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March 2, 2012 11:15 AM

The Big-Law Partner Lottery

Posted by Steven Harper

In a recent article in The New York Times MagazineAdam Davidson suggests that many of today's most intelligent and educated young people have entered an employment lottery. In making his argument, Davidson draws on the best-selling Freakonomics by Stephen J. Dubner and Steven D. Levitt, who use the unlikely prospect of hitting it big to explain otherwise irrational economic behavior within drug-dealing gangs: the legions of foot soldiers who work the streets as they seek to one day become kingpins.

Davidson focuses on the entertainment industry, where people with solid academic credentials and big dreams begin what they hope—in most cases unrealistically—will be glamorous careers by working in mail rooms. In passing, he identifies large law firms as another example where, for most young attorneys, analogous dreams meet a similarly unfortunate fate.

The topic is particularly timely. The National Law Journal just released its annual list of the NLJ 250's "Go-to law schools" from which the nation's biggest firms draw the most new associates. In 2007, the top 20 law schools sent 55 percent of graduates to big firms; in 2011, that percentage was down to 36.

As the job market for new attorneys languishes, most of last year's 50,000 law school graduates would count those new associates as already having won a lottery. But the real story is that they have actually acquired a ticket to one or two more lotteries.

The long odds

As more and more firms develop two-tier partnerships, the big-law lottery has become a two-step ordeal. Merit still matters, but attaining even the highest skill level is only a minimum requirement and not sufficient for advancement. To get a sense of the odds against success, consider the most recent data on NLJ 250 associates promoted to partner last year (nonequity partners in two-tier systems).

In 2011, 47 Harvard Law graduates went from associate to big-firm partner. That sounds like a lot, except that five years earlier—in 2006—Harvard sent 338 graduates into large firms. Although that 15 percent rate isn't as bad as the lottery's odds, winnowing the number down to only those who will become equity partners comes pretty close. (A time lag of five years isn't quite long enough for the groups of new and promoted associates to match exactly, especially given that partner tracks have become longer. But it's adequate to illustrate the point.)

Other top schools' graduates face even worse odds. Columbia Law sent 313 graduates to big firms in 2006; just 31 of its grads went from associate to partner in 2011. In 2006, 143 Northwestern Law grads got big-firm jobs; in 2011, 14 NU graduates advanced from associate to partners. The University of Pennsylvania's 2006 class sent 187 into big firms; those firms promoted 15 Penn associates to partner last year.

A few schools fared better in this comparative sweepstakes: the University of Texas placed 194 of its 2006 law graduates in big firms; last year 29 UT grads went from associate to partner at large firms. Vanderbilt also broke the 20 percent barrier.

Irrational behavior?

Why do associates continue to play such long odds in a game that doesn't yield any outcome for years and, for the vast majority of participants, turns out badly?

Understandably, some associates take big-law jobs solely to burn off student loan debt before pursuing the dreams that actually took them to law school in the first place. But others are playing the big-law lottery.

Meanwhile, those at the top of law firm pyramids have worsened the odds. They have pulled up the ladder by lengthening the equity partner track, reducing the rate of new equity partners, increasing leverage, and running their firms to maximize short-term equity partner wealth at the expense of long-run institutional stability and their colleagues' personal well being.

Rationalizing these actions, many big-law leaders have convinced themselves that the current generation of young lawyers is inferior to their own. They complain about those who act as if they're entitled to everything and unwilling to work hard, as they once did. 

Three concluding points:

First, many large-firm attorneys in the baby boomer generation act entitled, too.

Second, when today's big-law leaders were associates, no one was telling them to get their hours up.

Third, motivation and behavior follow incentive structures. If some of today's young attorneys occasionally behave as if they don't have a reasonable shot at winning the equity partner lottery, it's because they don't.

Steven J. Harper is an adjunct professor at Northwestern University and author. He recently retired as a partner at Kirkland & Ellis, after 30 years in private practice. His blog about the legal profession, The Belly of the Beast, can be found at www.thebellyofthebeast.wordpress.com. A version of the column above was first published on The Belly of the Beast.

 

 

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