Anyone in biglaw get a pay cut?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do these firms think no one notices that they have not even given this sufficient time to determine whether there is an actual downturn in their business?

What other businesses that have remained open and operational have instituted paycuts and layoffs? Are they that risk adverse that they cut everyone based on what might happen?

You kind of need to get a clue. Clients are vanishing and blowing up. The whole country is becoming impoverished and unemployed . . . so yeah, there is going to be price pressure on lawyers and massive layoffs.

If the firms are requiring contemporaneous entry of billable hours, they can track pretty much in real time how much their revenues are falling off. And I think they are falling of quite a bit already, and most people realize that there's going to be a long term impact as the clients go belly up.

Maybe. Some clients are cutting outside legal budget like crazy right now, but aren't necessarily "blowing up." Clients who use big law firms aren't likely skating close to the financial edge. They are likely preserving capital, postponing acquisitions, etc...

[Anonymous]

Anonymous wrote:

Anonymous wrote:Cutting out the large re-post block.

The law is a business, and just like any other, the employees aren't going to get treated the same way as shareholders. If you think like a business person when you're an associate, you have a much better chance of making partner. Or, more likely, you'll recognize far, far earlier what a racket big law firms are and use your firm more than it uses you.

For example, long before Covid-19, I knew an associate who wanted to travel to far-flung locations like Bali, Japan, Patagonia, and similarly high-travel cost places. He volunteered to do document review and other menial work on-site in cities all over the U.S. and the world. Very few associates wanted to travel to North Dakota during the winter, or West Texas during the summer - but he did it. 1M+ frequent flyer miles plus hotel points, he would take vacations worth $10k+ while other associates were spending their own $$$ on bar tabs, dinners out, etc...

A true entrepreneur would not be pursuing a career in law, let alone Big Law. TBH, sounds like you're equivocating what your friend is doing to what an employee would do...a true "business person" according to your definition, i.e. partner material, would think ways to help the firm cut cost and maximize revenue rather than enjoying the perks of working for a company by being a glorified doc reviewer.

Unless the guy was doing what a PP mentioned - spending 1-3 years paying down law school loans, then deciding to go into business (perhaps also realizing that he didn't acquire any legal skills that would translate into better opportunities down the line). I've met a few former lawyers turned business people in the corporate world, and they all did a quick stint in big law then went corporate. They bypassed being in-house counsel - they simply took corporate jobs alongside folks with MBAs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do these firms think no one notices that they have not even given this sufficient time to determine whether there is an actual downturn in their business?

What other businesses that have remained open and operational have instituted paycuts and layoffs? Are they that risk adverse that they cut everyone based on what might happen?

You kind of need to get a clue. Clients are vanishing and blowing up. The whole country is becoming impoverished and unemployed . . . so yeah, there is going to be price pressure on lawyers and massive layoffs.

If the firms are requiring contemporaneous entry of billable hours, they can track pretty much in real time how much their revenues are falling off. And I think they are falling of quite a bit already, and most people realize that there's going to be a long term impact as the clients go belly up.

OP here. we had an office partner meeting yesterday (by telephone, of course). managing partner stressed (again) that we should enter our time regularly, each day if possible. he said that the firm is tracking hours pretty regularly and that if hours fall off a cliff, we "may have to make decisions we don't want to have to make." although that will have to be done even if hours remain steady but clients quit paying, which is another thing the firm is watching closely.

To a point made earlier, I also initially thought the firms immediately cutting pay and laying off were jumping the gun, but I would be downright shocked if there isn't a huge and devastating impact on biglaw (and the economy generally) from all this - one that takes years to recover from.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do these firms think no one notices that they have not even given this sufficient time to determine whether there is an actual downturn in their business?

What other businesses that have remained open and operational have instituted paycuts and layoffs? Are they that risk adverse that they cut everyone based on what might happen?

You kind of need to get a clue. Clients are vanishing and blowing up. The whole country is becoming impoverished and unemployed . . . so yeah, there is going to be price pressure on lawyers and massive layoffs.

If the firms are requiring contemporaneous entry of billable hours, they can track pretty much in real time how much their revenues are falling off. And I think they are falling of quite a bit already, and most people realize that there's going to be a long term impact as the clients go belly up.

OP here. we had an office partner meeting yesterday (by telephone, of course). managing partner stressed (again) that we should enter our time regularly, each day if possible. he said that the firm is tracking hours pretty regularly and that if hours fall off a cliff, we "may have to make decisions we don't want to have to make." although that will have to be done even if hours remain steady but clients quit paying, which is another thing the firm is watching closely.

To a point made earlier, I also initially thought the firms immediately cutting pay and laying off were jumping the gun, but I would be downright shocked if there isn't a huge and devastating impact on biglaw (and the economy generally) from all this - one that takes years to recover from.

Whether they were jumping the gun or not, coronavirus will be used as an excuse to unload unproductive associates, older partners with shrinking books, etc.... This is how it's always been, and how it will always be with big law (and with big corp for that matter). The only major difference is what a PP mentioned, big law might use the current situation as a way to reset compensation that crept up over the past 10 years of the bull market (since 2008).

[Anonymous]

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Anonymous wrote:

Anonymous wrote:My firm (20-30 range) has a global town hall today. Partners didn't get a draw this quarter and I'm thinking this will be layoffs, but I'm stupidly optimistic they'll start with paycuts.

Update: partner comp reduced by 20% for first half of year, hiring freeze, summer program will get dialed back (but not canceled), no salary reductions for associates or staff. Caveat re: layoffs/pay reductions - this is the absolute last resort; don't want to get there, but we really don't know how long this will last or how bad it will get so no blanket promise to never do so.

At the very least, reviews are going to get a lot tougher and there will be more “performance” terminations. No one wants to be the one to admit to Latham-ing associates, although Latham sure seems to have survived just fine.

What is "Latham-ing" an associate?

It’s when a firm lays off associates due to financial constraints or to boost profits but tells the associates fired that it was due to their poor performance. Done by most big firms.

Ah, okay. I'm not in the law profession myself but have plenty of friends who are, including a partner at Latham, so I was just curious.

Sounds about right from what I do know about big law!

Large law firms have devolved into a horrible cesspool. They need to follow a more corporate model and hire fewer people with a view to have them stay. Charge reasonable rates. Pay associates far less. Allow for more job security. Should devalue billable hours and value good work and team building etc. The accounting firms are like this. Big law can do it.

You aren’t wrong. The high associate salaries lead to high hours requirements and high rates and no tolerance for a dip in performance.

Haven't read the whole thread, but had to respond this post.

The current BIGLAW model evolved over the past 100+ years with the rise of corporations from the industrial revolution. Yet even before that, lawyers would often hire young "clerks," burn them out or they leave to start their own firms, then hire a new crop of fresh clerks. This model works well for law firm partners, but not for clients. We will only see a change to the corporate model if clients demand it. Since only the largest clients generate continuous legal work, the ones with intermittent work won't care because all they're interested in is solving their immediate problem, then letting their in-house counsel handle the day-to-day work.

I'm sure folks will disagree with some or all of the foregoing, but that's not the larger point here. The OP was interested in pay cuts, which are happening, as they have happened before, and as they will again. Law firm partners are not altruistic and never will be if they can simply hire just-as-smart and cheaper talent when times get better (which they can). The real solution is for the number of law schools to shrink along with the number of law school graduates. But because law schools are cash cows for universities (i.e. they pay for the 17th century Central African dance department), this won't happen. The ABA won't shrink the number either, because it's dependent on the fees paid by universities to get accredited or keep their programs accredited (and the more lawyers there are, the more ABA members).

Not asked by the OP, but still important, is what should a young BIGLAW associate do today to avoid getting hosed down the line? Bill 50-100 hours over the minimum, then spend the rest of your time learning the ins and outs of the "business" of law. How to get clients should be at the top of this list (hint: it is about good service, but that's only a small part of it - anyone can provide good service). Never bill crazy hours and expect gratitude from the partners down the line. They've gotten their profit off you, so why should they give you any more of it? After not sharing enough times, they know you'll grow bitter, so it will be time to find someone new and "eager". Put simply, start thinking like a partner (owner) rather than an employee. If you don't, that's all you'll ever be.

All your points make sense, but I still do not understand if the model is bad for clients, why clients do not demand a change?

I’m no PP. but I think the clients were already demanding a change. They constantly ask for reductions in bills. They want top product with low rates.

I am a client. The kind of client that biglaw would kill for. We were demanding change Before C19. No way we ease up now.

[Anonymous]

What kind of changes, client? A lot of the inefficiency and wasted hours on tasks that really don’t need to be done in big law is client-driven. I’m in litigation.

[Anonymous]

Anonymous wrote:What kind of changes, client? A lot of the inefficiency and wasted hours on tasks that really don’t need to be done in big law is client-driven. I’m in litigation.

That's what firms often say, but it isn't necessarily true. Firms often want to run down every potential rat hole to avoid allegations of malpractice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What kind of changes, client? A lot of the inefficiency and wasted hours on tasks that really don’t need to be done in big law is client-driven. I’m in litigation.

That's what firms often say, but it isn't necessarily true. Firms often want to run down every potential rat hole to avoid allegations of malpractice.

DP. There is some truth to that. But there is also, at least at some places, an there is a competitive and perfectionist ethos that you have to track down every possible lead, even though the chance of that unpublished decision from the Western District of Bumblefudge that you found deciding the case is exceedingly low.

[Anonymous]

It can take a lot of work to "win" in litigation. If clients do not want to pay to try and win, they should agree to settle.

[Anonymous]

Anonymous wrote:It can take a lot of work to "win" in litigation. If clients do not want to pay to try and win, they should agree to settle.

thanks, captain obvious!

[Anonymous]

Anonymous wrote:

Anonymous wrote:It can take a lot of work to "win" in litigation. If clients do not want to pay to try and win, they should agree to settle.

thanks, captain obvious!

Not exactly obvious from the above comments. And not obvious IRL, when clients refuse to settle but complain about litigation costs on DCUM.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It can take a lot of work to "win" in litigation. If clients do not want to pay to try and win, they should agree to settle.

thanks, captain obvious!

Not exactly obvious from the above comments. And not obvious IRL, when clients refuse to settle but complain about litigation costs on DCUM.

C’mon. Yes, it costs money to litigate, but there are a lot of litigation costs that have a low ROI. Legal research to the ends of the earth are not likely to make a difference. Fighting over every step of discovery is a waste because you have a pretty good sense of how things will ultimately shake out. Reading the brief that extra three times to make sure there are NO typos and everything is as tight as can be will rarely make a difference.

So, let’s not pretend there isn’t a lot of fluff in litigation. In a rare bet the company case, it is with it to take these steps because the slight chance of it mattering is worth the expense. But, in virtually all litigation, it isn’t.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What kind of changes, client? A lot of the inefficiency and wasted hours on tasks that really don’t need to be done in big law is client-driven. I’m in litigation.

That's what firms often say, but it isn't necessarily true. Firms often want to run down every potential rat hole to avoid allegations of malpractice.

Sorry, it’s BS to blame it all on the firms. In-house counsel is often the one trying to cover his ass with or pacify the business people. In-house counsel often makes us do things that we flat out say have an extremely low likelihood of benefit. If you want to blame it on the nature of litigation, go ahead, but that’s not the fault of law firms.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do these firms think no one notices that they have not even given this sufficient time to determine whether there is an actual downturn in their business?

What other businesses that have remained open and operational have instituted paycuts and layoffs? Are they that risk adverse that they cut everyone based on what might happen?

You kind of need to get a clue. Clients are vanishing and blowing up. The whole country is becoming impoverished and unemployed . . . so yeah, there is going to be price pressure on lawyers and massive layoffs.

If the firms are requiring contemporaneous entry of billable hours, they can track pretty much in real time how much their revenues are falling off. And I think they are falling of quite a bit already, and most people realize that there's going to be a long term impact as the clients go belly up.

OP here. we had an office partner meeting yesterday (by telephone, of course). managing partner stressed (again) that we should enter our time regularly, each day if possible. he said that the firm is tracking hours pretty regularly and that if hours fall off a cliff, we "may have to make decisions we don't want to have to make." although that will have to be done even if hours remain steady but clients quit paying, which is another thing the firm is watching closely.

To a point made earlier, I also initially thought the firms immediately cutting pay and laying off were jumping the gun, but I would be downright shocked if there isn't a huge and devastating impact on biglaw (and the economy generally) from all this - one that takes years to recover from.

This reminds me of my time at howrey circa 2009. You were supposed to enter time each day, then release it weekly. It then became enter and release daily.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What kind of changes, client? A lot of the inefficiency and wasted hours on tasks that really don’t need to be done in big law is client-driven. I’m in litigation.

That's what firms often say, but it isn't necessarily true. Firms often want to run down every potential rat hole to avoid allegations of malpractice.

Sorry, it’s BS to blame it all on the firms. In-house counsel is often the one trying to cover his ass with or pacify the business people. In-house counsel often makes us do things that we flat out say have an extremely low likelihood of benefit. If you want to blame it on the nature of litigation, go ahead, but that’s not the fault of law firms.

Meh, I'm a GC. A big part of the reason I pay biglaw prices is for air cover. You give me and my execs the air cover I think is best.