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The Apprentice Hits Big Law

Vivia Chen

June 21, 2010

800px-Apprenticeship
Editor's note: The post incorrectly states that Drinker Biddle started its apprentice program after Howrey. Drinker Biddle initiated it before Howrey. We regret the error.

It used to be so simple: You get an offer from a big firm, you collect a nice fat salary, and you work your buns off. Though your chances of ever making partner are slim to nil, everyone--from the firm's management to the new associate--pretends that it's all possible. Meanwhile, you collect your money and upgrade your living standards. At a minimum, you are wearing much more stylish shoes.

But you might have to go back to shopping at Florsheim, as law firms come up with ways to pull that going-rate rug from under associates' feet. Even before firms started tinkering with their deferred associates' job description (as McDermott Will & Emery recently did), several firms started replacing their regular associate programs with "apprenticeships."

You might recall that Howrey started the program last year because its clients refused to pay top dollar for untrained junior associates. Later, Drinker Biddle & Reath and Frost Brown Todd followed suit. Of these programs, Howrey's lasts the longest--a full two years.

The National Law Journal reports that the three firms claim that their programs have been a success so far.

"Proponents hail the programs as a positive step away from the sink-or-swim environment many young attorneys encounter when they show up at large firms, and as a practical response to the growing cost-consciousness of clients," reports the NLJ. "The firms bill at much lower rates or not at all for work performed by the apprentices, who earn lower salaries than the industry standard."

So how low are those associate salaries? Here's what the NLJ says:

Howrey dropped starting compensation to $125,000 from the $160,000 it had been paying new associates, saving $840,000 on its 24 first-years--a fraction of the $3-4 million it initially expected to spend on the training program. Drinker Biddle lowered salaries for the first six months to $105,000 from $145,000 and $160,000, depending on the market. With 37 new associates this year, that saved about $1 million. Frost Brown reduced starting salaries to $80,000 from $100,000, saving $460,000 on 23 new associates.

But here's the part I don't completely buy: The firms say they are hurting from this arrangement. According to the NLJ, "Firms are absorbing the costs without raising either associate or partner billing rates." Though no firm had "tally up their actual costs thus far," writes NLJ, partners at the three firms say that "they entail significant costs." What costs firms is the "lost billable time from partners who run the programs and mentor new associates."

Firms might not be able to bill like the good old days, but are they really suffering under the arrangement? Firms like to say they are doing everything for the sake of the clients, like parents who justify their pushy behavior by saying it's all for the sake of the children.

I don't necessarily object to paying beginning associates less than $160,000--after all, a lot of firms are struggling in this downturn and can't afford the high beginning salaries. But let's be realistic, too: Firms have been able to impose the apprentice arrangement and the cheaper salary because they are in the better bargaining position. In this market, it's no surprise that recruiting has not been a problem. "Despite some skepticism about how apprenticeships would affect recruiting, Howrey, Drinker Biddle, and Frost Brown had no problem filling their [2010] summer slots," reports the NLJ.

But firms are advocating the apprenticeship system because they claim principles are involved, as if they're master craftsmen passing on some vanishing art form to the young. The partners at the three firms told the NLJ that "they are interested in young attorneys who are motivated by more than just money."

Really? Are most partners motivated by a higher calling?

If you have topics you'd like to discuss, or information to share for The Careerist, e-mail chief blogger Vivia Chen at VChen@alm.com.

Photo: painting by Emile Adan, 1914


Comments

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Generally speaking, firms lose money on first and second year associates. Although salaries are a material part of the cost of an associate, they are only part of the cost. Without going into a detailed analysis, there can be no doubt but that the substantially reduced billable hours of associates under these programs does not offset the salary reductions enough to improve the P&L's of the firms.

But, that issue is a red-herring created by the legal media. The real question is whether clients and associates, two of every firm's principle constituencies, are better served by these programs. The post doesn't discuss this, but providing associates with a better training experience while at the same time reducing the cost of training associates to clients is a trifecta for associates, clients and the firms.

Having said that, whether more firms will follow suit remains to be seen. Change requires investment of time and money, and many firms may not be willing to invest either if demand returns. Nonetheless, firms that innovate successfully will undoubtedly distinguish themselves favorably in the minds of clients and recruits, and therefore enjoy a competitive advantage. As a result, ultimately, however slowly, the model should gain acceptance, providing the innovators stick to and refine their models.

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About The Careerist

The Careerist takes an inside look at how lawyers shape their careers and manage their lives. The blog aims to dissect developments in the profession, provide useful information and advice, and give lawyers a platform to voice their views. The goal is to provide a fresh, provocative take on the state of lawyering.

About Vivia Chen

Vivia Chen

Vivia Chen, The Careerist's chief blogger, has been covering the business and culture of law firms for a decade. A former corporate lawyer, Chen is fascinated by those who thrive (as well as those who don't) in the legal profession. Her take: Success in the law (and life) doesn't always travel a linear path. If you have topics you'd like to discuss or information to share, contact her: VChen@alm.com

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