|The hot topic on the bar circuit now seems to be California law firms paying
first-year associates annual salaries of around $150,000. As I visit with bar leaders
around the country, they wonder what we are thinking out here, and a parade of horribles
is presented as the probable outcome of such salaries. There are charges that we are
fueling greed and will be left with lower partner profits, higher hours, no pro bono work
and generally more miserable lawyers. The furor may be overstated because not many firms
are involved, but the resulting public debate is important and might negatively affect
perceptions. I believe most commentaries on the $150,000 associate lack perspective on how
this fits into a broader picture and do not focus on the core issues involved.
The $150,000 associate is just one aspect of a broader question that
should be asked by bar associations, law firms and lawyers everywhere: What is the best way to provide legal services in
a world of changing markets and technologies? In this sense, the issue is thus related to
other issues of the day, such as multidisciplinary practice, multijurisdictional practice,
obtaining equity interests in clients, contingency fee rules, paralegals, and e-commerce
and internet lawyering. The State Bar of California necessarily is involved in reviewing
these pressing issues.
Reviewing these issues reveals some general principles. To begin, it
is usually not helpful to take the easy step of calling others greedy. Most humans seek to
sell their services and products at market clearing prices. It is more helpful to look to
the market, rather than greed, in determining the causes of the price of gasoline,
first-year associates and first-round NBA picks.
The primary principle in reviewing the merits of paying first-year
associates $150,000 is a factor which must be considered by all successful businesses.
Ironically, this factor is most important to lawyers, yet lawyers seem most inclined to
overlook it. The factor is service to the customer, or for attorneys, service to the
Books selling the principles of successful, profitable companies
almost always focus on service to the customer. One of the wonders about the invisible
hand of the market is that profits are produced by responding to the needs of customers.
Beyond pragmatic profitability, attention to client service has sublime significance to
lawyers. As argued previously in this column, lawyers, as principal players in the Third
Branch of Government, have a professional duty to look away from individual gain to a
selfless commitment to clients and the judicial system. Accordingly, lawyers, law firms
and bar associations have a special professional duty to review the demands of changing
markets and technologies through the test of how client service is affected. Clients also
should analyze the policies and practices of their lawyers by reviewing the resulting
effects on client service, thereby providing the ultimate market test.
Thus, the real issue concerning high associate salaries is generally
whether the benefit of service with high quality associates is outweighed by the cost to
service of lost efficiencies and enthusiasm, and whether there are other ways to attract
high quality associates beyond high salaries. The real issue with MDP is generally whether
benefits to service such as convenience and efficiency are outweighed by the cost of
unacceptable compromises to core values such as confidentiality, avoiding conflicts and
independent advocacy. The issue with MJP is generally whether the service advantages and
efficiencies of a broader licensing structure are outweighed by compromises in the
competence of legal services provided to Californians.
The issue of alternative fee arrangements is whether the benefits of
providing access to legal services for those who cannot otherwise afford such access is
outweighed by possible compromises to the quality of the independent advice given. The
issue with paralegals and internet lawyering is generally whether the increased
convenience and efficiencies of these services are outweighed by the diminished quality of
the service provided.
The bottom line, then, is client service. Focusing on this issue of
client service gives proper perspective to the issue of high salaries, and all the other
related issues, appropriately reducing negative perceptions. With the focus on client
service, lawyers can profitably meet their professional obligations while responding to
the demands of changing markets and technologies.