Living The Dream (Law School, Part 4)

Now, that’s all legal jobs. Biglaw, smallaw, D.A.’s, public defenders, judicial clerkships, in-house, public entity. I’m going to focus almost exclusively from here on out in this post about Biglaw jobs or Biglaw-like jobs. I can’t speak much about what it’s like to be a prosecutor or a public defender because I’ve got little knowledge either of my own or of colleagues to tap into. I can’t tell you much about public employment of any sort, for the same reason. I’ve had good relationships with a couple of Assistant U.S. Attorneys, for instance, but not good enough to get a sense of what their jobs are really like. Do they go home at 5:00 every day? I’ve no idea.

What I do know about are (from friends’ experiences) Biglaw, (from experience) insurance defense, and (also from experience) other similar sorts firms that do civil litigation and typically bill either by the hour or (for plaintiff’s firms) on contingency. This is the steadiest and most plentiful kind of employment out there for recent law graduates and what I believe to be the most well-populated aggregation of career tracks.

And on that collection of career tracks, it’s all about the billing, baby.

If you go into this well-populated field, you will work at least sixty hours a week for the next several years. It will be a moderately uncomfortable experience as you adjust to the sudden change in your accustomed environment, periodically blinking like a cave lizard as you stare in confusion at a distant, bright object suspended in the sky of which you have vague and inexact memories.

Your job is to complete a billing sheet every day. For your first few years of practice, there is really no other criterion upon which your performance will be judged in any substantial way. The quality of your work does not matter (much, and initially). The billing sheet may be generated physically as you write things down on a sheet of paper, or it may be generated electronically on your computer, or some combination thereof.

The line items on your billing sheet are your self-reporting of what you have done with your day. Over time you will learn the special version of English that is used in line items on attorney bills:

R4M114 Cointelpro: Cointelpro, LLC v. PKGM Greer Peatwick. 3.22 hours. BJL. Review and research client file including assessment and analysis of profit and loss report and trial balance sheet prepatory to drafting special interrogatories concerning disputed line items thereon predicated upon Cointelpro’s asserted affirmative defenses to counterclaim filed by PKGM Greer Peatwick.

The first number is the code identifying what bill the matter appears on. Next is the name of the client and case you’re working on. After that, we see that you, the junior associate assigned to the matter (identified by initials), spent three hours and thirteen minutes spent puzzling over the number soup that your client’s incompetent bookkeeper calls “the accounting reports,” and verifying that the drill-down documents which said bookkeeper insists support them actually do so, because there’s no reasonable explanation for where the money is going unless the debits from “ownership equity draws” were coming from the credits for “goodwill” and something told you that’s kind of a problem so maybe you’d better investigate some more to compare what you see in the documents your client gave you to the description of GAAP from the Skousen treatise that no one in law school ever told you would become your new Bible because they were all too busy proofreading the two hundred and forty-two footnotes in an article written by the recently-tenured professor holding the Lucius Q. Philodendron Chair of International Justice Studies about the application of the Privileges and Immunities Clause to preoperative transgender prison inmates, of which your state actually has exactly zero.

This is your life, Biglaw associate. It might be several years until you do anything of substance in court.

Lower-tier firms doing things like construction law or insurance defense will get you out of the library and into court faster in your career. For most people, this is generally thought to be more fun than writing and reading stuff all the time. In my experience working insurance defense, the billable hours accumulate relatively fast in court, because “2.5 prepare for and attend motion for summary judgment” was to me much more enjoyable than “2.5 draft objections to and research substantive responses to special interrogatories, set two, propounded by co-defendant Flybynight Reinsurance Company testing client’s assertions re: section D coverage theories.” Getting to court faster was worth giving up the difference in pay between me and my former classmates who were doing Biglaw.

If you were to accuse me of adopting an attitude of trying to make wine out of sour grapes because I wasn’t making as much money as I had hoped I would be, I would confess that you were probably at least partially right.[1] If you were to say, “I’m different than you, Burt,” I’d concede that may well be the case.

For instance, I’ve done plaintiff’s work before and while the drudgery of hourly billing is not as prominent a feature of that work, the top-notch plaintiff’s firms do typically want their associates to track their time in similar ways, for a variety of reasons. As an added bonus, you get either irregular income flow, or massive debt on lines of credit that takes the joy out of actually winning a big case and getting paid. I really didn’t enjoy that part of it and in between earned fees, my personal credit took a beating. But maybe the irregularity of income flow and access to the kind of credit needed to do that job right are things you don’t have as big a problem with as I do. I can’t tell you what’s going to work out best for you and once you have your ticket punched, it’s a wide world of options — until you get stovepiped, but stovepiping is a danger in a lot of professional careers.

What I can tell you is that the amount of money you make in the first few years of your career is the single biggest influence on the amount of money you will make over the course of your entire career. Lawyers who start out making a lot of money tend to continue to do so whether they break away from big firms or not; so too with lawyers who make moderate amounts of money. If you’re in it for the money, then you need to get on the high end of the curve as soon as you can and stay there as long as you can.

Biglaw firms pay junior associates $100,000 to $200,000 per year, with the variance based on all sorts of different things. Insurance defense or similarly-statused second-tier firms in big cities pay junior associates, oh, let’s call it between $60,000 to $100,000 per year. Public employers’ pay rates are set by law, but are generally similar to or slightly less than second-tier firms. Small firms pay what they can, competitive with this regime.

Availability of benefits like health insurance varies widely. To this day, my wife is astonished to learn that I have never had employee-provided health insurance in my career, but it’s also the truth. I’m told Biglaw firms actually offer benefits. Sometimes. I wouldn’t know.

As a theoretical matter, many firms offer vacations. It is to laugh. They don’t want you to actually take them. These are businesses that think it’s appropriate to charge their clients a quarter a page for sending faxes because each and every unit within that business, including the fax machine, must be monetized and made to generate profit.

Biglaw says it expects 1,600 to 2,000 billable hours per year from its associates. Biglaw lies. The real number is about a third again that much. The numbers for second-tier firms like insurance defense are lower, but again they lie about what they really want from you, again by a factor of about a third.

If you turn in the ostensible required number, that will be greeted with equanimity and you will be rewarded with the structured bonus and you will not advance along the track towards even nonequity partnership and after a few years, you’ll be quietly advised that partnership is not in your future based on your track record, so maybe you want to consider other alternatives.

If you want to get ahead, which is what you must do in order to stay ahead of the income power curve, there are two routes to go: you can be a trapper, or you can be a skinner.

In law school, they kind of trained you in how to be a skinner. You take the work, you apply the law, you use the skills and techniques you’ve acquired in practice, and thus fulfill the objective of practicing law, which is the generation of billable hours. Those billable hours will be multiplied by the hourly rate charged for your services, assembled into a bill, and presented to the client for payment.

To be a trapper, you have to generate business. You must be able to reach out to the sort of person or entity who needs the legal services you offer, sell your firm’s services, and ensure that the critical people pay the bills described above.

A successful several-years long run as an associate along the “skinner track” will eventually produce what is called a “nonequity partnership.” This is basically the same sort of work with minor degrees of ability to express a preference about how the firm is managed and run, coupled with profit-sharing as part of your compensation. A successful run of time as a “trapper” will be rewarded with “equity partnership.” Equity partnership means you are an actual owner of the law firm, entitled to meaningfully participate in its management, and nearly all of your compensation will come in the form of profit-sharing, with the amount of your compensation varying primarily based on the size of the book of business under your command.

I have it on good authority that the magic number is $1,500,000. When you have “trapped” a “book of business” generating one and a half million dollars of billable work per year, you have gone over the top and are a lawyer worth having in the firm. That is the threshold at which equity partnership will be a worthwhile thing for functionally any firm to offer, and the threshold at which you will be attractive to lateral to another firm that may offer you a bigger piece of your own pie. Again, if your book is lower and you’re looking at a second-tier firm the threshold will decline accordingly. (Note that this volume of work is more than any one lawyer can actually do in one year.)

Now, you may think that a million and a half dollars’ worth of billable work every year seems like a lot. Depending on the kind of billing rates your firm charges and the kind of rates your client negotiates, that number could fall anywhere between three to seven thousand hours of attorney time per year. You may be thinking, “Burt, there are not a whole lot of clients out there who can afford to consume that much by way of legal services and who have the need for them.” And that would be right. The kinds of clients that do consume law at that rate are big companies. And while there are a lot of companies that size out there, the population of such companies is finite. The population of individual people meeting those descriptions is finite also.

You can get such a company as a client. All you need to do is have been roommates, fraternity brothers, lovers, or co-worshippers at the same sacrificial altar with that company’s director of risk management back in college. So if you’re in college, pick the right friends now.[2]

But it may turn out that you aren’t quite so fortunate as that. The next best thing to do, and in some ways it may be a better thing to do anyway, is to get multiple clients who have smaller needs and budgets for legal services. If it takes 5,000 attorney hours to get you over the top, then maybe you find five clients who use 1,000 hours of legal services a year. Or ten at 500. Or, even more realistically, twenty at 250. That’s if you charge what is about the prevailing market rate in my area, of three hundred dollars an hour.[3]

Note, though, that staying on top of one client’s affairs and mollifying the ego and the white-hot outrage of one client when the other side makes a trivial modification to a settlement proposal is not all that hard, but juggling twenty clients’ affairs, problems, insurance policies, personnel changes, and of course those periodic outbursts of volcanic fury gets pretty stressful pretty quickly, because no client cares about any of your other clients and they all want you to respond to their concerns at the drop of a hat, while you don’t miss any of the deadlines associated with any of their pending cases or transactions. Meanwhile, you just have to hope that the associate attorneys fresh out of law school you have handling the scut work don’t screw up because you don’t have time to adequately oversee them and the paralegals all seem to have forgotten when to use “court days” or “calendar days” when putting those deadlines into the computers but Client C is on line 4 fuming with yet more frustration, blazing with the intense heat of the fusion reactions occurring at the heart of the sun — huh, there’s that thing again, “the sun,” something which you haven’t seen that all much more than your associates in the past twenty years.

…That’s what you’re going to be doing, Equity Partner. For the rest. Of. Your. Life.

To wrap up in my next post, I’m going to offer some ideas floating around there in the world of practice and academia that this dreary-to-miserable picture I’ve painted in this and the preceding law school posts might somehow be improved.