When the economy takes a plunge, staff and contract attorneys are naturally the first groups to be out of a job,[1] especially since non-associate attorney layoffs generally slip under the media radar. And even when reported by the omnipresent legal blogosphere, law firms generally don't deign to address or correct public perceptions of its staff attorney firings.[2] The implicit understanding shared both by the readers and the legal reporters is that a law firm that fires its staff attorneys might as well be cutting back on its secretarial or janitorial staff and that the firm may still be in good financial shape, but simply "trimming the fat."
In contrast, at least at the beginning of the 2010 recession, any associate layoffs at all at a firm would be seen as a red flag for possible financial troubles or dissolution. Staff attorney firings are framed and presented as solid business choices, balancing the work flow slowdown and cutting back on staffing costs. Ironically, however, staff attorneys are arguably the ones that keep overhead costs low!
In Figure 1 below, one can see that an entry-level staff attorney starts off at a salary between $45,000 at the low end and $60,000 at the higher end. This breaks down to an hourly rate between $18 and $34 for staff attorneys with one to four years of experience. Just for the sake of comparison, even if we used the highest hourly rate, the first-year associate salary of $160,000 would pay for more than 4700 hours of work by a fourth-year staff attorney. This is more than double the number of billable hours that an associate will provide a firm at the same cost.
Figure 1: Median Staff Attorney Salary by Years of Experience[3]Courtesy, Payscale.com
Although the pay scale does increase with experience, the wizened staff attorney who has more than twenty years of experience is salaried at a rate between $80,000 and $130,000, a shabby wage by no means, but still $30,000 less than an associate in his or her first year at the firm (not counting the yearly bonus that is at least recently was expected to be in the thousands of dollars).
The skewed logic behind firms' fist on the scale in deciding between young associates and contract attorneys can be summed up as follows: in order to provide work for first-year associates who come in with inflated salaries and little else in the way of practical ability, staff attorneys (usually with more experience and expertise) are let go. The hiring of new associates at high six-figure salaries racks up "substantial losses" for law firms since each fledgling lawyer will cost "in excess of $100,000 . . . for time write-offs, training, and redoing work."[4] In general, it takes four years of training and experience before an associate begins making a profit for the law firm,[5] which means each new class of associates coming in through the doors is a fresh financial burden. In addition, firing a flock of staff or contract attorneys in order to make room for an associate also takes away the flexibility that would otherwise be provided by hourly piece work. Contract attorneys are also getting cheaper and cheaper to hire as more attorneys lose their jobs and turn to the agencies for temporary work. Not only is the market saturated in major cities, but firms are also trying to pressure contract agencies for better rates in order to keep profits high.[6] This means that for firms, contract attorneys are becoming a better and better option!
Building a Better Legal Profession (BBLP) is an organization based at Stanford Law School. BBLP is a national grassroots movement that seeks market-based workplace reforms in large private law firms. For more information, visit BBLP's Web site at www.betterlegalprofession.org.
Sources:
[1] See, e.g., Elie Mystal, Covington & Burling Staff Attorneys: An Endangered Species?, Above the Law, May 28, 2009, http://abovethelaw.com/2009/05/covington_burling_staff_attorn.php; Elie Mystal, Nationwide Layoff Watch: Paul Weiss Staff Attorneys, Above the Law, Oct. 6, 2009, http://abovethelaw.com/2009/10/paul_weiss_staff_attorney_layo.php; Elie Mystal, Staff Layoff Watch: The Bell Tolls for Skadden Staff, Above the Law, Mar. 27, 2009, http://abovethelaw.com/2009/03/staff_layoff_watch_the_bell_to.php.
[2] See, e.g., David Lat, Correction: Milbank Didn't Fire All Its Staff Attorneys, Above the Law, Apr. 18, 2008, http://abovethelaw.com/2008/04/correction_milbank_hearts_staf.php.
[3] Payscale.com, Staff Attorney Salary: Median Salary by Years Experience, http://www.payscale.com/research/US/Job=Staff_Attorney/Salary (last visited Apr. 2, 2010).
[4] Karl Schieneman & Valerie C. Horvath, Legal Staffing for the New Millennium, 7 Law. J. 9, Apr. 7, 2000.
[5] Id.
[6] Julie Kay, Contract Lawyers: Cheaper by the Hour, The National Law Journal, Jan. 12, 2009, http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202427338861&slreturn=1&hbxlogin=1&loginloop=o (last visited Apr. 2, 2010).