In a somewhat cynical yet honest article, Harrison Barnes writes about an insider’s look at law firms and billings that you won’t get from your average story on law firm economics. While certainly not asserting that large and midsize law firms are breaking the law, Barnes does offer sobering information on the way these law firms generate revenue. Billable hours are the golden ring in most law firms, and it behooves a lawyer to be acutely aware of the culture of the law firm in which he or she is working.
Of course, the vast majority of law firms do not pad their bills. The question Barnes raises is whether or not a statement “accurately reflects the amount of time necessary to complete a task.”
The article goes over five role levels in your typical large to midsize law firms. These are the law clerk, junior associate, midlevel associate, senior associate and partner or counsel. Of these, the most robust role to occupy is the senior associate, as we shall see. The midlevel associate is probably the most rewarding role.
The Law Clerk
First, the law clerk or summer associate. Employing a law clerk is the equivalent of test-driving a soon-to-be-lawyer before he or she is out of the gate and amongst the legal world. They perform work that may not be profitable for the firm but can be helpful. According to Barnes, the real but unspoken value of a summer associate is to determine is that associate can “play the economic game inside of a law firm.”
A law clerk must understand that the law firm is looking at the billable hours logged. The law clerk is counted as working hard if he or she is recording in a large number of hours, rather than finding a better and quicker way to get the job done. It’s not the skill of the law clerk that is important at this stage. Instead, it is whether the clerk gets the economic game, which is, bill, bill, bill those hours.
It seems that the junior associate is profitable for law firms simply because it takes them longer to get the job done. Consider that it takes a junior associate, who is fresh from passing the bar, one or two days to complete a task where the same task would take a partner 15 or 20 minutes to complete.
Barnes asserts that it is not unusual for a partner to lead a client to believe that it would be less expensive to assign a junior associate the initial tasks because the billing rate is so low. True, the billing rate is low compared to the partner, but in this scenario, the client is not getting the most cost-effective means to her ends.
The junior associate is also getting on the job training at the owner’s expense.
The Midlevel Associate
The midlevel associate is where the real meat of lawyering takes place. These associates are at least two to three years into their legal careers and usually have a good grasp of knowing what they’re doing. At his point in his or her career, it is understood that the associate is competent in the field of law and is “expected to be a highly developed billing machine, relate to clients and do good legal work,” according to Barnes.
These associates are also very profitable for a law firm. An assignment can be handed over to a midlevel associate, and he or she can delegate parts of that assignment on down the line. They get the job done or figure it out with a minimum of fuss. Further, the billing rate quite a bit lower than a senior associate or partners.
The Senior Associate
With six or more years of experience, senior associates can be in a frightening place. You’re not a partner, but you’re knocking on those doors in terms of billable rates. Their legal knowledge also nearly matches or matches that of partners. The way law firm economics work, a partner, will rarely give work to a senior associate because it may disrupt the partner’s productivity.
These associates either must work at a firm that has lots of work opportunity or the associate must go out and become a successful rainmaker in gaining client of his own. Barnes says, “The senior associate who is able to generate massive amounts of work-whether on their own or by being given work from partners in the firm – will be the one who is seriously considered for the partner or a counsel position.”
The role of the partner is to perform solid legal work and to generate work that will create billable hours. He or she also must provide enough work to sustain the junior and senior associates.
Barnes reiterates, “Your success in a law firm will be based – at every single step of your legal career – upon the ability to generate revenue through the billable hour.” This strikes at the heart of his article.
To learn more about maximizing your billable time, click here.