Yesterday Above the Law ran a story indicating that Winston & Strawn has made offers to about 75% of Howrey partners.  What made the post interesting for me was the comment section, which featured a debate about the futures of Howrey associates and summer associates.  One camp argued that Winston is essentially acquiring Howrey, but that the firms will not be merged, probably for liability reasons.  If that’s true, they said, associates will follow their practice groups to Winston.  Another camp was persuaded that Winston is simply picking off practices  and that associates will be left to their own devices.  (The summer associates, by the way, are out in the cold under either scenario.)

I repeatedly get the sense that younger attorneys and law students do not understand the way law firms work.  I get that sense from commentors on sites like Above the Law and associates I’ve worked with or spoken with at bar association events.  I think it’s a huge problem for at least two reasons.  One, if you don’t understand how firms work you cannot assist me in being profitable.  And let’s not pussyfoot around with that.  I’m not talking about overbilling, or overlawyering, or inflating time, or overstaffing.  I’m talking about providing excellent legal service in the most economical way possible, at the negotiated rate, so that the client is satisfied and wishes to hire me again.  If I can accomplish that, I will earn income.  If I earn sufficient income, I can pay the rent and I can pay your salary. 

I once knew an associate who had been given an assignment by one of my partners (not my current firm).  This associate was not fresh out of law school and had a couple of years under his/her belt.  The assignment was not unusual or difficult and the associate was allowed more than enough time to complete it.  Over the course of time the partner checked in with the associate and was told on each occasion that the assignment was on track.  The assignment was “due,” in the sense that it needed to be finalized and filed, on Monday.  The associate appeared in the partner’s door late in the afternoon on Friday and handed the partner a sheaf of paper.  The assignment had not been completed because the associate had run out of time, and he or she was now headed out-of-town for the weekend.  The associate left the office, apparently utterly unaware that because the assignment had not been finished the partner would now be spending his or her weekend doing it.  Not only was the partner displeased with this turn of events, but much of the associate’s time had to be written off.  

The law firm profitability formula is simple.  Let’s say I am a partner and I have $ 500,000 in business, meaning that in a year I am typically responsible for $ 500,000 of fees billed by the firm.  I am only one person, however, and can only realistically do six to eight hours of work a day.  (Administrative responsibilities eat up some of my time, and I have a life, which I choose to live.)  At that rate I cannot possibly complete all of the work available.  On the other hand, if I hire two associates, each of whom can also bill six to eight hours per day, or more because associates have less non-billable work to do, all of the work can be completed and the client can be billed for that work at a rate lower than mine, which the client appreciates.  I can pay an associate a good salary which is nevertheless lower than what the associate is capable of billing in a year.  This is where that PPP (profits per partner) number comes from.  This leveraging system only works, however, insofar as it makes sense for me to delegate work to an associate.  If I cannot do that because work is drying up or because the associate’s work is of poor quality, then it makes more sense for me to do the work myself, and the associate is no longer employed.

I am sorry if that sounds harsh, but it is the way the system works, and I do not see the system changing.  If anything, I think the trend will be for law firms to hire fewer associates and to expect more of them.  The days of billing a hundred hours of document coding at $ 300 an hour are gone and shouldn’t ever have existed in the first place.  Clients deserve better than that. 

If you are working as an associate now, you need to understand your role in the law firm.  If you do excellent work, are pleasant to work with and show signs of being a business getter some day, you have more security than if your work needs regular, significant revising or you are afraid to talk to people or you harass the staff.   But even if you are wonderful and I would love, love love to keep you, if the work isn’t there I am going to have to consider laying you off.  This is the scenario played out over the past two years at law firms across the country, no matter how big or small.  (And, I’m assuming good motives and good management on the part of the firm.) 

That brings me to problem number two.  I don’t think many young lawyers understand that they, and only they, are responsible for their careers.  Period.  Once upon a time, you got hired as an associate at a law firm, worked hard, and then, assuming you were not convicted of a felony, you made partner.  Those times are gone, although in all honesty they weren’t as idyllic as you’ve been led to believe.  Law firms supported that structure by committing to pay retired partners all or part of their salaries for life, and in exchange, the retiring partner turned his or her work over to the incoming partner.  That phenomenon led to the failures of some firms when business slowed but the salary commitment went on.

Being responsible for your career means that you can not count on making partner.  At a big firm like Skadden or Cravath, you have almost zero chance of making partner, but so long as you understand that going in, you can make a lot of money and then transition elsewhere at the five or seven-year mark.  Great.  At a mid-size or small firm you have to show some foresight.  Understand that you will only be offered a partnership when the firm believes it has no other choice, either because you have formed relationships with essential clients or because you are talented and the firm needs you.  Don’t take that personally.  It doesn’t mean the owners don’t like you very much and want the best for you.  Bringing in a new partner involves risk, and it involves giving you a share of profits (as an equity partner, anyway).   The firm will not wish to do that unless it has to. 

So, if you are responsible for your own career, you will wish to either make yourself indispensable to your firm (which may or may not allow you to do that), or you will wish to position yourself as advantageously as possible.  That might mean a lateral move to a firm that needs someone with your skills and who would therefore be willing to talk.  It might mean luring away clients from your current firm, if you can and only to the extent that this can be done ethically.  It might mean getting to know lawyers of a similar or better experience level and exploring the possibility of opening up shop, or opening a firm on your own.  There are lots of possibilities.  None of them will be easy, necessarily, but that doesn’t make them any less possible.  My point is that no one else is going to look out for you.  The better the work you do, the more people you know and who respect you, and the more business you can develop on your own, the better your career will be. 

Getting back to Howrey, I don’t think it is at all safe to assume that Winston will be able to absorb all of Howrey’s associates, counsel and non-equity partners.  Winston has a bottom line.  What Winston wants to do is add business while keeping its overhead (including associate salaries) roughly the same.  To the extent somebody from Howrey puts his foot down and demands that so and so be hired, so and so will probably be hired, but I don’t see Winston’s largesse going much further than that.  That isn’t “bad faith,” as one of the Above the Law commentators suggested.  It’s business.  It’s not fair and it sucks, but you’ll get past it and you’ll be fine.  Hang in there.