And 8,784 in leap years. (If my math isn’t clear, its 24 hours per day, 365 days per year, plus another day every four years.)
After reading Gerry Riskin’s post “The Wall Street Journal Blasts Law Firms Salaries Arms Race” and Bruce MacEwen’s post “Associate Salaries: The Great Debate,” I couldn’t resist weighing in on the topic. There are, of course, many angles from which to view this subject. From the standpoint of the elite law firms, they look at salary as a principal means of competing for their share of the pool of “top talent”–that is, law review students from the top law schools. The pool is not growing, but the competition for those students is. Hence, rising salaries.
If one begins with the proposition that partners at large law firms want each new class of associates to generate profit, or at least not operate at a loss, and if we further accept the proposition that there is some limit on the hourly rate a client will pay for people who have no experience and add little to the value the client receives, then we must accept the proposition that there are practical limits to salary competition. Not that we’re there yet. But since revenue generation in firms is a matter of rate times hours, the practical reality is that increasing salaries will increase the number of hours associates are expected to work. No, there will not be an announce increase in the number of expected hours. That would be bad PR. Hours will simply be “managed up.”
From the client’s standpoint, this means more work done on the same matters or more hours billed doing the same work. Neither result is positive.
From my standpoint, this form of competition has a trade-off for clients. Sure, the top law firms can better compete for top talent. But top law school talent is a lot like the draft of athletes in professional sports. The highest draft spots do not always produce the top talent. Start with Tom Brady and then continue with the scores of other examples. The same is true in the legal world. Big New York firms use the demand for top talent to perpetuate the myth that they have the corner on talent, and that PR works to a significant albeit eroding degree, but savvy consumers are now looking to those firms as useful only for exceptional matters, where the Board wants name comfort.
Aside from that PR value, I believe that better training, reduced turnover and greater investments in associates will produce better results for smart firms. And in the meantime, chalk about another strike against an economic system based on time rather than value.