Saturday, August 15, 2009

Don't Pay to Train Young Lawyers

As a General Counsel, I am often asked to retain a law firm to perform legal work that is outside my scope of expertise. General Counsel, both in-house and out-house, have long complained that big law firms charge hundreds of dollars an hour for work performed by their most junior lawyers. I spent twelve (12) years in big firm practice and am familiar with this practice. According to Jeffrey Carr, general counsel at FMC Technologies, a Houston oil and gas equipment company, "it is one of the biggest problems today in the legal delivery system." I agree with Mr. Carr who states that clients are "saddled with the cost of training these novices."

In its August 24 & 31, 2009 issue, Businessweek recently wrote about this issue in an article entitled Junior Fees For Junior Lawyers. They report that this fall first year lawyers at Howrey, a Washington-based national firm that focuses on litigation and intellectual property, will enter a two-year training regimen that puts a cap on what they can charge clients. The young attorneys will be allowed to bill just 700 of the 2,000 hours they log per year. When they do bill, it will be at about half of Howrey's current rates, or roughly $150 an hour. (They can bill 1,000 hours in the second year.) The rest of the time, these new lawyers will be shadowing senior Howrey lawyers which will mean working on, but not billing clients, performing pro bono assignments, and/or serving externships with judges or in corporate client's law units.

Howrey began planning this program before the recession. Other firms appear to be starting similar programs as one way to cope with tighter times. Drinker Biddle & Reath, another national firm, announced in May that instead of deferring start dates, it will put new grads in a six-month apprenticeship-at reduced pay and billing rates. Law firm consultants agree that the way firms train, compensate, and charge for associates will be the most significant permanent change coming out of this downturn.

I applaud Howrey, Drinker and other big firms who are creating these programs to keep their clients from paying to train their young associates. I think it will also create better lawyers. The traditional big firm model is outdated and those firms who fail to adapt will not survive in the long run. If you are a business owner or a lawyer advising a business owner who needs to retain a law firm, make sure you are not paying to train that firm's young associates.

If you have any questions or concerns about any of the above, feel free to contact me at [email protected].

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