What am I worth in 2010?

When lockstep was the golden rule, the question of “What am I worth?” was never difficult.  You could easily find that information on any salary chart by looking at your class year and moving horizontally to the compensation posted to know, for certain, what you would be paid by a new employer.

In 2010, such is no longer the case.  The question “What am I worth?” now provokes a large amount of expectation, introspection, uncertainty, fear, and confusion because, generally, we don’t know what you are worth and, sometimes — even the law firm doesn’t know.  As firms readjust their compensation structures to move away from lockstep completely or adopt a hybrid compensation scheme, the numbers associated with any given class year may vary from firm to firm.  Thus, at Firm A, you may be worth $$$ dollars, but at Firm B, you may only be worth $$ dollars.  So, how can one guess at that number, and should one even venture a guess when faced with the question “What is my value in 2010?” 

My first rule of thumb — don’t list a random number.  Many firms are using the question “What type of compensation are you looking for?” as a way to screen OUT potential candidates.  For instance, if the firm wants to pay “X” dollars, and you put a number out there that is “XXX” dollars, you are likely going no further with that firm.   The process just ended.  Hence, rather than risk ending the process by requesting a pay figure that is too high, it would be better to illustrate a mature understanding of the economy and the strained legal hiring market by saying, “I am open.  I recognize the stress that the economy is placing on the legal industry and, as such, I can be flexible on compensation.  Of course, I put a great deal of value on my experience, intelligence, and abilities, but high compensation is not my foremost goal.  Rather, finding a strong practice where I will be fully utilized and subseqently paid at a fair value, that is something I see as reasonable in this economy.”  In other words, you have just punted a bit, but the firm will appreciate your maturity, and you will appreciate staying in the game. 

Not everyone wants to do this, however, and many still believe that their value is the same as it was in 2008.  Nothing could be further from the truth.  Everyone — candidates and firms alike — are rethinking “value,” and we are going to see some major changes this year.  While candidates struggle with the question, firms, too, are looking at each other in New York, DC and the West Coast and wondering — are we all going back to 145K for first years?  Will some of us stay at 160K?  What are we doing?  

Thus, when faced with the question “What am I worth in 2010?” — answer that question with an eye toward the economy, toward a change in your own value from past days, and toward a real knowledge that the firm, itself, may not even be sure!  However, together, you may have the ability to guide each other toward a fair number that works for both of you.  The compensation question/answer is no longer a bright-line rule.  It has, instead, become a point of conversation and negotiation.  The sooner you are able to get comfortable with that reality, the better deal you will be able to craft for yourself.

To Boutique or Not to Boutique

Recently, I spoke with a senior associate that was working at a boutique firm.  She had been there for less than a year and had previously worked for a number of years at an AmLaw 100 law firm.   In speaking with her, I could hear the frustration in her voice about having made a move that she thought was definitely the wrong move for her career.  She was obviously a very bright and accomplished attorney, but I got the sense that she felt like she had somehow failed for not having considered the significant differences that can exist between large firm practice and some boutique environments before she made the move.  She was being far too hard on herself — but for the benefit of those considering such a move, below are some of the more significant differences we discussed which I think are worth noting.

1. Resources/Technology.   Often associates coming from large firm practice don’t realize just how accustomed they have become to the every day resources allotted them in large firms.  These resources include such things as updated computer systems, having a lap top and blackberry, upgraded phone systems, the ability to work remotely and accessibility to a night staff.  Associates often take these resources for granted and consider them to be standard in the industry.  The reality is that some smaller firms don’t have the expanded resources of larger firms.  There can be significant trade offs moving from a large firm environment to a smaller firm, and one of the trade offs may be fewer resources.

2. Billable Hours/Face Time.  Working in a firm of 20 to 30 attorneys is dramatically different than coming to work and having the ability to “loose” oneself in a firm of 500 attorneys.  In a smaller firm environment, irregardless of whether you might be working remotely, if you are not in the office everyone knows it – and it is often not looked upon favorably.    For whatever reason, smaller firms tend to be harder on their associates regarding actually being in the office. Perhaps it is because these firms tend to be so leanly staffed and they need what few associates they may have to be immediately accessible at all times.  Of course, this is not true of every small firm, but it is definitely something I hear from attorneys who have come from large firm practice and are accustomed to managing their day/billing time, whether they are physically in the office or not.  In addition, associates who have transitioned to a smaller firm for fewer billable hours may find that because these firms tend to be so leanly staffed, the billable hour expectation can actually end up being much higher.

3. Culture.  Although many smaller firms can provide excellent cultures, the size of some of these firms makes it impossible to “escape” the grip of a difficult partner.  Whereas in a large firm, if an associate is having trouble with a partner in a particular group, he/she may be able to simply fill his/her plate with work from other partners, thus avoiding “combat, in a smaller firm it is virtually impossible to avoid anyone.

4. Sophisticated Clients and Work.  Some boutique firms have very high profile clients that spin-off sophisticated work – and some don’t.  An associate should ask for and evaluate a list of a firm’s Top 10 representative clients and matters which have been most recently serviced by the firm.   Another consideration is the length of time these particular clients have been with the firm.

5. Viability of the Firm’s Practice Focus/Financial Stability of Firm.  A boutique’s practice focus can have everything to do with its viability for the long-term, particularly in an economic downturn like the one we are currently experiencing.  For example, a real estate boutique that has not expanded its practice capabilities may suffer tremendously in a down cycle.  Depending on the size of the firm, its client base and financial stability may not survive a tough cycle.  Thus, before joining a boutique focused in a particular specialty, associates should consider both the short- and long-term effects the economy would have on a firm’s viability.

6. Compensation.  Many associates are willing to take a cut in pay for promised lower billable hour expectations.  Although some smaller firms may actually live up to these promises, associates may find that they are billing at the same levels, but are receiving considerably less compensation.

7. Power in the Hands of a Few.  It is fairly common for a few name partners in a small firm to have control over most if not all of the decisions being made about the firm.  These partners often maintain control over all of the clients, the strategic growth of the firm and have the power to decide how particular associates will progress at the firm.  Thus, exploring whether making partner is actually possible and the path for progression at the firm is very important for any associate transitioning from a large firm.

8. Mentorship.  In large firms, mentoring relationships for associates often come about as a result of formal mentor assignments or naturally via consistent work with a particular partner.  Because of the nature of how small firms generally manage their cases and time, and primarily because of lean staffing on cases, what often occurs in small firms is that associates are thrown into the pool to “sink or swim”.  This is not necessarily intentional on the part of partners, but is often a result of a lack of real time to allocate toward practical training.  Of course, some associates leave large firm practice to gain hands on experience, so this “sink or swim” opportunity may be just what they are looking for.

There are definitely many advantages to moving to a boutique which we have not discussed here, but being cognizant of some of the adjustments you may have to make may save you from regretting such a move down the road.

College Coaching is Not the Answer

Like other businesses that compete for talent, law firms continue to add to their pool of benefits. Several firms have now begun to offer college coaching. This benefit is a way to assist busy lawyers who are trying to help their college bound children navigate the competitive field of college admissions.

But are better benefits the key to retaining talent? I’m sure that offering good benefits is one important way that firms compete for talent. But isn’t offering constructive feedback much more important? On-site day care is not going to keep an unhappy associate from pursuing a lateral move if she isn’t being managed properly. Providing college admissions guidance to a partner will not stop her from moving her portable book of business across the street if she does not feel that the firm is supporting her practice.

Is Your Paycheck Making You Nervous?

IP Law 360 examined why we are seeing more layoffs in law firms recently, in an article titled “Lawyers Fear Layoffs” and published on Friday, May 30th (subscription required). When I was interviewed, I suggested that lawyers should be aware of the link between high associate salaries and the probability that more law firms will announce layoffs in the wake of a market compensation increase. I personally feel that the last so-called salary wars in early 2007 were so aggressive that a scaling back in personnel isn’t surprising, although it is certainly unfortunate.

Others in the article said that recent layoffs can be linked only to the lack of demand for legal services in particular practice areas. There is no denying the impact of the credit crisis on the market at large and law firms specifically. Do you think that associates’ increased salaries play any part in the current belt-tightening environment?

Do We Really Need More Law Schools?

Plans for three new law schools in New York were recently announced. There are additional law schools being started around the country. The National Law Journal has an article on the “deluge of law schools” today. For the article, click here. More law schools - is that necessary? There are so many law schools producing lawyers, but not enough jobs to go around.

Many students think that a law degree will lead them to a $160K job in BigLaw. So they attend law school. Unfortunately, graduates of lower tier law schools have an incredibly hard time securing legal employment after graduation. Some of these newly-minted lawyers have crushing law school debts and no chance of the $160K job (or, in some cases, a job at all!) Graduates of non-accredited law schools are really behind the eight ball upon graduation.

If you go to a law school outside of the top 20, make sure that you graduate in the top 10% - otherwise you will have a very difficult time trying to recoup your law school investment.

Am Law Second 100

The American Lawyer just released the list of the 101-200 firms ranked by gross revenues. Click here for the story and rankings.

So many attorneys look to flee BigLaw for an in-house position without considering a move to the Am Law second 100. Look at the stats provided by the American Lawyer: the average profits per partner for the Am Law second 100 is $666,000. It’s certainly less than the average PPP for the Am Law 100 ($1.315 million) but more than you would make in an average in-house legal department. Something to think about on this Friday afternoon.

You could have a pretty good life on $666K/year!