- The notion that a partner or associate must produce 2,000 or 2,400 hours of billable work yearly virtually assures that some clients will be overbilled.
Of course, almost all firms have stated policies that forbid…unethical and illegal billing practices. The extent to which these policies are actually followed depends on the firm culture, on unspoken messages that leaders of the firm send to its lawyers.
When money becomes the primary goal, a law firm may end up choosing to systematically inflate client bills and even to bill for expenses not actually incurred for those clients.
- --Seth Rosner, American Bar Association Journal, May 1992
One of the most important aspects of your legal career
-and among the most mysterious to young attorneys-is law firm economics. The economics of your particular law firm will have a profound significance in terms of what happens with your legal career. Because of this, smart attorneys and law students should have a good understanding of law firm economics before joining any law firm.
Law firm economics often confuse attorneys because they have very few ways of getting the information necessary to fully understand them. Law firms certainly do not tell their associates how the economics of their business work — many do not even tell their partners. This is something that is rarely, if ever, taught in law school. Despite the drought of information, to succeed in a law firm environment, you must have a good understanding of many of the unspoken rules that govern law firm economics.
There are several different models that law firms follow. The purpose of this article is to explore the common economic model that governs large and midsized law firms at the law clerk, associate and partner level. The purpose of this article is not to explore how staffing of paralegals and legal secretaries
works inside law firms-which is a separate topic entirely. I should note that this is not a pleasant article for me to write because much of what it says is a critique of the legal profession. Nevertheless, the truth cannot be ignored and you will have a difficult time succeeding at a high level inside a law firm unless you understand its economic model.
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