In my recent post, "Outgrowing the Cultural Foundations of BigLaw," I discussed the main reasons for BigLaw's unwillingness to abandon its dilapidated structure. Another reason is that the Cravath model depended on instability to be sure, as a way of siphoning off the associates who were not seen as having the skills or drive to be deemed eligible for elevation to partnership. However, the bloodletting was certainly not at the rates currently seen in the modern legal market. In a good year, at least twenty percent of the associates in a law firm will box up the personal effects in their offices and leave for greener legal pastures, whether by lateraling into another law firm or opting out of the BigLaw lifestyle altogether.[1] Either the associate becomes unhappy and disillusioned with firm life, or heeds the siren call of headhunters, who conveniently call up associates around the fourth or fifth-year mark, right when the revenue generated by the individual associate has started to turn a profit for the firm. For example, 78% of the associates hired in 2001 had left their starting firm by 2006, a dramatically steep loss for a five-year period of time.[2] With attrition rates so high, one almost wonders whether staff attorneys have it that much worse than law firm associates in terms of job security.
Even four years ago when the economy was still booming, legal commentators were already questioning whether the rapid turnover rate of associates was sustainable: "Should we, as a profession, care that life at large firms resembles that of pre-civilized man described by Hobbes: nasty, brutish and short? What would happen to the legal profession if Biglaw reached a point where it was no longer sustainable and went the way of the dinosaur?" When the skill sets and tasks given to young associates and to staff attorneys are the same and associates begin losing the protective aspect of their status as potential partners in the long run, there is even less justification for any kind of wage gap between the two classes.
Even at the partner level, a position that used to be associated with stability and long-term commitment to the firm, has become less so the case. In 2009, out of the American Lawyer's top two-hundred ranked firms, more than 2500 partners left their firms for a new one.[3] With the economy in turmoil, this trend of partner instability has only accelerated in pace (a nearly eleven percent increase in partner-level lateral moves in 2009 compared to 2008,[4] a four percent increase in 2008 compared to 2007[5]). In so much as the Cravath model is essentially unique to professional services firms, the demise of this model can be traced to the fact that modern law firms are no longer insulated from free market forces.[6] Increased interest in hiring staff attorneys could be viewed as just another symptom of the Cravath model breaking down.
Without much mental gymnastics, it is relatively easy to frame the staff attorney programs as a form of domestic outsourcing. The legal profession has already lamented or applauded the flow of basic legal tasks (document review, etc.) to the cheaper labor market in India's growing legal industry. The billing rate for a typical U.S. associate doing document review hovers around $200 an hour. By way of comparison, a contract attorney in the U.S. does the same work for $70 an hour at most. However, a lawyer in India can do that same task at an even lower financial cost: $35, or perhaps $25 an hour.[7] In farming out legal work either abroad to foreign personnel or domestically to staff attorneys where it can be done at lower cost, law firms are arguably undermining their own status and branding as professionals.
There is not much weight to the usual claim that this legal work done in offshore is of a lower quality either. According to one group that outsources work to India, the foreign lawyers are "hand-picked and are the 'cream of the crop,' sometimes with an LLM or MBA in addition to a law degree."[8] Add in the ISO certification for internationally recognized quality standards and the claim that offshoring legal work is effectively malpractice doesn't seem to hold much weight. With regards to staff and contract attorneys, the same quality critiques also don't stick. Even if the usual assumption that staff attorneys have less prestigious degrees, the tasks that they and young associates are entrusted with do not require a law degree to complete successfully! At the end of the day, it is simply that from the client perspective, the discovery that much of the work they had previously entrusted a white-shoe firm to do can simply be farmed out to bargain-cost legal workers makes it much harder for the firms to ring up the hefty bills as usual.
[1] Carolyn Elefant, No Attrition in Associate Attrition Rate, Law.com Legal Blog Watch, Aug. 15 2006, http://legalblogwatch.typepad.com/legal_blog_watch/2006/08/no_attrition_in.html (last visited Apr. 2, 2010).
[2] Id.
[3] Aric Press, In-House: The Lateral Report, American Lawyer, Feb. 1, 2009, http://www.law.com/jsp/tal/PubArticleTAL.jsp?id=1202427749058.
[4] Benzinga Staff, The American Lawyer's Lateral Report: The Great Recession Led to an 11 Percent Spike in Am Law 200 Lateral Partner Moves in 2009, Benzinga, Feb. 1, 2010, http://www.benzinga.com/the-american-lawyer's-lateral-report-the-great-recession-led-to-an-11-percent-spike-in-am-law-200-la.
[5] Nathan Koppel, In a Counterintuitive Twist: Lateral Moves Are All the Rage, Wall Street Journal Law Blog, Jan. 29, 2009, http://blogs.wsj.com/law/2009/01/29/in-a-counterintuitive-twist-lateral-moves-are-all-the-rage/?mod=googlenews_wsj.
[6] Derick Silveira, The "Cravath" Model, It's Application and Its Future, Managing Professional Services Firms: Individual Coursework EMBA February 2008 Intake 3, July 2009, http://www.cass.city.ac.uk/cpsf/programmes/DerickSilveira.pdf.
[7] Legal Pad Blog, Is BigLaw Ready for Outsourcing to India?, Oct. 31, 2007, http://legalpad.typepad.com/my_weblog/2007/10/is-biglaw-ready.html (last visited Apr. 3, 2010).
[8] Id.
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.com.