I'd like to thank Carolyn Spencer who graciously shared this article with the rest of us!

Bad Grades? Don't Despair

Linda E. Laufer
New York Law Journal
09-23-2004

Q: I attend a top-tier school, and my first-year grades were bad. I was able to get some legal experience this summer, but I have avoided all job searches for next summer because of my grades. What should I do?

A: Dear Ostrich:

Get your head out of the sand and start to develop a strategy. Your inquiry focuses on only your grades. You give no indication of the type of firm or practice in which you have an interest, or the nature of the legal experience that you obtained during the summer. Nevertheless, since this is the season for large law firm recruitment and you "have avoided all job searches," it appears that you had an interest in pursuing positions with those firms. Reading further into your inquiry, one can surmise that either you were so disappointed with your academic performance that you removed yourself from the fall recruitment process without considering whether any firms would look beyond your grades, or you performed so poorly that you did not meet the qualifications required by any of the large firms, even for candidates from a "top tier school."

The first step is to examine your grades issue. How "bad" were they? Were they "bad" on an objective scale, or just worse than you expected? Do they preclude you from all large firms, or just the firms on which you had your heart set? What caused your grades to suffer? What are you doing to improve your grades? Did you obtain a good grade in any course?

Next, determine the type of employer that will be the best fit for you. Consider the size of the firm. If you prefer large firms, evaluate whether your grades preclude you from all of them. In the event that they are not of interest or are out of the question, focus on medium-sized or smaller firms. Determine the practice areas that interest you.

The timing for applying to medium-sized and smaller firms is later, usually in the spring when they have a better idea of their hiring needs and budgets for the summer. There are advantages to conducting your job search in the spring. You may be able to improve your grades this semester. Then, you can point to an uptrend. If your coursework is in practice areas that you wish to pursue at those firms, you demonstrate an interest that corresponds to the firms' practice.

In addition, you have a few months in which to research firms and perhaps contact graduates of your law school who work there. Networking is an effective way to break into a firm. You must remain positive about your law school experience, including your grades. For all you know, some of the alumni may have had a similar slow start in law school, with a less than stellar first year transcript. They may be able to overlook poor grades, but not a negative attitude.

When talking to alumni, and other contacts, you must never ask for a job. If they do not have an available position, they are likely to feel uncomfortable about referring you to other contacts. They may be unwilling to subject their network to the same discomfort.

In addition, a conversation has nowhere to go once someone says "no" to a request for a job. It becomes worse if you ask a follow-up question of whether the contact knows of anyone who is looking. Then, the contact has to say "no" again. At that point, the conversation is at a dead end.

As you network, remember that you are looking for AIR -- advice, information and referrals -- to breathe life into your job search. You are engaged in informational interviews, not job interviews. Occasionally, an informational interview can turn into a job interview, but do not expect it and do not regard it as a failure if it does not happen. An informational interview is a success if you obtain at least one referral to a new contact.

Another strategy is targeted mailings to firms in which you have an interest. You can write to the recruitment coordinator, if the firm has one, or the hiring partner, or a graduate of your law school, or an attorney with whom you have something else in common. Follow up with a telephone call.

As the spring progresses, many law schools receive job postings from law firms. At times, these listings appear quite late in the season.

Consult the counselors in your law school's career services office. They can probably offer specific suggestions to help you deal with these issues. They may also be aware of certain law firms that hire 2Ls from your law school, regardless of grades.

There are many successful attorneys who had poor grades and developed excellent practical skills. Your first step is to look up, wipe the sand from your eyes, and see what opportunities are available to you.

Sincerely,

Linda E. Laufer

Linda E. Laufer is a former practicing attorney and a career consultant.

19. Arnold & Porter: "Staffers get 12 weeks paid maternity leave and profit sharing of 7.5% of salary. The less you make, the less you pay for health-insurance premiums."

Actually, a correction: 18 weeks (as of January 1, 2008).

31. Alston & Bird: "Both the legal and nonlegal staff get super benefits, including 90 days of paid maternity leave, coverage of fertility treatments, and concierge services."

Concierge services? Fabulous. Atlantans, stop yer whining!

41. Bingham McCutchen: "They're proud of their elite grads: 72 from nearby Harvard Law, 24 from Yale, and 20 from Stanford. They all start at $160,000 a year."

55. Perkins Coie: "They value fun at this law firm. At 2007's Lawyerpalooza battle of the bands, the Perkins Coie rock & rollers brought down the house (and took home the top prize)."

See also Nixon Peabody: "Fun is not prohibited here." Speaking of which...

66. Nixon Peabody: "The law firm excels on policies for GLBT employees (a 100% rating from the Human Rights Campaign); it targets 3% of billable hours annually for pro bono work."

Please send us any theme songs that are composed to commemorate these honors. Thank you.

100 Best Companies To Work For (2008) [Fortune]

Earlier: Bingham McCutchen: Land of the Amazons?

Summer Associate Forecast Brighter in '08

Petra Pasternak
The Recorder
January 18, 2008

Jennifer Nejad, a second-year at Boalt Hall School of Law, worried that her status as a transfer student might affect her desirability in the eyes of summer employers.

But as it turned out, she found the fall recruiting season was a cinch. After 11 initial interviews led to about eight callbacks, Nejad followed up with four firms and received three offers. She'll be spending this summer at Orrick, Herrington & Sutcliffe, earning $3,077 per week.

She says her friends reported similar stories. "Almost everyone I talked to was pleased with how things worked out," said Nejad, a transplant from Hastings College of the Law.

Her experience reflects the conclusion of another robust summer hiring season, which apparently wasn't affected much by the darkening economic outlook, the turmoil in credit markets nor a slowdown in M&A activity.

Morrison & Foerster Chairman Keith Wetmore says that firms, particularly those that sport a well-diversified practice, are much better equipped to handle isolated downturns than they were two decades ago.

"Generally, we haven't seen a recession that hit diversified firms significantly since the early 1990s," he said. The dot-com bubble burst hit technology-oriented firms hard in the early part of the decade, he said, and some New York securities firms are being buffeted by the credit storm. But for many other firms, 2007 was a good year, and firm leaders say they expect 2008 to bring more of the same.

Summer programs are a valuable recruiting tool that can influence students' perception of a firm, said Peter Ocko, a recruiter with Major, Lindsey & Africa in Los Angeles. "If anybody publicly slashes its summer associate group, it's like putting up a stop sign, 'Not welcome,'" Ocko said.

While general hiring hasn't slowed down, he added, even big firms that are doing well are hiring laterals in a more targeted fashion, not creating positions for every great candidate that crosses their threshold.

Both MoFo and Orrick wrapped up 2007 with 16 percent increases in gross revenues. Both firms are also reporting bigger summer programs.

At Orrick, last year's summer class totaled 93. This year, the firm has already hired 97 second-years and still expects to add 10 to 15 more first-years, said West Coast hiring partner James Kramer.
The Summer Forecast

Compare the size of the 2007 and '08 summer classes of more than half a dozen Am Law 100 and 200 firms (.pdf).

"The economic factors played a role in the sense that we paused and took a hard look at where we expect the firm to be in two years," Kramer said. "And we're comfortable with where the firm is going, and because of what we learned we decided to hire more people."

"We want to make an offer to every single summer associate that joins us," he added.

MoFo bumped its number of summers to 134, up from last year's 108. And the increase is spread over both coasts. The firm's San Francisco office is bringing 42 students aboard, up from 24 last year, while the New York office is hiring 27, up from last year's 14.

Reed Smith's hiring co-chair, Morgan Tovey, said he expected tougher competition for students this year, but his firm ended up increasing its summer class slightly, from 77 total last year to 69 so far this year, with 12 more slots budgeted for first-years. First-year hiring will be completed by March.

"Back in the fall we expected that the competition would be stiffer," Tovey said. "We extended fewer offers and got a better yield."

By contrast, Heller Ehrman was the only one in a random sampling of seven firms to significantly slash its summer program. Only 50 summers will work at Heller this year, down nearly 50 percent from last year's 97. But the firm is also boosting summer pay from $2,800 to $3,100 in most offices across the country.

In early Am Law 100 financial results published this month, Heller reported gross revenues of $491 million, down more than 3 percent from the previous year.

But David Sanders, Heller's chief human resources officer, said the decrease in summer hires is the result of rebalancing the proportion of first-year associates as opposed to judicial clerks and junior lateral hires.

A few years ago the firm had a large proportion of midlevel associates due to lateral hiring. The firm doubled the size of its summer program to fill out the early classes, Sanders said.

Now, he said, "We can go back to the norm that we have used in the past."

A number of other law firms active in mortgage-backed securities work have announced layoffs in the recent past, according to the article: Clifford Chance terminated a six-lawyer group in November. Thacher Proffitt & Wood and McKee Nelson both have offered buyouts to large numbers of associates working in the area.

San Francisco Bay Area Law Firms Float on Turbulent Waters
Niraj Chokshi and Zusha Elinson
The Recorder
01-10-2008

A rough economy in late 2007 killed a lot of the M&A and corporate work that had powered 2006, but leading Bay Area firms say global presence and a balance of practices helped insulate them from the downturn.

Despite the subprime mortgage crisis and resulting credit crunch, most of the eight Bay Area law firms that have released financial data so far showed . solid increases in revenue and profitability in 2007, according to The Recorder's annual survey of California firm finances.

Two exceptions were Heller Ehrman, which saw revenues and profits per partner drop slightly, and Townsend and Townsend and Crew, whose 2006 numbers had been goosed by an exceptionally large contingency fee.

Cooley Godward reported a 45 percent increase in revenue -- but that number is somewhat less jaw-dropping when considering that much of the increase is from its late 2006 merger with Kronish Lieb Weiner & Hellman.

Leaders at MoFo and Orrick credited their increases to international scope and diversity of core practice areas.

"[With] the international platform of the firm, we are now able to serve our clients around the world in a significantly more comprehensive way than we were just a few years ago," said Orrick Chairman Ralph Baxter Jr.

Orrick's ranks and revenue per lawyer grew by 8 percent each. RPL is now at $850,000, which Baxter predicted will continue to rise "year on year going forward."

Headcount at MoFo grew by 6 percent and was outpaced by RPL, which grew by 9 percent to $890,000.

Referring to 2006's 12 percent revenue jump, MoFo Chairman Keith Wetmore called 2007's across-the-board increases "more of the same."

"We saw lots of activity in our core litigation strengths," Wetmore said, pointing to major wins such as the November jury verdict in favor of JDS Uniphase Corp. in a securities fraud trial.

Pillsbury Winthrop Shaw Pittman saw a more modest 2 percent increase in revenue, to $590 million. Its gross had risen 1 percent the year before. In 2007 the firm lost 24 lawyers while RPL increased by 5 percent to $810,000.

Though the firm's gains weren't as large as other firms, Pillsbury Chairman James Rishwain Jr. was happy with the increase.

It was "on the path that we expected," he said.

Heller Ehrman was the hardest hit of the large San Francisco firms reporting so far, falling from $507 million to $491 million in revenue, a 3 percent drop. RPL fell by 5 percent to $800,000, canceling gains made in 2006.

Firm Chairman Matthew Larrabee blamed the losses on a series of large litigation cases that wrapped up early in the year.

"In the first quarter of 2007, in a period of about 45 days, we won or settled eight or nine very large litigation matters," he said.

He also blamed "an environment where litigation was down nationwide."

The nationwide decline, said Newport Beach-based legal consultant Peter Zeughauser, comes after years of above-average activity.

"It just so happens that it was extraordinarily busy for a good five years, and it's fallen off a little bit," he said.

That's not to say litigators everywhere were twiddling their thumbs.

"Litigation remained robust and ... in litigation shops or firms that had big litigation practices, generally, I think they had good years," he said, noting that "there were a few exceptions."

Heller also lost 25 equity partners, a 15 percent drop, while gaining 26 non-equity partners, a 30 percent increase.

Those changes, Larrabee said, are due to the firm adhering to The Recorder's survey definition of equity and non-equity partners -- something the firm hadn't done in the past.

"In the past we did not report everybody who fit The American Lawyer definition as a nonequity partner as nonequity," Larrabee said.

Regardless, the lower financial numbers won't drive lawyers away, Larrabee said.

"We have a very transparent organization. The partners are well aware of what happened this year and why," he said.

"Our partners have been very supportive."

Though most firms escaped the full wrath of the subprime crisis and credit crunch, the economy still held back growth.

Corporate and private equity trended downward, Zeughauser said.

"That's really what kept this year from being a great year."

He expects 2008 to be a lot like 2007.

"I think it's going to be a mixed year again. I think litigation is going to be strong," he said. "I think corporate is going to be weaker."

Employment powerhouse Littler Mendelson had a year of expansion that saw healthy growth in gross revenue -- up 28 percent to $307 million -- but losses in revenue per lawyer and profits per partner as headcount grew by half.

Managing partner Marko Mrkonich said that as employment law becomes increasingly specialized, his firm is looking for underserved corners of the country to set up new offices. In 2007, it opened offices in Portland, Ore.; Orlando; Cleveland; and New Haven, Conn., adding 220 lawyers in the process.

Mrkonich said that much of that growth also took a bite out of profitability. Profits per equity partner dropped by 10 percent, to about $420,000. Revenue per lawyer was down almost 15 percent, to $460,000.

Mrkonich said that the best-performing areas continue to be cross-border employment issues, payroll and traditional labor law, and class actions. "The total number of class actions being defended passed 300 pending matters at any one time in 2007, up from 250 a year ago," Mrkonich said.

The growth phase isn't over, either. He said he expects the firm to employ more than 700 lawyers by the end of this month.

The other two largest S.F.-based firms -- Thelen Reid Brown Raysman & Steiner and Sedgwick, Detert, Moran & Arnold -- did not provide financial data by the time of publication.

PEAKS IN THE VALLEY

Unlike the mixed results from San Francisco firms, some key Silicon Valley firms reported strong results for 2007.

Cooley Godward Kronish had a very strong year, boosting revenue by 45 percent to $485 million. While that outsized hike was thanks in large part to its merger with New York's Kronish Lieb, Cooley said that a strong year across all of its practices also boosted its 2007 results. That was evident in the healthy 10 percent bump in RPL.

"The Valley was extremely busy and I think the more pure tech firms weren't nicked as much by the subprime problems as other firms were," said Mark Pitchford, Cooley's COO. "In our space it was a really, really nice year."

Pitchford said IP and commercial litigation, as well as the firm's M&A practice, were particularly busy in 2007. Also, the firm's work for emerging companies rose on an increase in clean-tech activity, he said.

Profits per partner were up 42 percent at Cooley, hitting $1.42 million -- but that number was aided in part by a drop in equity partners and a huge increase in nonequity partners. The firm reported 6 nonequity partners in 2006 and 72 in 2007. The equity ranks went from 148 to 129.

Changes were made to the Cooley pay system in 2007 that caused a number of mostly junior partners to be reclassified as nonequity partners as defined in the Recorder survey, explained Joseph Conroy, Cooley CEO. The Recorder and American Lawyer magazine define a nonequity partner as a partner who receives more than half of his or her compensation from guaranteed salary rather than from profits.

Conroy said the change was made to better manage partner compensation as partners move up through the ranks. It also, he said, provided a more "apples to apples" comparison with PPP at other firms.

"That was not part of the motivation for the change," Conroy said. "That was part of the calculus of whether we would report these partners as nonequity partners."

Pitchford added that the change had nothing to do with the merger.

Fenwick & West boosted its top line nearly 10 percent to $183 million.

"Litigation was busy, corporate was busy, tax was busy and IP was busy," said Fenwick's Chairman Gordon Davidson.

Fenwick also raised its PPP nearly 8 percent, breaking the million-dollar mark for the first time in its history. The firm did drop four equity partner slots and gain six nonequity partners. Davidson said that's because new partners get a certain amount of compensation guaranteed for the first two years, a new practice at the firm.

"It was our strongest year ever, including the bubble," Davidson said.

What looks like a lousy year for one IP-heavy firm was just a numbers trick. After booking huge contingency fees in 2006, Townsend and Townsend and Crew showed a 15 percent decline in revenue to $145.5 million, with PPP nearly halved to $750,000.

Chairman James Gilliland Jr. predicted a year ago that 2007 wouldn't match the previous year, when the firm pulled in a $40 million award from a huge antitrust case against Microsoft. The firm also had landed a big contingency fee in 2005 from a patent suit for MicroUnity Inc. against Intel Corp.

"From our perspective 2007 was not a down year, it was a typical year," Gilliland said this week. "[2005 and 2006] were definitely aberrations and the partners knew that."

Before the two big years, the firm's PPP was at $550,000 while revenue stood at around $100 million.

Wilson Sonsini Goodrich & Rosati said it would wait until the close of its fiscal year Jan. 31 to report results. But firm spokeswoman Courtney Dorman said it would be a record year for the firm.

Staff writer Petra Pasternak contributed to this story.

Editor's note: For related financial information, see The Recorder story "Quinn Partner Profits Clear $3 Million."

Some pointers that Mr. Herrman shared from his book:

* No such thing as a first draft for summer and law firm associates. You should always try to draft your very best piece of work for a reviewing partner. Same applies to partners drafting work for their clients. Get the concenpt of "draft" as a sloppy first cut out of your head!

* Associates should always endeavor to get drafts to partners at least three days prior to the client deadline. Partners have their own internal deadlines dictated by their clients. It will win you any accolades to send a "draft" to a partner on the the client expects the final work product.

* Get involved in journals, whether it be law review or some other journal. The ability to write notes and articles beyond law school is critical to client and practice development.

You can listen to Mr. Herrman's aka/the Curmudgeon's talk on the OCS website here: http://www.law.umich.edu/currentstudents/careerservices/workshops/Pages/workshops.aspx

Some startling innovations: wholesale abolition of billable hour requirements for first years ( Ford & Harrison ), reducing billable hour requirement to 1600 (Boston-based Lowrie, Lando & Anastasi),and presenting new associates with two compesnation tracks ( Chicago-based Chapman and Cutler), among others.

As EIW comes to a close, students will have any variation of three basic questions relating to EIW: 1) When should I hear back from employers about callbackss? 2) What do I do if I don’t get my desired callbacks (or any callbacks?) 3) How do I schedule and prepare for callbacks?

While the OCS staff is certainly available to meet with you on an individual basis to address your concerns and answer questions, below is some general guidance from OCS counselors on the three basic questions.

1. What should I hear back from employers about callbacks?

While it’s true that you or some of your peers may have received callback invitations during EIW (and in some cases the day of the screening interview) employers are all different and handle callbacks differently. Students can typically expect to wait anywhere between 1-2 weeks to hear back from employers. Some of your peers may get callback offers earlier than others-the fact that you have had to wait does not necessarily mean that you are not getting a callback. Similar to your experience with law school admissions, some get accepted earlier, some later, and so on.

2. What do I do if I don’t get callbacks?

After two weeks or so of waiting for a callback you might be in either of two positions: (1) received rejection letter from firm(s) or (2) not heard back from firm(s). For the firms that have rejected you, put them to bed and don’t waste time mourning over or thinking about them. For those that you have not heard back from, you should be proactive and follow up with the firms by both leveraging other callback offers against this particular firm and/or by expressing your great interest in visiting with the firm on a callback. To leverage an offer, you simply let the firm that you seek a callback from know that although you already have a callback from firm X, but that you are really interested in interviewing this particular firm. In short, don’t give up until you either get the callback or a rejection.

3. How do I schedule and prepare for callbacks?

Scheduling callbacks is relatively painless. Typically you’ll be given the number of the law firm recruitment coordinator (or travel agent) who will help you schedule your callback interview. While it might be advantageous to schedule a callback soon after you receive the invitation, there may be other good reasons to not schedule it as soon as possible. For callbacks on the West Coast, due to the travel time and time change, you might consider blocking off several days to complete all your callbacks in that region. For callbacks where travel time is not a major issue, you can plan your callbacks to best fit your class and personal schedules over a period of weeks.

As far as preparing for callbacks, for the most part think of them as multiple screening interviews. You should be prepared to speak to your resume, about your grades, and of course why you are specifically interested in their firm. Often times you will get a schedule of interviewers before the callback, which makes it possible to research your interviewers to come up with good questions and points for discussion. You can also ask for a schedule a day or two before the callback.

What Every Lawyer Should Know About the Economics of a Law Practice

Melchior S. Morrione
Marketing the Law Firm Newsletter
08-30-2007

Why do so many lawyers know so little about the economics of practicing their profession? Not surprisingly, it's because their law school education did not address any of the business aspects of practicing law. So most young lawyers join law firms with little understanding of how they operate and without a clue as to what it takes to make a law practice successful and profitable. Many lawyers, especially those who join large firms, manage never to master these concepts -- and, in many cases, work hard at avoiding them.

This abyss between law school education and professional practice is finally being acknowledged in academia. Harvard Law School has established a research center, under the direction of professor David Wilkins, to identify the broad issues that have transformed the legal industry. In addition to research projects, it has identified the need to make law school curricula more relevant to current issues in the profession. I would hope that this will include the basic economics of practice, how law firms operate, how services should be delivered and how to adapt to the changing needs of clients.

Those who choose to practice law as solo practitioners or in a small-firm environment learn the relevance of economics early in their careers. They learn quickly that while they may be very busy working on client matters at a point in time, once those matters are completed, they need to find new work. They soon come to realize that in order to maintain a steady stream of work, they will need to pursue new assignments and new clients while working on their current matters. They discover that keeping all the balls in the air is not easy. Then there are the costs: secretary, rent, supplies, insurance, office equipment, etc.

What's left is net profit -- their compensation. At some point, they come to appreciate that their compensation is limited by the number of hours they can bill and collect from clients. And if they can hire an associate, at an overall cost less than the value of the associate's time that can be billed to clients, the difference will increase net profit -- their compensation.

THE INSTITUTIONAL COCOON

Then there are those who join large firms. Their experience is completely different. There always seems to be an endless supply of work. Their main concern is to charge the number of billable hours expected of them.

Even after they become partners, most lawyers in large firms manage to evade involvement in the economics of the business. They do not really understand, nor do they want to. Some won't acknowledge they are in a business. Others feel that the business of law is not their problem but that of the managing partner. Rather than spend time trying to understand the financial statements they receive, they focus only on their draw and annual compensation. These partners are often annoyed, and sometimes personally affronted, by management requests for certain levels of billable hours, monthly billing, reductions in write-offs, speedier collections and better management of associate time.

ECONOMIC INFRASTRUCTURE

The basic economic infrastructure of a law firm is no different from that of any other service business. There is revenue, expense, profit (partner compensation) and capital (the funds needed to run the business).

The revenue cycle is the key to profitability. Once upon a time, law firms billed their clients once a year, and the statements said simply "for services rendered" -- but that was eons ago.

It is vital to understand the role that timing plays in the revenue cycle. Although a simple concept, most lawyers fail to focus on the fact that they do not bring in a single dollar of revenue until they bill the client and collect the fee. Assuming that you are proactive and manage to bill all the time charged to clients on a monthly basis, consider that by the time the bill is presented to the client, at least 10 or 15 days will have elapsed into the next month. Even if the client pays the bill within 30 days of receiving it, a minimum of 45 days (and more like 60 days if you average in the month over which the costs were incurred) will have elapsed since the costs were incurred that produced this revenue. These costs, which include associate and staff salaries, overhead and office costs related to the work billed, have already been paid and therefore need to be funded for two months, until the revenue is received. And this is under the best of circumstances.

What if you don't bill all your time charges monthly or the client doesn't pay in 30 days? You will need to carry your unbilled inventory and receivables even longer. So how do you fund unbilled inventory and receivables? The answer is: with working capital.

WORKING CAPITAL

Because costs are incurred before revenue is received, you need working capital to run the business. Working capital is that which should funds the difference in timing between the collection of revenue and the payment of costs and expenses to earn it. In a properly capitalized firm, the required working capital is funded from capital contributed by the partners. Bank borrowing should be used only to fund temporary or seasonal shortfalls in working capital and for the acquisition of long-term assets.

IMPROVE PRODUCTIVITY TO INCREASE PROFITS

Just as solo practitioners come to realize that once they have reached the limits of billing their own time their profit can be increased only by adding an associate whose time can be billed to clients, so, too, in a large firm, the effective use of associates is the key to increasing profits. Many partners are perplexed by the concept of being able to improve their own productivity and consequent profit contribution to the firm, by learning to use associates more effectively.

Most partners will concede, albeit grudgingly, that not all functions involved in solving client problems require the same level of knowledge and experience. Therefore, projects can be broken down into discrete functions, and assignments can be parceled out to associates according to their individual abilities and experience. Delegating work should mean that everyone gets a challenge, and by pushing the work down to the lowest-cost associate capable of handing it, costs are reduced, and better value is delivered to the client. In a service business, efficiency and profitability are maximized only when people are working at their highest ability levels. So even though a partner is capable of performing the work that can be done by an associate, it is a waste of partner talent to do so.

RELUCTANCE TO DELEGATE

Getting partners to delegate work to associates is difficult, at best. Many who have tried have been unsuccessful because they just dump the work on the associate, without properly planning, communicating and supervising the assignment.

I believe I've heard all the excuses for not delegating. Some of my favorites include:

* I barely have enough work to keep me busy.
* Clients want only me to work on their matters.
* I can do it faster.
* Explaining things to associates is a waste of my time and the client's money.
* Why bring associates to client meetings; they don't say anything anyway.
* Associates never get the job done right the first time and are always late.
* Only a few of our associates are any good, and they are never available when I want them.

Some managing partners suffer from the same mind-set. I have known managing partners who, when they sought to improve the firm's bottom line, just told their partners to bill five more hours per week. What they should have said was to bill five fewer hours per week and use that time to go out and get 20 hours of new work from existing and new clients that could be done by associates.

HOW LEVERAGE AFFECTS PROFITABILITY

The improvement in profitability that can be achieved through the effective use of associates is best demonstrated by an example. To simplify the analysis in our example, assume that for every dollar the firm collects from clients, 55 percent goes for expenses, and 45 percent is net profit to be shared by the partners. Assume, too, that the firm is large enough that adding one or two associates to the staff will not materially alter the 45 percent profit factor.

As shown in the accompanying chart, a partner billing 1,700 hours will generate revenue of $1,020,000 and profit of $459,000. If this partner's billable hours increase to 1,900, the revenue goes up to $1,140,000, and profit rises to $513,000. Not bad.

But suppose, instead of increasing billable hours, this partner's billable hours are reduced to 1,500, and the 200 hours is used to find new work, a good portion of which can be done by associates. If the partner can bill 1,600 hours of Associate 1's time, then, although the profit from the partner's hours is reduced to $405,000, the combined profit from the partner and Associate 1 is $621,000. Therefore, even at 1,500 billable hours, a partner leveraged with one associate billing only 1,600 hours is considerably more profitable than that partner billing 1,900 hours alone. And if the partner could bill 1,800 hours of an associate's time (Associate 2) the combined profit is increased to $648,000. Now if the partner could find enough work to keep both associates busy, the combined profit would be $864,000. And this, while billing 1,500 hours and spending 200 hours marketing and developing new work. This is how real money is made in a professional services business.

The numbers are compelling. But to achieve them requires that managing partners recognize the need for partners to devote time to marketing and provide the motivation and tools to help them learn how to develop effective delegation skills.

EVERYBODY WINS

The key to successfully growing a law firm is to have all the lawyers in the firm performing at their highest-ability levels. And while partners often resist, bringing associates into the firm is a fundamental tenet of growing a healthy law firm. It is the way young lawyers learn how to serve clients, working on the job as part of a team solving client problems. And it is the only way to train and develop new partners.

Everyone benefits from leverage -- clients, associates, partners. Clients get better value because all team members working at their proper experience levels get the job done at lower billing rates. Associates learn how to deliver service under the guidance of an experienced partner. And partners are able to spend more time interacting with their clients and performing the functions only they can handle.

CONCLUSION

This is not rocket science. It is Economics 101 for a law firm. I will admit that learning to delegate effectively does not come easily. It requires the development of project management skills, which, once learned, will put the partner in the position of spending more time planning, supervising, and reviewing the work and less time doing it -- without compromising quality. But the bottom line is that everyone on the client team participates at their highest-ability level in delivering better value to the client and increased profitability to the firm. And isn't that the objective?

"Is this any way to recruit associates?" asks a lead story in this month's American Lawyer.

What is "this way?" We all know the drill, most of us from both sides of the table:

* Top law schools orchestrate dances of 20-minute interviews between visiting firm partners and law students;
* questions are kept superficial (one Latham recruit got a steady diet of fantasy football questions);
* grades and class rank are presumed to be valid proxies for post-employment performance; and, in the event,
* of students offered summer jobs by "big" firms (> 250 lawyers):
o just 28% accept
o 40% of whom are gone by their 3rd year, and
o 62% of whom are gone by their 4th.
* And, according to NALP, half of associate departures are "unwanted" by the firms.
* Finally, depending on who you believe, replacing a needed associate costs from one to three times their fully loaded annual costs.

Worse, the pressure is intensifying. According to the National Law Journal's "250" report (ranking the largest 250 US firms by lawyer headcount), the number of associates at those firms has increased 76% over the past decade while the number of law school graduates has gone up just 7%. Firms are going to more law schools, reaching farther down into the class ranks, or both. And at the elite schools, firms are simply pushing harder. Georgetown Law, for example, anticipates a 10% increase in firm interviews this year, and the same again next year.

Need I add that most of this takes place with students fundamentally in the dark about what differentiates one firm from another?

"[Students] aren't helped much by firm marketing materials, which often say the same thing and make firms indistinguishable from each other. "They all tell you they have great clients, and they work hard but [have] a very collegial atmosphere," says the Stanford student. "It's the same discourse over and over again."

Fine. Diagnosis is one thing, prescription another.

Aric Press
The American Lawyer
August 1, 2007
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Put aside the conventional wisdom. Here's the state of associate life.

-Associates aren't miserable, except perhaps in certain high-pressure New York precincts. The average satisfaction score hit a record high this year: 3.81 on a five-point scale.

- Associates don't plan on staying. Despite the high level of job satisfaction, only 44.9 percent of the respondents predicted that they would be at their firms in five years, and only 11.7 percent expected that they would become equity partners at their current firm.

- Despite all the hand-wringing over associate retention, law firms report that in nearly half the associate departures -- 49 percent -- the firms were either neutral about the departures or happy to have the associates leave. (This statistic comes from the latest survey by the National Association for Law Placement.)

- There may not be enough lawyers to feed the hiring appetite. According to our survey of summer associate hires, Am Law 200 firms expect to bring on roughly 10,000 associates next fall. That astonishing number equals about one-quarter of all the students who will graduate from U.S. law schools next year. To put it another way, the top 20 law schools will only produce about 6,500 graduates.

What do these four facts mean? For law firms, at least three things. First, in the short run, the war for talent will become more ferocious. Second, the cost of talent will only increase. And third, the need for firms to differentiate themselves will become apparent even to the hidebound.

As costs rise, the price of a mistake only grows. The feverish but unsystematic, even casual, recruiting habits of firms seem painfully inadequate now. Firms will sharpen their techniques or start losing ground to others who have grown weary of viewing recruits through a glass darkly.

As we have argued before, firms are not all alike and do themselves and their potential associates little good by pretending otherwise. Firms need to define themselves and then make their distinctive qualities known to the job market.

A word for potential associates: Enjoy! The seller's market will last until the next downturn -- by which time most of you will be on to something else.

Do not ask questions about benefits, billables and compensation. Wait until you get an offer before you jump into such question or find the answers from the website or through other resources.

Do not ask questions that shed the firm in a negative light or questions that may put the firm on the defensive. Avoid asking why the firm does not compare to other firms in terms of pro bono, minority partners, etc. Save those questions for later after you have received an offer.

Do not ask extensively about opportunities in the firm’s international and/or entertainment practices. Often times, students express interest in these practice areas without having a thorough understanding of what is actually involved in those fields. International law as practiced at major law firms involves international arbitration and drafting contracts and agreements with clients overseas. More likely than not, it will not involve appearing before the International Court of Justice, WTO or similar institutions. Similarly Entertainment law is labor and employment law relating to those in the entertainment industry.

Do not ask about the quality of life, life/work balance and culture of the firm. While these may truly be important to you, they may create a perception with the employer that you are not willing to work hard. Save these questions after you have received an offer of employment.

David Hammond represents companies when they get in trouble for their work in Iraq

Daphne Eviatar
The American Lawyer
June 20, 2007

When the House Judiciary Committee held a hearing on what it calls "War Profiteering and Other Contractor Crimes Committed Overseas" Tuesday, David Hammond, the lead partner handling Iraq liability issues at Crowell & Moring, was there.

As a lawyer for some of the top private security companies operating alongside U.S. troops in Iraq -- Blackwater USA, Triple Canopy Inc., DynCorp International Inc. and Erinys Llc -- a big part of his job is monitoring the growing outrage over those companies' alleged abuses.

Hammond was there in February, too, when the House Oversight Committee held its own hearing on the role of military contractors and Blackwater, the North Carolina-based private military company, was on the hot seat for the gruesome deaths of four men it had sent to Iraq. The men were independent contractors hired by Blackwater, on a security mission near Fallujah, when they were ambushed by insurgents and shot, dismembered and hung from a bridge that spans the Euphrates River.

For years, Hammond has been offering answers. His clients include some of the top private security companies now operating in Iraq. These companies take on roles once played exclusively by soldiers in the U.S. military. Some call them mercenaries.

As the war in Iraq drags on, these companies face a growing list of legal troubles. At least 15 personal injury, wrongful death and product liability cases have been filed. And federal investigators have estimated that some $10 billion of U.S. taxpayer money has been squandered or gone unaccounted for by private companies providing military services and supplies.

Hammond not only does much of the contracting and contract-related litigation for these companies, but he also provides the political and legal justification for the growing reliance on their services. He is chair of the general counsel committee of the Orwellian-named International Peace Operations Association, or IPOA, the leading industry group for private military contractors. He has published papers with organizations such as the conservative Washington Legal Foundation, given speeches at defense industry conferences and offered seminars to private military companies. His major theme: how to avoid liability despite the risks of battlefield operations.

Hammond's practice has grown, along with the number of private contractors serving in Iraq. There are almost as many men and women in Iraq working for private military contractors as official American troops. In the Gulf War, by contrast, the ratio was about 1-to-6.

The outsourcing of military operations is just one piece of a larger federal outsourcing effort, an effort that Crowell lawyers have helped to create and now profit from. The firm's prominence in the field dates back to 1979, when 53 Washington lawyers left Jones, Day, Reavis & Pogue to start their own firm. Though it's since expanded to a full-service 350-lawyer firm, one of Crowell's calling cards is its roster of some of the most experienced and well-connected federal contracts attorneys in the country.

Partner Angela Styles is one. A Texan who worked on President George W. Bush's first presidential campaign, she was administrator for procurement policy in the White House Office of Management and Budget from 2001 to 2003. Her job was to develop procedures for outsourcing as much of the government's work as possible.

"If a federal employee was performing a job that you could find in the yellow pages, we would look at whether the private sector could be doing it more effectively and cheaply," says Styles.

Richard Bednar, a former brigadier general, is another key player in the practice at Crowell. In the Army he decided whether companies found guilty of defrauding the military would remain eligible for government contracts. Now he defends those companies before the Army official who has his old job. He also touts the industry as coordinator of the Defense Industry Initiative on Business Ethics and Conduct, a group of defense and security contractors formed in the 1980s to boost the industry's image. Most of its 80 members are traditional defense contractors, such as Lockheed Martin Corp. and United Technologies Corp. Contractors of the new breed -- the providers of private armies, such as Blackwater and DynCorp -- have not signed on to its code of conduct. All four companies are Crowell clients.

The traditional practice of defending defense contractors' cost overruns is one thing; claiming immunity for wrongdoing by private security forces in Iraq is quite another. Recent congressional hearings have called attention to the fact that no one in the government seems to be holding these companies -- whether for failure to protect their own hires or for inflated charges to the federal government.

Although agencies such as the Office of the Special Inspector General for Iraq Reconstruction and the Government Accountability Office have conducted audits and issued reports that highlight vast overcharges and unauthorized spending by private military companies, the government frequently doesn't penalize the companies for it.

"There's a war going on," explains Crowell partner Terry Albertson, who represents private military contractors in cost accounting disputes. "You get these stories that come out of Iraq that sound in some ways like terrible problems, but if you were really on the ground there, doing what these contractors are doing, you'd see it differently." By and large, says Albertson, the U.S. Department of Defense understands the difficulties that private military companies face and rejects the auditors' recommendations.

Hammond also tries to insulate his clients from judgment. One way is to thwart the extension of rules that burden the regular Army to private companies. He has opposed a proposal to make military contractors subject to the Uniform Code of Military Justice, among other rules. The proposal "could have an unintended negative impact on the mission of our armed forces and the government and contractor personnel serving overseas, including possibly compromising their physical safety," he wrote in a letter to a Defense Department official.

But at other times, Hammond has argued that his clients are essentially indistinguishable from the U.S. military. When they are sued, for instance, Hammond argues that private military companies are part of the "U.S. total force," and that they should enjoy the same immunity from suit as U.S. soldiers. To help make that happen, Hammond advises his clients to make the company's close connection to the military explicit. "All those things should be put into the contract, so the court can see the scope of government control," he says.

Several companies have failed to spell out that connection and are in legal trouble as a result. For example, Blackwater has been sued by the families of the dead men, who claim that the company failed to provide essential safety equipment and that the failure led to their deaths. Blackwater is represented by Michael Socarras of McDermott Will & Emery. Socarras and Hammond both declined to comment on the case.

Almost every aspect of the case has been blanketed with secrecy. Who wrote the employment contracts? Hammond won't say. What about the contract between Blackwater and the U.S. government? Turns out, there wasn't any. Only after the lawsuit and congressional hearings was it revealed that Blackwater was a subcontractor of a Kuwaiti hotel services company, which in turn was a subcontractor of a Cyprus-based food service company, which itself was a subcontractor of Kellogg Brown & Root, which at the time was a subsidiary of Halliburton Co.

In May a federal district court sent the case to confidential arbitration. So the proceedings will remain a secret. In the end, the U.S. taxpayer, who can be considered the ultimate client of Blackwater, may never know the outcome. And that would be just fine with David Hammond.

It may be a stretch to argue that beginning lawyers at big law firms need more money, but those practicing in New York could make a strong case for a raise.

With more law firms now paying first-year associates in Los Angeles, San Francisco, Chicago and Boston the same amount they are doling out to their starting lawyers in New York, it seems that attorneys in the Big Apple are getting shortchanged in the deal.

Several big law firms in the last few weeks have boosted salaries for first-year associates in large cities in the West to match the $160,000 that their New York beginners receive.

A "nationalization" of their practices is the reason many firms give for paying the same amounts in different locations. But a look at the cost-of-living differentials shows that the copycat compensation is creating some significant pay disparities among associate ranks.

Law firms in California say recent raises are based on what individual markets demand and not on how far a dollar goes in a particular area.

"The marketplace was less regional than we thought," said Orrick, Herrington & Sutcliffe Chairman Ralph Baxter, referring to his firm's decision in May to raise associate pay in California to match its New York offices. Orrick had upped its New York pay in January to $160,000 along with several other law firms at the time.

Orrick's West Coast raises last month set off a rash of salary increases in California that is still spreading. Several firms in Chicago have raised pay to $160,000, including McDermott, Will & Emery; Kirkland & Ellis; and Sidley Austin. Firms in Boston, including Foley Hoag, Goodwin Procter and Ropes & Gray also have followed suit.

On one hand, firms say that their decisions to boost salaries in Los Angeles, San Francisco and Chicago are necessary to stay competitive in recruiting. Firms want to avoid the embarrassment of becoming pegged as a holdout for upping salaries. On the other hand, they say that as their specific practice areas have broadened to include attorneys from both coasts and cities in between, it is inequitable to pay an attorney in Los Angeles one amount and an attorney in New York another.

"If it were cost-of-living driven, we'd pay less in Walnut Creek," said Morrison & Foerster Chairman Keith Wetmore, referring to one of its California offices.

But maybe it should. Cost-of-living differences are huge among major U.S. cities. According to the Council for Community and Economic Research (CCER), the equivalent of a $160,000 annual salary in New York is $205,631 in Los Angeles. The CCER, a 46-year-old nonprofit organization, comprising economic development organizations, government agencies, universities and others, produces the Cost of Living Index.

In Chicago, $160,000 balloons to the equivalent of $278,573, according to the CCER. In the pricey San Francisco market, the equivalent of $160,000 in New York is $190,789. In Boston, it equates to $241,397.

Housing provides some of the sharpest contrasts. An apartment costing about $2,000 per month in San Francisco runs more than $3,400 in New York. The same apartment goes for about $1,600 in Chicago.