Law Firms to Pay $200,000 a Year to Law Grads Who Have Never Practiced — Inexperience Is Costly

The Point

Earlier this month several top U.S. law firms announced that they’d be paying 2021 law graduates $200,000 per year (Wall Street Journal: “Entry-Level Lawyers Are Now Making $200,000 a Year”).

Whether the law firms account for this as overhead (very unlikely), or pay for it by charging clients for the time of such novices (much more likely), client companies will shoulder the bill for this largess.

This Matters

Any U.S. law graduate will attest to the reality that a freshly minted law graduate — without any experience in or training for actual practice — is unqualified to perform as an attorney.

As the founders of AmLaw 200 firm FisherBroyles have described it (before this month’s announcement of $200,000 a year salaries), assigning such unseasoned individuals to perform legal tasks for clients, and then charging clients hundreds of dollars per hour for their work, amounts to, “the $180,000 a year associate being trained on the client’s time“.

Because …

1. In high-consequence legal work, an inexperienced law grad is not yet competent to serve clients.   

Law school in the U.S. is three years of classroom instruction focused on books that contain cases and statutes. It’s necessary but not nearly sufficient to making a competent lawyer.

Attorneys in the U.S. transition from classrooms and books to actual litigation, deal-drafting and other practical tasks only through on-the-job work. (So-called “clinical” courses in law school offer a smattering of exposure to trial work or to deal-drafting — but only in an introductory, get-your-feet-wet format.)

2. This classroom-to-$200,000-a-year jump would not be allowed in U.S. medicine or in other countries’ legal systems.   

An MD is not allowed to practice immediately upon graduation. To actually perform work that affects patients, he or she must complete a formal residency or some other form of post-graduate apprenticeship under the structured supervision of experienced physicians. Such residencies, depending on the specialty, take a minimum of three years, ranging up to seven, after graduation with an MD degree.

It’s a similar track for the law graduate who’s passed the bar exam in the United Kingdom, Hong Kong, Australia, Canada, or other Commonwealth countries. Following graduation, lawyers called “solicitors” must undergo engagement as “trainee solicitors” at a law firm or in-house law department — usually lasting two years — in order to qualify as full-fledged solicitors.

3. The U.S. legal industry’s push to bill maximum hours aggravates problems posed by such inexperienced associates.

A decade ago, Patrick Lamb, along with Nicole Auerbach, founded ElevateNext, a much-admired national corporate trial practice, based in Chicago. From its founding, ElevateNext has avoided billing clients by the hour, preferring instead to price their work based on value that they agree with the client before any work begins. Indeed, Patrick Lamb has “written the book” (actually two) on how to price legal work on the basis of value rather than hours.

Considering the legal industry’s push to charge for maximum hours, Patrick Lamb commented on an article in the legal press describing billing quotas assigned to young lawyers in large law firms:

“Article begins ‘As we enter the home stretch to make billable hour targets in advance of bonus season…’ ‘Tis the season for clients to get ripped off by imagined hours and unneeded work. Time to pushback ….”

The legal industry’s push to maximize hours results in unwise actions, like paying someone $200,000 a year to do a job for which they have only academic, and no practical, background. Law firms are OK with this. General counsels are OK with this. It’s up to CFOs and other business executives to force cost efficiency — and simple competence — onto the attorneys who comprise the corporate law function. 

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