Know what you're getting for $145K
>>Sullivan & Cromwell has increased associate base salaries by $20,000 across the board, with first-years now due to receive $145,000 a year before bonus. The New York firm's move tops a recent round of salary increases led by Los Angeles firms, where first-year base salaries rose to $135,000.<<
Let me express my incredulity at this news from law.com. These breathtaking salaries are going to 24-year olds who are being hired for the wrong reasons. The law firms could just as well take the $145K to Las Vegas and put it all on black at the roulette table.
The firms hire based on graduate's school, grades, publications, clerkships, personal pedigree and chemistry with the hiring partner. But that's not enough information. The truth is that most of the firm's money will be wasted, because many of the Gen-X associates aren't interested in becoming partners. If they are interested, most of them will be let go within five years, after the firms have lost money on these pricey new hires for years.
Here's my radical suggestion: why not hire associates based on their potential to bring in new business? Give them a personality test to see if they have what it takes to become a rainmaker. Have the marketing director or marketing partner interview them to probe their inclination to develop business relationships and open new files.
Being a lawyer today means (a) being able to do great work + (b) ability to bring in new work. If a firm pays $145K for a library lawyer, it's money wasted. If a firm is going to shell out a king's ransom for green recruit, they should at least determine if they can build a practice around themselves.
Larry-
I once heard someone tell a lawyer to give the following advice to his client to help the client grow his business:
"Fire all your experienced sales and marketing professionals. Afterall, they make a lot of money and always want to try new things and are too creative. THEN, have your senior executives do the sales and marketing...when they have free time, regardless of if they have the skills, personality or the desire to to do business development."
The lawyer thought this was HORRIBLE advice to give his client. Yet it is how he probably runs his firm!!!
I think your point about screening law school candidates for their rainmaking potential is a great idea. But it would take years to see the actual results (which I agree would be HUGE), and I don't think most firms would adopt such a policy if they could not have 100% guaranteed results within the first 6 months.
How is again that the firms are losing money on this? A little math:
2400 hours x $250/hr = $600,000. Assuming a (probably low) 75% realaztion rate still leaves $450,000. Even if the total cost of hiring an associate is $200,000/year including bonus, salary, benefits etc, that still leaves $250,000 in profits.