The Philadelphia Inquirer’s Chris Mondics writes about statistics showing that first-year law firm associate salaries are not declining despite the apparent turmoil in the legal marketplace. He asks whether this means “the big-law-firm model has come through unscathed after the worst downturn since the Great Depression. Well, actually, no.”
In fact, he notes the revenue squeeze is continuing and this
will force firms to change even more in the coming years, said Larry Ribstein, associate dean for research at the University of Illinois College of Law and an expert on law-firm management and economics. Ribstein published a fascinating paper [link added] in the Wisconsin Law Review recently in which he argued that the changing economics of the legal industry were leading inexorably to the breakup of big firms.
Ribstein foresees a legal marketplace that still will have large firms, just fewer of them. Whole practice groups will splinter off, starting firms of their own as they seek refuge in smaller organizations with lower cost structures. * * *It’s Ribstein’s point that lateral recruiting, taken to an extreme, breaks down partnership cohesion, and undermines what he calls a firm’s “reputational capital.” When that happens, choosing a firm can be an eenie, meenie, miny mo, or throwing darts at a dart board. Pick your metaphor.
So, then, Mondics asks, “why have first-year salaries retained their robustness?”
“Good associates are still very valuable in this marketplace,” Ribstein said. “We are getting more regulation than ever, and a sophisticated ability to grapple with that is more important than ever. The question is how many of them do you need. And the answer is not as many as before.”
Of course, this raises the question of what is a “good associate.” The answer is that it’s someone who actually knows something useful out of the starting gate, not just anybody with a high IQ from a top law school. The question of how to produce these people should be dominating the discussion at law schools today. So far, I haven’t seen that happen.