The end of the $160,000 first year associate

Cite this Article
Larry Ribstein, The end of the $160,000 first year associate, Truth on the Market (October 17, 2011),

The WSJ discusses the declining value of first-year associates as clients are refusing to pay for training. Clients question whether new associates have “a sophisticated knowledge of the business world, and many nuts and bolts, such as how to prepare a witness for a deposition or the precise terms that, say, need to be included in a particular kind of loan agreement.”

Law firms can’t put the associates to work anymore because a lot of the work they used to be able to bill to clients, particularly research and discovery, is now outsourced or automated.  And what isn’t goes to contract lawyers who get $60-$70/hour rather than $200-$300.

So what’s the solution?

I suppose that the clients and the firms think it’s the law schools’ responsibility.  But law schools don’t have a comparative advantage doing this kind of training without significant retooling.  I have suggested some things law schools should be doing that are within their comparative advantage, including more finance and business-oriented training, but they don’t include apprenticeship programs.

Even if the law schools should do this from some perspective, who or what is going to give them the incentive to do it, and do it well?  Where, for example, will the money come from?  Higher tuition?

One would think the clients would pay to train the lawyers who will be working for them after they get trained, as the WSJ article notes.  But training lawyers is not what non-law firms do, so buying them already trained seems like a sensible “make or buy” decision.

The law firms once could benefit from training associates who would be their partners, but this long-range view doesn’t work in the Death of Big Law era.

In Germany, from which I just returned, university law grads go through a two-year training/apprenticeship at government expense prior to taking their final bar exams.  Somehow I don’t think the idea of the government paying to train lawyers would work in the current US political environment.

So what’s the solution?  I think we are ultimately going to come down to apprenticeship programs at law firms, where the pay matches the experience level.  This solution, though quite logical, will not sit well with the current model.  No more $160,000 salaries right out of law school.  And of course, student debt and law school tuition will have to ramp down to reflect law students’ reduced prospects on graduation.