Up and down the halls of Los Angeles' law firms, partners are eagerly waiting for the newest batch of law grads to report to work.
And work they will.
While this is the most handsomely paid bunch of new attorneys to hit local firms ever, it may also become the most overworked bunch of legal eagles in recent memory.
Young attorneys' salaries took a giant leap six months ago when Silicon Valley law firms and companies, stocked to the gills in Wall Street money, started offering handsome financial remuneration for recent law school graduates. Before long, fresh-out-of-school lawyers were commanding base salaries of $125,000 and up, a leap from $100,000 the previous year. (Base salaries usually are tied to billing at least 1,900 to 1,950 hours a year.)
Managing partners at local law firms huddled and decided that to capture top law grads to work in their busy firms, they would have to match the Northern California salaries.
"You are always trying to hire the brightest and the best," said Michael Meyer, managing partner for downtown L.A.-based Pillsbury, Madison & Sutro. "When you do that, you are going to be at a competitive disadvantage by paying 20 to 25 percent lower."
More money, more work
To placate attorneys already working at law firms, managing partners had to increase in-house lawyers' salaries, too. That led to a major problem: how to come up with the money to pay for those salary spikes.
The answer at most firms is to make their attorneys work harder to earn their pay.
"There is no question they will have to work more now than they did before," Meyer said. "I assume a strong associate will work 2,400 billable hours (a year), vs. 2,100 billable hours before."
Not that first-year associates weren't overworked in the old system. Typically, they put in 12-hour days, five days a week, in addition to time on the weekend, to handle the required number of billable hours. But under the new requirements, they'll have to toil about five or six more hours a week, Meyer said.
"Those extra five hours a week are brutal because they come out of your leisure time or your sleep," he noted.
At Paul, Hastings, Janofsky & Walker, the firm is calculating this year's budget using 2,000 billable hours per attorney, instead of last year's budget of 1,900 hours, said Greg Nitzkowski, a managing partner at the firm. The idea is that everyone is going to have to work harder to make a profit and pay for bigger compensation all around.
"The increased salaries is a management challenge," Nitzkowski said. "There's no doubt about that."
While newly minted attorneys might be deprived of sunlight for years to come, they will also be under closer scrutiny by tough law partners eager to weed out the weaker, less committed new associates. If they aren't pulling their weight or picking up the legal lay of the land, law grads could soon find their names dropped from the firm's legal lineup. "They will be judged much more quickly," Meyer conceded.
New attorneys at Manatt, Phelps & Phillips in West L.A. will be facing a steep learning curve and be asked to pick a specialty faster than before. "We will have to compress the learning time. It is more important that people become specialized quickly and reach a higher level quickly," said Managing Partner Paul Irving. "It creates more demands on the partners that the associates are trained (more quickly) and not fall through the cracks."
Looking for efficiency
Adding to workloads isn't the only way law firms are making up for higher salaries. They're also looking at ways to better manage their staffs' time.
At Sheppard, Mullin, Richter and Hampton in downtown L.A., attorneys will be crossing departmental lines to help out. "If we have labor litigators with excess time, then they are going to be readily loaned to the business litigation departments," said Richard Brunette Jr., the firm's managing partner. "This way we don't have departments working at 110 percent while others are working at 85 percent capacity."
Said another managing partner at a Los Angeles law firm: "The keys are closer management of personnel and closer attention to how you staff a case. You can't have large numbers of people that are operating below budget."
Support staff will have to work harder at Brobeck, Phlegar & Harrison. "We are not increasing our staff as we grow our lawyers," said Managing Partner John Hilson. "The ratio of staff to lawyers is decreasing. Those are the secretaries, people in document processing, the mail room and in records."
The law firm also raised its fees something it does every year, Hilson said.
Not all firms are looking to greater efficiencies or planning to work their associates longer and harder. A few are willing to make the ultimate sacrifice: reduce the profits shared by the firm's partners, in order to attract the best new associates.
At Latham & Watkins, the second largest law firm in Los Angeles, partners are expecting to take a cut in pay, said Managing Partner Martha Jordan. "We analyzed it, and the partners took a gulp," Jordan said. "You can call it an income shift from the partners to the associates."
Jordan said the firm will not stand over its new law grads and demand more billable hours out of them, like other law firms. "We don't think this is correct or appropriate. We have always had a minimum billable hour requirement of 1,900, and that hasn't changed," she said.
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