The legal profession is in the midst of a fundamental change, according to some inside observers. Critics of the status quo insist that aging law firm structures are no longer serving the best interests of clients or new generations of lawyers. In support of this conclusion, analysts point to record numbers of junior associates departing traditional firms in search of meaningful alternatives.
A number of cross-currents are implicated in the shift away from traditional law firm structures. Generational differences among lawyers, skyrocketing salaries, and junior associate training are all germane to the current transformation of the profession.
"The State of the Legal Profession" symposium discussed these and other issues on Friday, April 18, 2008 at Stanford Law School.
Generational Differences
There are obvious objective distinctions between senior partners and junior associates. The average age difference between the two groups is 20-40 years, not unlike most parent-child relations. This difference alone leads to a significant generation gap of misunderstanding.
In terms of subjective generational differences that can be hard to quantify, Baby Boomer generations routinely cite a general lack of work ethic among youth.
"Young lawyers want to work at home in their pajamas, looking at their fish tanks and listening to their iPods," chuckled Gordon Davidson, Partner and Chairman, Fenwick & West LLP. Although his statement is tongue-in-cheek, it captures the "play ethic" embodied in younger generations.
Kate Ilana Frucher, General Manger, Axiom, countered with the observation that many younger lawyers simply do not want to dedicate their lives to work, as the senior partners have done. "Young lawyers are not buying into the model of a single bread winner per family," Frucher explained, "and traditional firms have relied on this model."
Davidson agreed. "Today, both spouses tend to be very smart and want to do something interesting with their lives."
According to some lawyers who post on FindLaw's Greedy Associates, the current state of the profession is so unfulfilling that there is a distinct career path for attorneys, from "BigLaw through to non-legal employment." Essentially, the professional life of an attorney is a progression from money to self-fulfillment.
A summation of the generational challenge by a senior member of the panel, James D. Holzhauer, Partner and Chairman, Mayer Brown LLP resonates: "The law firm that cracks the lifestyle dilemma will be the most successful law firm of the future."
High Salaries and the Prestige Factor
All Stanford panelists agreed that the current $160,000 salaries for untrained first-year associates are ludicrous. Why, then, are firms offering these incentives? The panel suggested that these high salaries are a necessary and inescapable element of competition among law firms.
"Large firms didn't start the salary games," Davidson remarked. Escalation started in 1999 when the Gunderson firm, a small patent boutique, raised salaries by 50% for a few attorneys. "It was the egos of large firm managing partners that made them match these inflated levels."
Other panelists attributed skyrocketing salaries to Steven Brill, founder of The American Lawyerpublication that created the profits per partner (PPP) system, which has become the benchmark by which law firms judge themselves. The PPP system measures net operating income, minus compensation for nonequity partners, divided by the number of equity partners.
"The legal profession didn't have to buy into profit-per-partner charts," said panelist Jamienne S. Studley, a former attorney with the Clinton Administration and President of Policy Advocates, Inc. "Once people resort to profit-per-partner statistics, it's hard not to compete," Holzhauer added.
Larry Kramer, panel moderator and Dean of Stanford Law School, stated that he does not believe young attorneys go to the large firms for the money. "They go for the prestige." Young over-achieving students are looking for the "next gold star."
Rebecca Love Kourlis, former Justice of the Colorado Supreme Court and Executive Director, Institute for the Advancement of the Legal System at the University of Denver, believes that the legal profession itself is to blame. When the legal profession upholds high salaries as the paragon, students will naturally follow. "Who are we holding up as the leaders?" Love Kourlis asked, "Can we change the profession by upholding different people?"
Training and Loyalty
The training and loyalty of junior associates is closely tied to the issue of high salaries. Lack of "real world" legal training haunts most junior associates, who are routinely assigned to tedious document review projects.
Training a highly-paid first year associate who will most likely move on in a couple of years is a dilemma faced by many firms. According to the panel, 78% of lawyers are leaving their firms after only 1 or 2 years.
As the difference between first year salaries and the cost of law school is now very wide, debt burden (having to pay off one's school loan) is no longer the primary motivating factor that drives and binds young lawyers to unfulfilling careers. Consequently, the lack of lasting loyalty among young associates to their law firms is now the norm.
The loyalty issue cuts both ways, however, as some firms do not offer the training that they have a responsibility to provide to associates. Under pressure from clients, who ultimately bear the cost of training, law firms are often limited in their ability to staff junior associates on interesting matters that will provide vocational training. (See part 1 of this article for issues relating to Client Driven Innovation in Legal Services)
One result of this tangled situation is a legion of highly-paid, dissatisfied young lawyers working long hours on routine matters that offer little in the way of training.
While other professional schools -- medical, dental and business -- offer much in the way of hands-on training, new lawyers may wonder why they didn't receive more vocational training in law school. Recognizing this need, most law schools now offer clinical programs in a variety of practice areas.
Dean Kramer commented that while he understands how such offerings are a good strategy for second and third-tier school, Stanford has no intention of moving in the direction of providing vocational training.
Holzhauer agreed. "I don't think top law schools should move in the direction of offering on-the job training. They should be turning out strong, broad-minded students."
Finding Solutions
The Stanford panel offered no simple solutions to the generational and training problems facing the legal profession. Acknowledgement and discussion of the issues are steps in the right direction, and firms of all sizes are experimenting with solutions that fit their organizations.
To quell dissatisfaction among the youth, some large international firms are offering "study abroad" programs, whereby junior associates are dispatched to foreign offices in desirable locations, like Paris, London, Brussels, Amsterdam and Shanghai.
Fenwick & West offers its attorneys flexible schedules, however Davidson acknowledged that, "Clients don't respect flexibility."
Others firms are training junior associates on pro bono work. Shearman & Sterling recently took the only antitrust pro bono case in 10 years, according to Jamienne S. Studley, President of Policy Advocates, Inc. She also indicated that many firms are asking her organization for pro bono projects to fill the time of their first year associates.
"State and local governments are places that provide a good mix of satisfaction and money," Love Kourlis said. One audience member opined that American legal system should introduce the notion of mandatory pubic service component. Holzhauer supported the idea, adding that Mayer Brown employs more Assistant U.S. Attorneys than any other law firm.
The Stanford Panel's Answers to the Junior Associate Training Dilemma:
- Government / public service
- Public interest / pro bono
- Work on smaller matters where there's not much money at issue
- Take "Running the Company" matters when available
- Work at a firm and become tied to a corporate client
- Find a firm that provides on the job training.
Love Kourlis commented: "Healthy structures lead to healthy behaviors. The legal profession needs to address problems on a structural level. Adhering to the same old structures will never fully solve the dilemmas."
Dean Kramer commented that there are too few alternatives to traditional firms. "Why isn't there a flowering of alternatives?"
Axiom is an existing alternative to the traditional law firm. Frucher suggested that there is a trade off when you leave a traditional firm. "What you lose in money, you gain in quality of life."
One member of the audience put forth the idea of the decentralized law firm, a network of sole practitioners empowered by technology. These networks have a vastly reduced overhead and offer the members both experimentation and enterprise.
Branding, however, is a challenge for these decentralized operations. When it comes to client development, there is undeniable value in brand recognition.
Conclusion & Trajectory
Although the Stanford panel approached the issues from different perspectives, there was general agreement that the legal profession is in a state of real flux. The outcomes of these current changes are uncertain, but one thing will remain constant in the midst of change: The young always replace the old.
Perhaps young lawyers' dissatisfaction with the profession will lead to a flourishing of public service, such as government, public interest and pro bono work. In this optimistic scenario, the public becomes the beneficiary of a transformed legal profession. Such an outcome would be welcome by at least one panelist, who stated, "Lawyers are in a service profession. We're not the center of the universe."
Andrew H. Zangrilli, Esq. is a Senior Producer in the Sunnyvale office of FindLaw, a Thomson Reuters business.
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