Making Junior Associates Cost-Effective

Yesterday I noted the issues raised by a WSJ piece on clients looking askance at paying going rates for first- and second-year associates.

There are really only three ways to resolve this issue, beyond, of course, extending the status quo:

1. Firms bill out junior associates at lower rates (including $0).
2. Firms stop hiring junior associates.
3. Firms find ways to make the junior associates more valuable to the clients.

I've seen #1 and #2 discussed in the past few years, but I've seen very little of #3.¹ 

#1 is happening to some extent, at least for some firms (and some insistent clients). We've certainly seen a variant of #2, slow law-grad hiring, over the past two years.

Why not look at #3?

Making Junior Associates More Valuable to Clients

I can think of three straightforward ways to make first- and second-year associates more valuable. They can cram more "law" into the same number of hours, they can gain experience faster, or they can take on different valuable duties.

Same Hours, More Lawyer

An hour is an hour. How can you cram more "lawyering" into that hour? It's like saying, "Sleep faster; we need the pillow."

The reality is that resources perform tasks with different levels of skill. It's clear that a senior partner will have more skills in almost every aspect of the law than a first-year associate, right? Well, by the same token, some recent grads have more skills than others. If there is slower hiring all around, then "higher quality" graduates are available to those firms who might not get to pick first in the choose-up game of hiring law-school grads.

It's like choosing up sides for a pickup baseball game.² If the captain who chooses first gets to pick three players at a time, then clearly the other team will be significantly disadvantaged.³ Thus in choosing up sides, each captain gets only one pick at a time. For years, law has worked more like baseball free agency, where the rich teams got lots of picks and the smaller-market teams had to play Moneyball. However, with slower hiring, there are more "top-tier" new hires available to the firms that choose 2nd, or 102nd. There's no guarantee that a given high-ranking graduate from a highly respected school will be the better hire, but firms believe that on average those choices will do better... and there are now more of those choices available.

Gaining Experience Faster

Gaining experience faster seems like another "sleep faster" paradox; how can you gain experience other than an hour at a time? Hours are fixed quantities.

Hours are indeed fixed quantities, but the quality of each hour varies. Which of these three will grow associates skills the most rapidly?

1. Proofreading a senior partner's brief.
2. Doing basic research.
3. Taking more responsibility.

Few would doubt that #3 will grow the associate faster... but who's willing to give deep case responsibility to a first- or second-year associate?

The answer is... you are. And I am. Look at the local prosecutor's office; it's not uncommon for recent grads to be given significant responsibility on a case. Maybe they're not leading first-degree murder trials (though occasionally that does happen), but they're regularly on the line representing the people (that's us) in all sorts of other matters, with real stuff - like freedom and futures - at stake.

In the best corporations in America, new hires are often given serious responsibility. Often they take full responsibility for at least a small area or project. Google, Microsoft, and other technology companies make this an explicit part of their practices, and I see it increasingly in non-tech companies too.

In fact, there are even some law departments that are hiring right out of law school. They're not sending these recent grads to two-year training programs; rather, they're throwing them into the water and taking but occasional looks to ensure they're still swimming. Indeed, most of them will swim, and they'll learn in a hurry to swim rather well.

In fact, this is an elegant solution to the problem... from the client's perspective. I'm not sure it bodes well for the firms, though. What if the corporate law departments discover this practice works out so well that they only need the firms for high-end work, specialty work, and so on? What happens to the firm's economic structure, especially at the larger (AmLaw 100) firms? I don't know the answer, because it's still a largely theoretical problem. (Calling Adam Smith, Esq.) But it might not be quite so theoretical in five years.

In other words, it might be worthwhile for the firms themselves to look further at this option, increasing associate responsibility significantly. It's not so much about billing out the associate as much as creating associates who are worth billing sooner, who add more value faster to both firm and client.

More Client Value

Obviously one side effect of both #1 and #2, above, is added client value. But there's another way to add client value.

Consider training your team - associates and partners - in Legal Project Management. LPM, at least in my book (pun intended), is about adding value, about finding ways to increase effectiveness and increase efficiency at all levels. It's about working together better as a team. It's about learning to understand responsibility, leadership, delegation, and task-assignment. It's about strengthening those skills, beyond "lawyering" itself, that define client value.

Add client value, and the clients will jump aboard.

They'll still clamor for ways to pay less, since that's the way of the world. But firm and client will be able to have a different conversation, one that focuses on shared goals rather than simply hours and years-in-the-job.

Which conversation do the firms want to have? For that matter, which conversation do the clients want to have?

I think this is a case where both parties do indeed win.

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¹Of course you can combine #3 with #1 and/or with the slowed-hiring variant of #2. For the sake of keeping the initial discussion simplified, I'll treat the four options (the three numbered items plus status quo) as either-or propositions, understanding that the real world isn't that simple.

²Do our kids even know how to do this anymore? I haven't seen a pickup game in decades. I'm constantly floored when I take my son up to the local ballfield for a bit of practice and find it empty. Do we really need adults to organize every single baseball game? Eek, it sounds like I'm getting old or something!

³Well, at least it seems that way, though I don't notice the Yankees or Red Sox or Phillies in the World Series this year.