Saturday, February 23, 2008

High First Year Associate Salaries Cause Clients Distress

I have always wondered how large law firms have been able to pay such huge starting salaries to inexperienced first-year associates and still maintain a solid client base. In early 2007, a prestigious Wall Street firm set the new national pay standard for large firms by being the first to offer $160,000 salaries to first-year associates fresh out of law school. Of course, simple economics suggests that it is the client who ultimately must pay higher billable rates to accommodate such a high salary. And surely clients are not naive to believe that higher billable rates, let alone high paid salaries, are directly proportional to the quality of the representation. If clients suffer from such naivety, one of the purposes of this post is to dispel that belief.

I am personally familiar with two former partners at a large firm in San Antonio who left to form their own small firm. The reason? Salaries and billable rates were getting out of control and their clients were not happy. The partners began to investigate starting their own law firm when billable rate increases, which ranged from $180.00 hourly to $400.00 hourly, had made it increasingly more difficult to engage new clients. Surprisingly, the partners were able to retain 90 percent of their clients and now have a thriving small law firm practice.

Make no mistake about it. Most, if not all, law firms are in business to profit. But they must also have a duty to serve clients under a Lawyers Creed without sacrificing quality of representation. Personally, I am proud to be part of such a law firm. William B. Soloman, Jr., General Counsel for GMAC, said it best when he stated, “When I talk to law firms, I have one hand on my wallet [because] with the pressure on firms to increase revenues, they don’t care very much about cost effectiveness.” Our investment in experienced lawyers provides our clients peace of mind that the attorneys working their case will work efficiently. Clients of firms employing high paid first year associates absorb the cost of the inexperience by paying for additional legal research and hours of work. I am proud our firm combines experience and reasonable hourly rates to provide its clients affordable and quality representation. I am proud to be part of a law firm named Bertolino LLP.

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