Labor/Wages


This is absolutely fantastic, and I completely understand the point.  Kudos to the Italians for making it work. 

This study is directly relevant to life as an associate at a big law firm.  As an associate at a big firm, one competes with other associates for a very limited number of partnership positions.  Associates work crazy hours, respond to emails at all hours of the night, and generally have no life. 

All associates would actually be better off if all associates would agree to be mediocre.  If all associates billed 500 fewer hours per year across the board, the same people would still be made partner — the result would be unchanged — but we would all have an extra 500 hours to enjoy. 

This doesn’t work though, because someone will always cheat.  (We are lawyers.)  Even if everyone agrees to bill only 1800 hours, there will always be that guy who thinks he can get ahead by billing just a few more hours.  It becomes a race to the bottom where the desire to provide a future for one’s wife and children competes with the crushing mental and physical anguish of billing yet another hour. 

The Italians seem to have solved that problem with a combination of social pressure and lowered expectations. 

L-worlds: The curious preference for low quality and its norms

Abstract. We investigate a phenomenon which we have experienced as common when dealing with an assortment of Italian public and private institutions: people promise to exchange high quality goods and services (H), but then something goes wrong and the quality delivered is lower than promised (L). While this is perceived as ‘cheating’ by outsiders, insiders seem not only to adapt but to rely on this outcome. They do not resent low quality exchanges, in fact they seem to resent high quality ones, and are inclined to ostracise and avoid dealing with agents who deliver high quality. This equilibrium violates the standard preference ranking associated to the prisoner’s dilemma and similar games, whereby self-interested rational agents prefer to dish out low quality in exchange for high quality. While equally ‘lazy’, agents in our L-worlds are nonetheless oddly ‘pro-social’: to the advantage of maximizing their raw self-interest, they prefer to receive low quality provided that they too can in exchange deliver low quality without embarrassment. They develop a set of oblique social norms to sustain their preferred equilibrium when threatened by intrusions of high quality. We argue that cooperation is not always for the better: high quality collective outcomes are not only endangered by self-interested individual defectors, but by ‘cartels’ of mutually satisfied mediocrities.

(HT Kids Prefer Cheese)

If you’re considering law school, maybe you should read this take from the folks over at Big Debt, Small Law along with all those glossy law school brochures.

Consider the typical, hapless TTT[*] law school grad: First she invested 100 K in a worthless undergrad degree like English Lit or Poli-Sci, then compounded this initial mistake by piling on 120 K or more in non-dischargeable law school loans, bought hook, line and sinker the materially fraudulent salary stats of her law school, endured the BarBri blather-thons, walked the hot coal hazing ritual of the bar’zam, and now finds herself coping with $1500 a month loan payments and a total lack of job opportunities.

I commented on the bimodal nature of lawyer salaries back in the good old days (2007), and I can guarantee you that the top salary hump has gotten a lot smaller in the intervening years.

Don’t get me wrong.  I still believe that the law is (or can be) an honorable profession and that the rule of law is an absolutely necessary condition for a free and prosperous society.  I’m just reminding everyone that there is no such thing as a free lunch, no matter what the admissions office says.  I cannot comprehend how a fourth tier school like Pace University can justify $39K a year in tuition.   How would you ever pay it back when good students from top tier schools are out of work?

However, my favorite quote from the diatribe is a side note about pro bono.

Thanks to a generation of propogandist “college for everyone” drivel, there’s an acute shortage of HVAC repair techs, plumbers, electricians, and other skilled tradesman. Don’t believe us? Call a plumber and a lawyer and see who can get there first. By the way, ask the plumber if he’s willing to install your faucets “pro bono” because you have no money. After all, running water is surely as important as your legal problems (and plumbers are VERY expensive), so just tell him he should do it for free in the public interest. Try the same thing with your auto mechanic, roofer, HVAC guy, and electrician. You’ll quickly find that only the “law” is so fixated on the merits of giving expensive professional services away to deadbeats for free. Here at Big Debt we’ve long argued against any and all pro bono work. Why? Because by so doing, one reinforces in the public’s mind that the service provided is worthless. This is especially true when rendering an “intangible” product like law, one that looks to a layperson like nothing more than a stack of very boring paperwork.

Justice should be free, right?

For context, a good CNC technician can make six figures without the bar dues and malpractice insurance, and no one ever asks them to give their work away for free.

(*Note: TTT stands for third tier toilet.)

I received this email from a legal recruiter.

Dear Offa:

I am writing to tell you about a position that recently opened up in Atlanta, GA. The details are as follows:

Litigation Associate: Atlanta, GA, office of this international law firm is seeking a litigation associate with 3-4 years of experience to work specifically on litigation and arbitration matters in the securities industry. Securities industry experience is a plus but is not required. Georgia or Florida bar is preferred.

If this position is something you might be interested in hearing more about, please feel free to contact me at the below number.

One would think that, given the general death of securities and the extensive law firm layoffs, one could find enough securities lawyers laying around on park benches to make blind email marketing unnecessary.

(Appologies to Mr. Coleridge.)

. . . and doesn’t plan to get out of the business any time soon.

I have to admit that this scares the Hell out of me.  From the Wall Street Journal Opinion Journal:

Here’s a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He’s been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with “adverse” consequences if its chairman persists. That’s politics talking, not economics.

Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can’t a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can’t special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit — until now.

Which brings me to the Pay for Performance Act, just passed by the House. This is an outstanding example of class warfare. I’m an Englishman. We invented class warfare, and I know it when I see it. This legislation allows the administration to dictate pay for anyone working in any company that takes a dime of TARP money. This is a whip with which to thrash the unpopular bankers, a tool to advance the Obama administration’s goal of controlling the financial system.

Primary farm producers in the world’s developed countries receive about $280 billion a year in government support. In the European Union, farmers receive a third of their income from government subsidies. Beef and veal producers get more than 70% of their income from subsidies.

A typical cow in the European Union receives a government subsidy of $2.20 a day. The cow earns more than 1.2 billion of the world’s poorest people.

Mark Vaile, Australian trade minister in 2005

(HT Carpe Diem)

The Mercian Royal Family is sort-of in the market for a new castle.  So, we sometimes drive around on Sunday afternoon and look at houses.  We stopped by an open house in a nearby neighborhood a couple of weeks ago.  The house was way beyond the budget of this minor kingdom (not enough serfs to exploit I think), but it’s fun to look.  The real estate agent made a little bit of small talk and casually asked what I did for a living.  When I told her I was a (soon to be) lawyer, her eyes positively lit up.

My brother, also a lawyer, recently faced the same reaction when buying a house in Utah.  He recounts how he dreaded the point in the discussion where the seller asked about his job.  He wanted to lie and say he was a plumber or a school teacher.  Because, the reaction was invariably, “Oh, you should have no problem affording this house then.”

Everyone knows that all lawyers are loaded, aren’t they?  It turns out that maybe not.

A friend and loyal reader recently sent me this article from the Wall Street Journal.*

A law degree isn’t necessarily a license to print money these days.

For graduates of elite law schools, prospects have never been better. Big law firms this year boosted their starting salaries to as high as $160,000. But the majority of law-school graduates are suffering from a supply-and-demand imbalance that’s suppressing pay and job growth. The result: Graduates who don’t score at the top of their class are struggling to find well-paying jobs to make payments on law-school debts that can exceed $100,000.

The actual situation is stunningly shown in the distribution of starting salaries for law school graduates (via Adam Smith, Esq. and Empirical Legal Studies).

Photos-Uncategorized-2007-08-30-Nalp-Bimodal

Can you say “bimodal,” and this predates the recent move to a $160,000 starting salary at many big firms.  Unfortunately, the future prospects might not look any better.

Public-Resources-Images-P1-Aj088-Lawjob-20070923191725-1

The Wall Street Journal article spills a lot of ink taking law schools to task about their marketing and makes some valid points about the transparency of law schools’ marketing material.  A law school could say, “the average starting salary of our graduates is $95,000,” and that would be perfectly true and honest.  But, it doesn’t quite tell the whole story because almost no one makes $95,000.  Starting lawyers make almost twice that much . . . or half that much.
Maintaining a little skepticism, I do have to wonder if the graph represents actual salaries or base salaries.  Smaller firms are much more likely to have a lower base with a higher portion of salary dependent on billing.  For example, a small firm may offer a base salary of $50,000 with the actual salary being much closer to $90,000 if the lawyer bills a reasonable number of hours.

All this being said, I have one word of advice for those starting or considering law school:

GRADES
.

Having been on the job hunting side and more recently on the recruiting side, there is not another single factor, or combination of factors, that comes close to the emphasis big firms place on grades.  One can argue all one likes that good grades do not mean good lawyers, and I would probably agree.  But, as I tell my clients: I don’t make the rules, I just explain how they work.

(HT Elijah G.)

(* I’m sure this article will shortly disappear behind WSJ’s pay-per-view firewall.  Sorry.)

Working in patent law, I somehow got on the mailing list for Intellectual Property Today.  In the back of the magazine each month is a Classified Services section.  This section contains, among other things, classified ads for Positions Available and Situations Wanted.  Typically, the Situations Wanted section includes ads from practitioners looking for overflow/contract work or patent search work, but the December issue had an ad that caught my eye.

US/China Position

Attorney with 12+ years experience as Corporate Legal/IP (primarily biotech & pharma) Counsel, seeking position with U.S. company having operations in China (or vice-versa).  Initially relocate to China to intensively learn Chinese language, business customs and operations; and then travel to China on as needed basis.  Email: (removed)

I guess there is something to be said for knowing what you want and going after it, and he plans not just to learn Chinese but to learn it intensively.