The message that corporate America is sending to the nation’s law firms is “class dismissed.” It’s a result of cost-slashing and the practice of passing along the cost of training to young lawyers that has been going on for decades.
David Brill, who is the general counsel of American Stock Transfer & Trust, believes the training of new lawyers “shouldn’t be done on our nickel.” Well, this isn’t the case anymore. With the recent recession and financial meltdown, many companies have now started pushing back.
The discussion of the trend of clients refusing to pay for on-the-job training has prompted WSJ law reporter Ashby Jones to join the Mean Street. No one will argue that many young lawyers do have reputable work experience. Their experience typically includes three years of law studies, summer internships and the time it took to study and take the bar exam. Plus, many young lawyers have helped a judge research and draft legal opinions. This experience though isn’t good enough. David Brill states that “younger attorneys can be fine on less complicated matters, but we draw the line at anything with any complexity.”
The difference that many experience lawyers see is between a new lawyer and one who can provide value to a client. New lawyers are lacking the comfort and confidence that is supposed to be given to a client, refined knowledge of the business world and necessary skills such as prepping a witness for a deposition.
Most law firms treat their new lawyers fairly well. Usually, the new lawyers first two years resemble an apprenticeship; however, they are paid a very good rate. The yearly salaries at many of the nation’s largest law firms start at $160,000 and go higher.
The costs of young attorneys are usually recouped by simple jobs in the office like researching, proofreading or pulling important documents from boxes of paperwork. These simple jobs allow law firms to pass the costs to their clients by billing anywhere from $200 to $300 per hour. This type of practice is starting to be a big problem and many companies do not want to do business that way.
“According to a September survey for The Wall Street Journal by the Association of Corporate Counsel, a bar association for in-house lawyers, more than 20% of the 366 in-house legal departments that responded are refusing to pay for the work of first- or second-year attorneys, in at least some matters. Almost half of the companies, which have annual revenues ranging from $25 million or less to more than $4 billion, said they put those policies in place during the past two years, and the trend appears to be growing.”
It is taking some time for this adjustment to take full effect. After the 2008 financial collapse, many law firms reduce pay immediately, but most have held their salaries steady. The recent client demands haven’t been able to shake firms’ hiring or billing practices, but as many say, at least not yet.