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The Need
An employer must first be sure that the work load in the office requires additional assistance. The exception is when qualifications of an individual trigger a response to needs not fully recognized by the employer. A job seeker could, for example, convince an employer that his or her special qualifications could match unmet needs in the organization. Generally speaking, however, if an employer does not feel that additional assistance in the office is essential, it will not initiate the hiring process.
Recruitment Costs
Few law students realize the economic costs to a firm of hiring an associate, but employers must evaluate the economic considerations before deciding to hire a new lawyer. One consideration, for example, is where to put a new lawyer. The cost of office space is considerable. In 1990, standard office space in the major metropolitan areas was renting for from $30 to $50 per square foot per year.
An area of 100 square feet for a desk and chair will cost a firm $3,000-$5,000. This figure does not include the cost of furnishing and maintaining the new lawyer's space, or the additional space required for secretarial support.
There may simply not be space available to accommodate an additional person. It is not unheard of for new lawyers to find themselves occupying the library, sharing space with several others, or even working in a basement file storage area. An employer knows that this is far from ideal, but sometimes the work demands precedence over the environment.
Not only does the new lawyer occupy space, but also he or she requires support services. Secretaries, legal assistants, file clerks, billing functions - all take up precious room. It may be possible to absorb a new lawyer into an office without additions to the support staff but if any are necessary, an employer must plan for space for these individuals as well.
The list continues. The costs of such office equipment as telephones, typewriters, computers and software, dictating units, and file cabinets must be included. Annual overhead costs for a new associate, not including salary, may run from $30,000 to $150,000.
Even the smallest office, planning to add only one associate, faces a substantial investment of time and money in the recruitment process. Every minute of reading resumes, making phone calls, writing letters, and interviewing candidates is time away from client work. It may seem more convenient for you that the employer come to your campus, but if the number of people from your school interviewing an employer is small, it may be much more cost effective for the employer to interview at the law office.
Another consideration is the per capita cost of hiring a new lawyer. If a 100-lawyer firm adding ten lawyers invests $100,000 per person hired, or $1,000,000 total, that cost divided by all the lawyers on staff equals $5,000 per lawyer. The sole practitioner who makes the same investment to recruit one associate will have to take $100,000 out of his or her wallet. In practical terms, small firms are less likely than large ones to use campus interviews, summer clerk ship programs, or high starting salaries as a recruiting strategy.
Your best strategy is to let the small firm know you want to work for them. Be willing to assume some of your own interviewing costs, and expect to make less money when you start. Work really hard during the first year of employment—it is more critical to do this in the small firm than in the large firm.
Economics of Hiring
In addition to recruiting costs and overhead costs, many other economic factors go into the decision to hire a new lawyer. Learning a few basic principles of law firm management will help you understand the very different hiring patterns for different employers.
Second, it is easier for a large firm to predict its needs in advance, recruit effectively, and bear the cost of training new associates than it is for a small firm or sole practitioner.
Third, understanding the economics of law firm hiring will give you an advantage in the interviewing process, whether it be on campus or in the law office.
The income in a private law office is determined by fees charged to clients and the decision to hire is inextricably linked to that fact. The amount of the fees and the method of their calculation determine the compensation that the employer is able to offer.
In most firms, all the lawyers in the office who work on a client's case keep time records. Each lawyer will have an assigned dollar rate which the client will be charged. Charges are also recorded for legal assistants and secretarial work, photocopying, telephone calls, travel time, court time, and so on. Normally, the client will be sent an itemized bill on a monthly basis for all of the charges incurred.
How the hourly billing charges for lawyers are calculated is of primary interest to you. Partner rates are based on such factors as who developed the business, who did the work and the degree of expertise required. Associate rates are based on quite different factors, and these are more important for your consideration.
Usually hourly rates for associates, determined by the number of years they have been admitted to the bar, will be fairly uniform for associates at the same level within an office. Figured into the hourly rate is the associate's salary, share of overhead, employee benefits, and other costs that cannot be charged directly to a client.
To keep track of time spent on various client matters, each law firm employee keeps detailed time records, usually expressed in six minute units or 0.1 hour. Phone calls, photocopying charges, and similar expenses are also noted. Many associates are unpleasantly surprised to find that the law office expects 1,700 annual billable hours from the associate, and some firms actually require associates to bill over 2,000 hours each year.
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Those 1,700 billable hours may not seem extreme if you assume that you will work just 34 hours a week for 50 weeks a year in order to meet that criterion. Unfortunately, much of your time will not be billable. A beginning lawyer may take 24 hours to draft a contract, for example, while an experienced associate could have completed the matter in 8 hours. The client cannot be charged for the additional l6 needed by the new attorney nor time spent by a partner or senior associate redrafting the contract if the beginning lawyer's work was deficient.
Furthermore, associates cannot bill time spent on administrative tasks, training, evaluation, or talking informally to colleagues. In actuality, many associates discover that they can bill little more than one-half of the time spent in the office to client matters. Thus, to bill 34 hours to clients each week, an associate may spend 65-70 hours in the office or 11-12 hours per day six days per week.
What does this have to do with hiring? If the average law practice grows at a typical rate such as 7% per year, and the average annual billable hours amount to 1500 per attorney, a sole practitioner will have 105 new billable hours of work in a year. A firm of ten will have 1,050 such hours, and a firm of one hundred, 10,500 hours. The predicted number of new billable hours will determine how many new lawyers can be hired in a given year.
You are unlikely to bill any hours to a client during your first day with a firm. During your first year, you may bill less than 1,000 hours, and the costs of hiring, training, and supporting may exceed by far the income you bring into the firm. As time passes you will become more productive, and at some point you will produce as much as you cost to keep. After another period, your income (for the firm) will recoup the losses from your first few months. Then there will be a period of clear profit for the firm before you are made partner and begin to "share in the pie."
Thus, a ten-lawyer firm with its 1,000 growth hours ought to be able to hire you. The 100-lawyer firm will be able to hire you and nine classmates. For the sole practitioner with only 105 new hours, however, the only way to hire you is to have a phenomenal growth year or to take the money out of his or her personal income to pay your salary.
Firms of ten lawyers or more can predict their needs. Smaller firms usually cannot at least not a year or more in advance. Therefore, smaller firms are destined to be more sporadic in their hiring.
Corporate and Government Budgets
Corporate or government employers face a situation substantially different from that found in the private practice of law. A budget for a corporate legal department or government agency is established considerably in advance of the year it is to cover. The degree of involvement of the general counsel in the budgeting process varies from organization to organization. Each employer must cover the cost of any new additions to the staff within the budget guidelines. Although there may be procedures available for supplementary appropriations in emergency situations, frequently these funds are not disbursed liberally.
The corporate legal department or government agency must incorporate its budget for new staff into the total organizational budget. The larger the organization, the more precise is the structure needed to provide equity for all. That fact may curtail the freedom of the general counsel to add lawyers to the staff or offer higher salaries than the budget dictates. For this reason salary bargaining by the candidate is seldom a practical approach in the corporate or government environment.
Work Assignment
Assigning cases in a law firm is a delicate balancing act. The client obviously prefers a senior partner to be visible. While having an associate do the work is more economical for the firm, a partner or senior associate must review the new attorney's work until an office has complete confidence in the beginning associate's work. This subtle factor leads many law firms to conclude that no associate carries his or her own weight for at least two years.
Another factor in the selection of an associate to work on a particular project is the lawyer's expertise. For example, an associate assigned to an environmental case will acquire a good deal of knowledge about the issues involved. When a similar case arises in the office, it will be more economical to assign the case to the same associate to make use of the knowledge already gained.
This process of gaining expertise by accretion produces de facto specialists in the law. New lawyers should be cognizant about how work assignments will affect their present value to the firm as well as long-term marketability.
Productivity
Abraham Lincoln said: "A lawyer's time is his stock in trade." Productivity or the amount of work accomplished in one hour is a major concern to the employers of new lawyers. Compensation rates for new attorneys today are much higher than those in the past and current rates are in turn reflected in the fees charged to clients. An employer cannot be satisfied simply because a goal of 1,700 bill able hours was attained by an associate. At what rate was the work produced? What revenue was realized from the work? What was the caliber of the work product? To what degree was a learning process involved? How efficiently were information sources tapped?
The productivity concept, which came out of experience in industry, has subtly but radically changed the evaluation of the work of lawyers. Some law students find it distressing to think that such pedestrian concerns as productivity and profitability seem paramount to service ideals in a professional setting. Unfortunately this aspect of practice is unavoidable. Productivity also exercises an important influence on many employment decisions.
For example, an older law school graduate who has developed special skills in a non legal area, is still an unskilled lawyer at the beginning of practice, and will require training and experience to become productive. It is difficult, if not impossible, for an employer to offer such a lawyer the same kind of salary he or she earned in the non legal position. On the other hand, if an individual's paralegal skills have direct application to the law firm's practice, the associate's learning curve will be accelerated and productivity increased. In some cases, therefore, the law student with more work experience may have an advantage.
While a special background may permit rapid growth and lead quickly to the compensation levels of more experienced attorneys, there is still a possibility of economic hardship for the individual in transition from another field to law. That is probably why many experienced people use their legal education to enhance their positions in their current fields of expertise rather than starting all over again as a new lawyer.
Hiring a Lawyer vs. a Legal Assistant
The question of productivity also is important in an area that has troubled law students for the last two decades: the imagined competition with legal assistants for available positions. Actually, in the mind of the employer, the choice of a candidate involves an evaluation of current productivity as related to future productivity.
An employer who hires a legal assistant hires someone who will perform a limited number of specific duties over a substantial period of time. On the other hand, if the choice is made to hire a law graduate, the employer anticipates that the graduate will develop skills and assume an ever-increasing range of legal responsibilities. While a law graduate can perform the duties of a legal assistant, a legal assistant can never perform all the duties implied by the term lawyer.
Conclusion
In deciding whether or hire and whom to hire, an employer looks at basic issues such as evaluating the work that needs to be done, both now and in the future, and the matters of space, support services, training, and productivity.
During the interview process and while working, you should be sensitive to these business aspects of practicing law. Your employer may not expect a new lawyer to know a lot about the economics of law practice, but will appreciate your being willing to learn.
Clerkships
Clerkships are increasingly being used as a recruitment device. Second year clerkships are more common and easily obtained than first year clerkships for law students.
Whether it is a part-time or summer clerkship, the student has an opportunity to see firsthand how a law office operates, the interaction of office personalities, the degree of organization, and many other factors. In turn, the employer can see the student in action on a day- to-day basis and better assess the individual's abilities than in a single interview. Thus, everyone can avoid the problems and miseries that can occur because of a hiring mistake based on too little contact.
If it is impossible to obtain a clerkship experience because you are otherwise employed full-time, consider whether you can demonstrate your qualifications to a potential employer through volunteer work, piecemeal research, or law school externship programs. The idea is to create situations where the employer can observe your work directly.
Who Decides?
Unlike corporations where personnel managers are permanent fixtures, the hiring partner or a hiring committee in a law firm is appointed by the senior management to serve for only a limited period of time. Thus, it may be difficult, if not impossible, for the graduate to determine where the hiring decision finally rests.
In some cases, associates are part of the hiring committee. For larger firms, the recruitment administrator will be included in the hiring process. And in many small firms, the hiring decision is actually a group effort.
See 6 Things Attorneys and Law Students Need to Remove from Their Resumes ASAP If They Want to Get Jobs with the Most Prestigious Law Firms for more information.
Difficult as it may seem to sort out, you should strive to identify the individuals who will be deciding your fate. Questions about salary and benefits, as well as other factors to be negotiated, are best directed to those responsible for hiring decisions.
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