Thursday, May 26, 2011

Comments -- Big Law Firms

More From The Associate by Grisham

Any hope of pursuing meaningful work was promptly crushed at 7:30 Monday morning when all twelve new litigation associates were sent into the abyss of Document Review.

Document Review was certainly not glamorous, but it was a safety net for all new associates. "You can always go there and find work that can be billed," Karleen said. "Eight hours minimum, but there is no max."

Their first case involved a client with the slightly ludicrous name of Placid Mortgage -- ludicrous in Kyle's opinion, but he kept his mouth shut as Karleen rattled off the more salient facts of the case. Starting in 2001, when a new wave of government regulators took over and adopted

a less intrusive attitude, Placid and other huge home mortgage companies became aggressive in their pursuit of new loans. They advertised heavily, especially on the Internet, and convinced millions of lower- and middle-class Americans that they could indeed afford to buy homes that they actually could not afford. The bait was the old adjustable rate mortgage, and in the

hands of crooks like Placid it was adjusted in ways never before imagined. Placid sucked them in, went light on the paperwork, collected nice fees up front, then sold the crap in the secondary markets. The company was not holding the paper when the overheated real estate market finally crashed, home values plummeted, and foreclosures became rampant.

Now the lawyers were trying to clean up the mess. Placid had been battered by lawsuits,

but the worst one was a class action involving 35,000 of its former borrowers. It had been filed in New York a year earlier. Beginning of Chapter Six at 118-119.

Karleen led them to a long, dungeon like room with no windows, a concrete floor, poor lighting, and neat stacks of white cardboard boxes with the words "Placid Mortgage" stamped on the end.

It was the mountain Kyle had heard so much about. The boxes, as Karleen explained, in came the files of all thirty-five thousand plaintiffs. Each file had to be reviewed.

"You're not alone," Karleen said with a fake laugh, just as both Kyle and Dale were about to resign. "We have other associates and even some paralegals on this review." She opened the box, pulled out a file about an inch thick, and went through a quick summary of what the litigation team was looking for.

"Someday in court," she said gravely, "it will be crucial for our litigators to be able to tell the judge that we have examined every document in this case."

Kyle assumed it was also crucial for the firm to have clients who could pay through the nose for

such useless work. He was suddenly dizzy with a realization that in just a few short minutes, he would punch in and begin charging $300 an hour for his time. He was worth nothing close to that. He wasn't even a lawyer. He opened a file and glanced at his watch -- it was 7:50.

Scully lawyers billed by tenths. A tenth of an hour is six minutes. Two-tenths is twelve, and so on. One point six hours is an hour and thirty-six minutes. Should he roll back the clock two minutes, to 7:48, and therefore be able to bill two-tenths before the hour of eight? Or should

he stretch his arms, take a sip of coffee, get more situated, and wait until 7:54 to begin his first billable minutes as a lawyer? It was a no-brainer. This was Wall Street, where everything was done with aggression. When in doubt, bill aggressively. If not the next guy will, and then you won't catch him.

Another comment spawned by the NYT article two days ago on two-tier law firms locating the second tier in Dayton, Ohio and Wheeling, West Virginia.

As an attorney I can tell you that the best and brightest do not necessarily make Partner in the large firms (although many of them fit that description) it is the people who are able to bring in the money making clients (i.e. "Rainmakers"). Normally connections are far more important than ability and they know it.

There are three tiers of lawyers in the large firm. The finders, the minders and the grinders. It is actually liberating for many attorneys to finally understand that they will not be allowed to buy into the firm hierarchy, but will be sequestered in the back room generating billable hours.

That is what large firms do by the way. They do not particulalry care about winning or losing, which will come as a shock to many of their well healed clientele, they are interesting in doing the best job of lawyering, and thereby billing the greatest number of hours.

Small firms can get the same or better result in 90% of cases entrusted to the "elite" with much less effort and much less cost. The system has no standard for efficiency or result measurements. Time is the only standard, and if young attorneys want to give up the possibility of being a Partner for half the pay and half the time committment they will be happier for the decision in the long run.


I am a paralegal in big law firm. Here is another viable career path (and you don't have to incur $150,000 in debt): over the last 12 years, my job has evolved quite a bit and I am doing exactly the same work (international M&A, post-merger acquisitions, reorganizations) as an associate, but have a regular schedule, see my kids, even have time for a hobby. It's intellectually challenging as well and very busy. I do have billables to reach, and I earn pretty good money plus paid overtime. Of course, it does not have the prestige an associate position has, but once you get over it, it's great. We are a team of several people, some with law degrees, some with foreign law degrees, some with a lot of experience.


At Well-Paying Law Firms, a Low-Paid Corner


Published: May 23, 2011

comments (184)

WHEELING, W.Va. — The nation’s biggest law firms are creating a second tier of workers, stripping pay and prestige from one of the most coveted jobs in the business world.

Jeff Swensen for The New York Times

Heather Boylan Clark and Mark Thompson took the nonpartner track at the law firm Orrick, Herrington & Sutcliffe.

This is the first article in a series examining how new workers are being hired at lower pay and benefits.

Reader's Comments
"Nobody has told the law schools that the $160,000 jobs are dying out. Tuition has skyrocketed and wages are collapsing. Take it from a 2007 graduate, get thee to plumbing school. "
Joseph, San Francisco

Make no mistake: These are full-fledged lawyers, not paralegals, and they do the same work traditional legal associates do. But they earn less than half the pay of their counterparts — usually around $60,000 — and they know from the outset they will never make partner.

Some of the lawyers who have taken these new jobs are putting the best face on their reduced status. “To me there’s not much of a difference between what I’m doing now and what I would be doing in a partner-track job,” said Mark Thompson, 29, who accepted a non-partner-track post at Orrick, Herrington & Sutcliffe when he could not find a traditional associate job. “I still feel like I’m doing pretty high-level work — writing briefs, visiting client sites, prepping witnesses for hearings.”

Asked whether he hopes someday to switch onto the partner track, given the higher pay for this same work, he is diplomatic. “I’m leaving all my possibilities open,” he said.

Lawyers like Mr. Thompson are part of a fundamental shift in the 50-year-old business model for big firms.

Besides making less, these associates work fewer hours and travel less than those on the grueling partner track, making these jobs more family-friendly. And this new system probably prevents jobs from going offshore.

But as has been the case in other industries, a two-tier system threatens to breed resentments among workers in both tiers, given disparities in pay and workload expectations. And as these programs expand to more and more firms, they will eliminate many of the lucrative partner-track positions for which law students suffer so much debt.

Mr. Thompson is one of 37 lawyers in Orrick’s new program, which is based in this small Rust Belt city an hour southwest of Pittsburgh. An international firm headquartered in San Francisco, Orrick is one of a handful of law firms, including WilmerHale and McDermott Will & Emery, experimenting with ways to control escalating billing rates.

“For a long time the wind was at the back of these big law firms,” said William D. Henderson, a historian at Indiana University-Bloomington.

“They could grow, expand and raise rates, and clients just went along with absorbing the high overhead and lack of innovation. But eventually clients started to resist, especially when the economy soured.”

For decades, firms used essentially the same model: charging increasingly higher rates for relatively routine work done by junior associates, whose entry-level salaries in major markets have now been bid up to $160,000 (plus bonus, of course), a sum reported by the big law schools. Even under pressure to reduce rates, firms are reluctant to lower starting salaries unilaterally for fear of losing the best talent — and their reputations.

“Everyone acknowledges that $160,000 is too much, but they don’t want to back down because that signals they’re just a midmarket firm,” said Mr. Henderson. “It’s a big game of chicken.”

So now firms are copying some manufacturers — which have similarly inflexible pay because of union contracts — by creating a separate class of lower-paid workers.

At law firms, these positions are generally called “career associates” or “permanent associates.” They pay about $50,000 to $65,000, according to Michael D. Bell, a managing principal at Fronterion, which advises law firms on outsourcing.

These nonglamorous jobs are going to nonglamorous cities.

Orrick moved its back-office operations to a former metal-stamping factory here in 2002, and in late 2009 began hiring career associates. Costs of living are much cheaper in Wheeling than in San Francisco, Tokyo or its 21 other locations, saving $6 million to $10 million annually, according to Will A. Turani, Wheeling’s director of operations.

“It’s our version of outsourcing,” said Ralph Baxter, Orrick’s chief executive. “Except we’re staying within the United States.”

Similar centers have cropped up in other economically depressed locations. WilmerHale, a 12-office international firm, has “in-sourced” work to Dayton, Ohio.

“There’s a big, low-cost attorney market there,” said Scott Green, WilmerHale’s executive director. “That means we can offer our services more efficiently, at lower prices.”

What’s good for clients, of course, isn’t quite as good for those low-cost lawyers.

Lower salaries make it even more difficult for newly minted lawyers to pay off their law school debt — like the $150,000 in loans that David Perry accumulated upon graduation from Northwestern University School of Law in 2009.

Mr. Perry, 37, became a career associate at Orrick after unsuccessfully seeking public service work (which would offer the option of loan forgiveness). But he says he loves his “lifestyle job,” which enables him to work from home and spend time with his infant son while still doing interesting work.

“I didn’t have the strong desire to make loads of cash,” he said.

Other career associates at Orrick said they too were content, even if this track was not their first choice out of law school.

Heather Boylan Clark, 34, was a seventh-year associate at Jones Day before applying for a career associate position after the birth of her second child. She makes 40 percent less than before, but says she still does “challenging work,” and, more important, has greater control of her schedule.

“I’m not killing myself to be hitting specific numbers of billable hours in any given year,” said Ms. Boylan Clark, a graduate of the University of Virginia School of Law. “Now I’m always home for bedtime.”

To some extent, firms have been using lawyers off the partner track for years, known as staff attorneys, although usually on an ad-hoc basis. Executives at Orrick were quick to clarify that the new class of career associates should not be confused with such attorneys, and emphasized efforts to make career associates feel valued.

“There are no second-class citizens at Orrick,” said Mr. Baxter. “This is a career path for people who want it because they prefer the attributes.”

But while Ms. Boylan Clark and others switched from partner tracks at other firms, Orrick has not encouraged associates on its partner track to switch to career associate out of concern that it would seem like a demotion, according to Laura Saklad, Orrick’s chief lawyer development officer.

“That’s just about perception, though,” Ms. Saklad said. “These are not second-class jobs, but the program is so new that they may be perceived that way.”

Congrats to the times for xeroxing the same article they wrote in 1987.


166.bruce abel cincinnatiMay 25th, 20119:40 am Being a Harvard Law graduate and a Yale graduate about to go to my 50th reunion, and happily practicing out of my home with the proper Google phrases bringing me clients -- and trading this corrupt casino called The Market, both activities marginally lucrative, or losing, however, but with a wife who has somewhat dipped into her resources to put up with my lifestyle, I love this article and love more the comments.

From my observing, many a lawyer who is at the top of his law school class (at whatever law school) is worth $1000/hr or more because he avoids getting off on the wrong track. A lawyer who is not at the top of his class will invariably go off wrong and the case or matter is bolixed up for good wasting hours and sometimes years.

I have observed in the Cincinnati business Procter & Gamble's recruit is by definition at or near the top of his class. I know John Pepper (former ceo; Francie introduced me to my wife) and Doug Worple (my son-in-law, former P&G brand manager and founder of Barefoot Advertising, now subsidiary of Proximity Worldwide, being itself a subsidiary of Omnicom, Inc.). Both are worth super-star salaries and other emoluments because they are, well, just ...everything! Ethics, social, financial, analytical, organizational, even spiritual I believe! They think ahead, they plan out their lives. They help whoever they touch, with their insights and ideas.

Allen Kmetz, one of my my roommates at Yale, an EE with a gentle demeanor, got his PhD in EE and went on to be one of the inventors of the liquid crystal at Bell Labs. I will see him and Joan next week!

But back to the main theme: the practice of law. After a failed practice as an associate at Frost & Jacobs, and then a successful practice as a utility lawyer for industrial clients at a boutique law firm, and then after about 15 sole practitioner years of trying, I have come to be able to handle the "small" non-corporate matter or case adequately (after many years of sneering at it from the big law firm perspective, later the utility law specialty perspective). Why have I finally been able to give the small case my full attention? Because I have now lived more than 1/2 my life in Cincinnati and I can identify with "Price Hill," "Dilly Dallies at Mariemont," etc. and can picture the lives and backgrounds of everybody who calls me in what is now my town.

So I have travelled in virtually all the worlds described in the comments.


Hey, I'm one of these lawyers. I have been for a couple years now. I find it laughable that the article says "Some of the lawyers who have taken these new jobs are putting the best face on their reduced status." I realize I am in the minority, but I don't see being a full-fledged partner-track associate as a high-status thing - I see it as a generally pathetic existence. 90% of the full-time associates I have worked with seem to be miserable people who don't have anything going for them other than their supposedly-terrific job. When I was in law school and later on when I was just starting out, I used to assume that people in those jobs didn't exactly enjoy working so many hours, that they accepted it as a necessary step to getting to a more comfortable place someday. The truth - in my experience - is that many of them really do not have anything else they would be doing if they weren't billing 14 hours per day (or whatever). They have no apparent interests outside of trying to appear high-status and to please their family and their (usually identical) friends. During the time I have been one of these "reduced status" lawyers I've also been able to pursue numerous other interests (some of which I also earn money from). And now the NYT is telling me I'm supposed to feel bad about it and envy the lawyers who are making more money but who literally have no time to spend it? And nothing interesting to spend it on because they have devoted nearly all of their waking hours to billing clients rather than to cultivating any sort of personality? Ha! No.

Wednesday, May 25, 2011

Attorneys vs Realtors

Years ago our corporate offices mandated that all divisions only use attorneys of their choosing. I contacted one of the select firms to help prepare an eviction notice for a non-paying retail tenant in our factory building. A few days after I requested the service, our real estate broker took the information over the phone, and at no charge, faxed me back a one page document within hours. I didn't even use this eviction notice, but rather spoke with the tenant and asked him to vacate within two weeks. He thanked me for being patient.

I called the attorney and told him to cancel the assignment. We later received an $3,000 invoice for research performed by a junior associate. When I questioned the amount, the partner cut the fee to $1000. I forwarded the invoice to our corporate offices, and told them they could pay it if they chose to do so, but I would not accept a charge at our division. If the law firm had actually prepared the document, their fee may well have exceeded the $5,000 rental value of the store.

The first thing these new lawyers learn is CYA. Prepare for every worst case scenario. Reasonable and practical are not terms in their vast storehouse of professional knowledge.

Saturday, May 14, 2011

Look a Gift Deed in the Mouth

Look a “Gift Deed” in the Mouth - Watch Your Language When Transferring Real Property as a Gift.

Posted by Stephen D. Richman, Esq.
1:28 PM
Deeds; Conveyance and Recording Issues, Purchase and Sale, Real Estate Law 101, Watch Your Language

Sunday, February 13, 2011

Most practitioners and others in the real estate business know what a quit claim deed, a limited warranty deed, a general warranty deed and a fiduciary deed are (See Ohio Revised Code §5302 et. seq. for the statutory language in Ohio required to create the same). While a “gift deed” has no required statutory form, failure to use “required magical language” has recently resulted in two disgruntled, former property owners who thought they had a gift that couldn’t be taken back.

In Dassel v. Hershberger, 2010 - Ohio - 6595 (OH CA 4), Jonathan and Mary Hershberger received a tract of land that they thought was a gift from elderly sisters Ruth and Rosemary Dassel. The Hershbergers were good friends of the Dassels and did odd jobs around their house for many years. In 2008, one of the Dassel sisters (Ruth) became terminally ill and was hospitalized. Five days after Ruth came home from the hospital, in need of full time care, the Hershbergers were given a deed conveying approximately 119 acres of property that was situated in-between the Hershbergers’ home and the Dassels’ home. No money had exchanged hands between the parties and while the Hershbergers testified that they promised to try and take care of the sisters for the rest of their lives, they denied making this promise in exchange for the property. Rather, they claimed the property constituted a gift for all of the past home improvements they made to the Dassel house. The Dassels, on the other hand argued that there was no intent to make a gift; they intended to transfer the property in exchange for the Hershbergers’ promise to take care of the Dassels until they died.

The Hershbergers did in fact move into the Dassel house, made improvements to the house, and initially cared for Ruth Dassel when she returned from the hospital. The stress of providing round the clock care, however, became too much for the Hershbergers, who moved out after a month. Shortly thereafter, the Dassels sued the Hershbergers for breach of contract and demanded rescission of the deed and return of the property.

The Fourth District Court of Appeals affirmed the trial court’s decision in favor of the Dassels. The court held that the deed transfer was not a gift, rather, it was a contract of care and maintenance that the Hershbergers breached, entitling the trial court to rescind the transfer as an equitable remedy for the breach. The Fourth District simply looked at the Deed on its face, which stated “for valuable consideration paid”, and following Ohio precedent held that when a deed contains such a recital, it should be construed as a deed of purchase, and no extrinsic evidence may be permitted to show, instead, it was intended as a gift. Actually, extrinsic evidence helped support the court’s holding that the transfer was not a gift, as the Statement of Reason for Exemption from Real Property Conveyance Fee indicated no conveyance fee was due because the transfer was “ to or from a person when no money…is paid…and the transaction is not a gift”. Perhaps the intent really was to transfer the property as a gift, but the Hershbergers wanted to avoid the conveyance fee (as the conveyance fee exemptions regarding gifts are only applicable to gifts to charities, and gifts between spouses, children, heirs or trust beneficiaries, trustees...). If so, one important lesson from this case is that avoiding the conveyance fee should not be the overriding factor in property transfers.

However, the overriding moral of this story? “When construing a deed, a court must examine the language contained within the deed, the question being not what the parties meant to say, but the meaning of what they did say, as courts cannot put words into an instrument which the parties themselves failed to do”. McCoy v. AFTI Properties, Inc., Franklin App. No. 07AP-713, 2008-Ohio-2304 at Par. 8. In other words, “Say what you mean, precisely, or a judge will tell you what you meant”.

If a transfer of real property by gift is truly intended, the words “Gift Deed” should be the heading. More important, the consideration should be “for love and affection”; not, “for valuable consideration”. Alternatively, if the consideration for the transfer is for support and maintenance of the Grantors for the rest of their lives, those terms should be spelled out in the deed (better yet, the specific provisions should be detailed in a contract).

Home Owning vs. Renting -- The Definitive Study

Sunday, May 8, 2011

Contract to Purchase

As of May 6, 2011, presented by Matre & Beyke to the Northeast Lawyers Association at the Montgomery Inn Steakhouse.