners have become progressively greedier and the profession has devolved into only being about money.

Law firms have never been more efficient, profitable and leaner. The "underperforming" lawyers only make a 100 percent profit margin versus 200 percent.

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

[rpupkin]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

[bruinfan10]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.

[rpupkin]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc.

It varies based on firm. The firms with the top billing rates would still be profitable at 1200 hours, though I don't know about "massively profitable." Other firms could still be decently profitable at 1200 if they started paying associates significantly lower salaries but kept the same billing rates.

As for your observations about your own profitability, I think associates tend to underestimate the partnership's expenses. Associate and staff salaries are a big chunk, but there's also rent (which can be very costly in big cities), malpractice insurance, partnership tax, and debt service. Also, associates rarely know what their actual realization rate is. For every 1,200 hours you bill, some percentage is being written off and/or discounted.

[Npret]

FWIW: the table on lawyer staffing capacity asks about groups of lawyers being sufficiently busy: associates come in at 74.7 %, but equity partners are only at about 47.6% and non-equity partners (39.5%) are even lower.

Profitability is the name of the game though with everyone concerned about decreased demand.

Funny how the report doesn't even address training associates or even associate turnover in discussing profitability. Not that I saw on a quick glance- associates are only mentioned once or twice.

[Monochromatic Oeuvre]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.

Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.

While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.

[Anonymous User]

Can someone please define what amount of hours billed constitutes "underperforming"? At my firm, barely a majority of associates billed enough to get a bonus last year. Does that mean almost half the associates are "underperforming"?

[bruinfan10]

thanks pupkin and monochromatic, that's fascinating. i had no idea there was so much overhead.

[Anonymous User]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.

Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.

While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.

The business model would collapse because it is premised upon partners making 3 million per year on average. If partners settled for a million (terrifying thought I know), none of the above would be true. You are counting the 3 million dollar per year per partner profit expectation in your figures which simply is not a minimum overhead. Associates are break even probably around 600 hours even with ridiculously bloated overhead. I cannot believe people actually believe these false numbers.

[Npret]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.

Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.

While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.

The business model would collapse because it is premised upon partners making 3 million per year on average. If partners settled for a million (terrifying thought I know), none of the above would be true. You are counting the 3 million dollar per year per partner profit expectation in your figures which simply is not a minimum overhead. Associates are break even probably around 600 hours even with ridiculously bloated overhead. I cannot believe people actually believe these false numbers.

I think you are underestimating costs significantly.
Also, if the partners make less,then they just go somewhere that they can make more. Expecting the top of the food chain to earn less is a pipe dream. Even the first years think they deserve more than $180,000.

[Monochromatic Oeuvre]

Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.

While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.

The business model would collapse because it is premised upon partners making 3 million per year on average. If partners settled for a million (terrifying thought I know), none of the above would be true. You are counting the 3 million dollar per year per partner profit expectation in your figures which simply is not a minimum overhead. Associates are break even probably around 600 hours even with ridiculously bloated overhead. I cannot believe people actually believe these false numbers.

Huh? How would I count profits in overhead? Profits are what's left AFTER overhead. Even if you dropped PPP at all the major firms to $1M, you would still need RPL of $900k-$1M to pull that off.

Think about it--if your total overhead per lawyer is $700k with leverage at 4:1, you still need to be generating $900k per lawyer to average $1M PPP. Even if you go with the ridiculous assumption that partners would gladly take him a tiny fraction of what they generate, and even at pretty sizeable billing rates, after write-offs and discounts, that's just not a number that a lot of first years, and some second years, would be hitting.

[Desert Fox]

A lot of the overhead in the 700-800k figures likely includes overhead that scales with revenue--not with lawyer count. Whether you have 2 associates billing 1000 each or 1 billing 2000, that won't change the need for paralegals, practice support, vendor costs, etc.

[Monochromatic Oeuvre]

A lot of the overhead in the 700-800k figures likely includes overhead that scales with revenue--not with lawyer count. Whether you have 2 associates billing 1000 each or 1 billing 2000, that won't change the need for paralegals, practice support, vendor costs, etc.

But head count absolutely change your costs for real estate, which is by far the single largest overhead component. Even in Manhattan firms require about 1000 square feet per lawyer. Same goes for utilities, hardware, recruiting, training, maintenance/upkeep etc.

If firms didn't incur additional costs from having four first-years making $135k bill 1500 instead of having three first-years making $180k bill 2000, they'd have no reason not to do that. But I'd bet they'd lose more money by doing that than they could gain in savings from attrition (which is surprisingly consistent from firm to firm, even those with wildly different reputations).

[Anonymous User]

Re: real estate. A lot of firms are going to open office plan, my v10 incliuded. It's not great and it makes me want to lateral.

[Pokemon]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.

Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.

While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.

[Pokemon]

The framing of these issues is in line with a perspective where the profession is only about money and where no value is placed on having a life. All firms would be massively profitable at 1200 hours billed a year (which used to be the standard). The extra 1200 on average is all gravy but somehow this gravy has turned into an expectation and a minimum.

The bolded isn't true.

Out of curiosity, what do you think the break even point is on hours/profitability? Are you saying that it varies based on billing rate between firms or something? Looking at my receivables from 1200 hours of work, I'm hard pressed to see how I'm not generating a significant amount of profit for the firm, even taking into account overhead, etc. But honestly I have no idea. They just seem to be doing well off of me.

Most large firms based in NYC have expenses per lawyer of over $600k. A lot of them are closer to the $800k range. Even if your firm was fairly leveraged and the partners only made a little bit more than senior associates/of counsel (assuming anyone would ever put up with partner-level bullshit if that's where the money capped out, which they wouldn't), the average lawyer still would still need to make $800k-900k to keep things afloat.

While the trope that "associates aren't profitable until the third year" isn't necessarily literally true, the point is that the business model would collapse on first- and second-year profitability numbers. Sure, there's plenty of partner greed, but you're paying for much more in legitimate pro rata expenses than you are in Palm Beach atrium renovations.

800k seems really high in my opinion. A lot of ny law firms have economies of scale (it and a lot of support is firm wide and based in lower cost locales). Rent is an expense but there seems to be other businesses with lower margins based in NYC A Office space and doing ok. Also, rent is a relatively fixed costs that does not expand with attorney numbers.

[Desert Fox]

A lot of the overhead in the 700-800k figures likely includes overhead that scales with revenue--not with lawyer count. Whether you have 2 associates billing 1000 each or 1 billing 2000, that won't change the need for paralegals, practice support, vendor costs, etc.

But head count absolutely change your costs for real estate, which is by far the single largest overhead component. Even in Manhattan firms require about 1000 square feet per lawyer. Same goes for utilities, hardware, recruiting, training, maintenance/upkeep etc.

If firms didn't incur additional costs from having four first-years making $135k bill 1500 instead of having three first-years making $180k bill 2000, they'd have no reason not to do that. But I'd bet they'd lose more money by doing that than they could gain in savings from attrition (which is surprisingly consistent from firm to firm, even those with wildly different reputations).

My firm has one of those work space for start up companies as a subtennant. They rent out private offices for 600 bucks an office per month. It's expensive but not like 200k/year expensive.