There are lessons to be learned from COVID-19 that should provide the impetus for change to address some of the structural flaws in the way Big Law recruits and develops legal talent.
Any analysis must acknowledge that while it may be easy to make broad proclamations about the permanent changes to Big Law that will arise from COVID-19 and its aftermath, it is dangerous to do so. Traditionally, Big Law does not change quickly or permanently by way of seismic shifts. It changes cautiously and slowly, often only after a strong market leader breaks with the past to provide cover to the entire profession – and particularly when clients press for, or at least approve, of a new approach.
And Big Law has done well by the way it has done business for a very long time. Initiatives such as paying very large premiums to high achieving graduates of top law schools, summer associate programs, recruiting at a small number of law firms, reliance on first year law school grades, were well conceived in the environments in which they were first utilized.
But circumstances have changed. Big Law must do the same in response. When many partners of Big Law speak candidly, they acknowledge that there are deep structural flaws in the way Big Law recruits, hires and utilizes legal talent. We formed Legal Innovators because we believed these practices had become anachronistic, at least for many firms and for a large number of the young lawyers they hire, and because we believed the profession can and must do better on recruiting and developing diverse legal talent. COVID-19 has provided some lessons for ways those flaws might be addressed and the urgency to make significant change.
- Diversity and Inclusion has not been achieved. More creative approaches must be adopted.
- Rates charged for junior lawyers are too high. They were unsustainable before COVID-19 and they will be even more unsustainable after it. The most significant factors driving those high rates are the starting salaries for first year associates and the real estate costs of providing permanent office space for them (and their more senior colleagues) often in the most expensive locations in the world. Of course, the ever-increasing salaries paid to junior associates bump up the salaries of more senior associates, causing a spiraling effect on the rates charged at all levels of seniority.
- Relying on one year of law school grades from only a small number of top ranked law schools as the overwhelming predictor of law firm success is unreliable. There is equally capable, and often more diverse, talent entirely missed by this process.
- The Summer Associate Program is anachronistic and unjustifiably expensive. It neither trains future associates nor screens for their performance.
- It is bad business to determine the size of an incoming associate class, and the identity of its specific members, two years before the class commences full time employment. Markets are far too volatile for this to continue.
Lessons from COVID-19
Sudden, Unpredictable and Globally Interdependent Business Shifts Require Greater Work Force
The severe downturn of the early 90’s, 9/11, the recession of 2008, SARS and now COVID-19
demonstrate the volatility and global interdependence of business and legal markets. Coupled with the
unreliability of institutional relationships in a highly competitive legal environment, Big Law must
develop the flexibility to respond more nimbly to market fluctuations. As currently structured, Big Law
is not well situated to do this.
There are at least two changes Big Law should make.
First, it should move towards a more flexible labor model, one that can be ramped up and down more
easily to respond to market fluctuations. Outsourcing more (but not all) associate work in a way that
allows firms to evaluate talent before making a long-term commitment (and vice versa, in a way that
allows young attorneys to evaluate the firm before making the same commitment) provides the
requisite flexibility. If done thoughtfully, with high quality resources, it will also provide the means of
evaluating talent to make a more informed long-term decision when the time is right to do so.
Second, it should evaluate junior talent on the basis of three years of law school performance, not just
one; and it should only make a longer-term, higher priced commitment to associates after having had
first-hand, meaningful exposure to performance. This would allow law firms to eliminate their now
largely meaningless summer programs and provide greater opportunity to more students to
demonstrate their potential over a more meaningful period.
Indeed, if the pass-fail approach adopted by many law schools during the Pandemic is maintained in the
future (as is currently being debated in some law schools), it will force firms to adopt different metrics to
predict success than the ones they have relied upon for decades. A more flexible approach that allows
firms to evaluate talent on a real-time, real matter basis will provide greater predictability of long-term
Teleconferencing and Working Remotely
Obviously, significant legal business has been performed via teleconferencing during COVID-19. It is not
perfect, and not all legal functions can or should be provided this way. But it should lead to a more
balanced approach between in-office and remote functionality. Over the long term this should allow
law firms to shrink their real estate footprints to accommodate more temporal visits to the office for
much of its work force, and to reduce travel expenses. Law firms that experiment with the right balance
in this respect will cultivate a more satisfied work force and gain a handle on their true real estate and
travel needs. This can only lead to a reduction in costs and greater efficiency. These efficiencies can be
passed onto clients.
Diversity and Inclusion Is Even More Critical
COVID-19 is a global crisis. There is literally no nation, race or culture immune from it. As the problem is
multi-national and multi-cultural, so too will be its solutions. Law firms will increasingly need diverse
perspectives and voices to respond to these challenges. There can be no slippage on diversity and
inclusion efforts during a time of significant business challenge.
Cast a Wider Net Over the Recruiting Process
Particularly by making use of technology, law firms can cast a wider net to find previously untapped and
more diverse talent pools. Historically many law firms have identified at only a small number of the
most highly ranked law schools. The original proposition of paying premium salaries to a small number
of highly elite law school graduates was predicated on the expectation that by doing so law firms would
be first to secure long term loyalty (ultimately to populate their partnerships) and that they could charge
premium rates for their services.
Almost everything about these assumptions has changed:
- Young lawyers today do not exhibit long term loyalty in exchange for the high pay associated with their law firm offers. In fairness, neither do law firms towards the associates they recruit.
- With the advent of the AmLaw rankings and the consequent commoditization of unsustainably high entry level salaries for so many law firms, it is fanciful to believe that all junior attorneys commanding these salaries possess sufficiently premium talent to justify their premium billing rates, and that all junior associate work is sufficiently critical and complex that it should universally command these rates. Clients know these are myths, and they are aggressively pushing back.
- Not all law students with high grades from highly ranked law schools possess the innate business development characteristics required by the competitive markets in which Big Law practices. High performing law students from additional law schools may more naturally possess these characteristics and complement a law firm’s talent base.
- Pursuing a narrow approach to recruiting has suppressed Big Law’s ability to make significant progress in diversity and inclusion at entry levels, which is critical to achieving better results at senior levels. It misses far too much diverse talent.
- Finally, the discrepancies amongst law schools is not as great as it once may have been. Putting aside the dangers of relying on a ranking system that law schools have become adept at manipulating, there are many reasons that law students end up at lower ranking schools than the top 14 or so that law firms favor.
- First, cost is a factor. Many students accept scholarships at lower ranked schools to defray the extraordinarily high costs of law school.
- Second, standardized testing is often a major differentiator. There are numerous studies analyzing the biases that may be contained in this type of test.
- Third, the nationalization of law firms has also occurred in law schools. They recruit from a wider base and attract more highly qualified candidates than previously may have been the case.
- And fourth, focusing only on the most highly ranked law schools and dipping lower into their classes, overlooks the grit, determination and smarts possessed by high performing students at the many law schools never visited.
Three Suggestions for Change
COVID-19 provides the impetus for Big Law to consider three areas for change.
- Double-down on its diversity and inclusion efforts. Explore more creative ways of identifying, evaluating, cultivating and promoting diverse talent.
- Outsource more of its junior associate work. This will bring the price point down and enable more informed permanent hiring decisions later in a lawyer’s career, when higher rates are more sustainable.
- Outsource some of its recruiting functions to cast a wider net . Hiring decisions should remain with law firms, but with the use of appropriate criteria the tasks of identifying and screening additional talent can and should be delegated. It is imperative that the eye of the needle be widened to create additional pathways to success.