Money Matters

If you want to see what's valued in any organization, find out what gets funded. Let's look at what gets funded in the legal system. The answer is $400/hour associates who have very little practical experience under their belts (even if they're smart as whips in terms of citing the relevant facts in Pennoyer v. Neff). The average judge makes much less money than the average associate in a large law firm. Senior level associates make multiple times what a federal judges make. And partners make multiple times that.

Do any of us begrudge these outside counsel their pay?

Of course we do, when we sit and think about our career choices and wonder why our colleagues from law school are making bundles off the fees we arrange to pay them. But we get over that when we go to work and remember why we made those choices. At the end of the day, we don't get that upset about paying high rates to good firms for great work--our clients want success and that takes money.

But at what point will corporate counsel say, "Gee, a $400-an-hour associate who doesn't know my company (yet), doesn't know the law (yet) and doesn't have any experience working on such matters (yet) may not be the best person to work on my matters. I'd rather have the partner I know and trust, who may be $650 an hour, but can do the matter in two hours and has a good track record."

As law firms continue to increase associate pay, associates will have to work harder than ever to get assignments that are increasingly going (by client mandate) to more experienced partners. And because partners are busy billing directly to clients for work that associates might previously have been tasked to do, they have less and less time to mentor and guide associates. The result is that associates have fewer opportunities for professional development and lower career satisfaction.

At some point, this system is going to snap. ACC plans to help the in-house legal profession figure out how to better manage its legal spend. It's pretty clear that firms have no understanding of cost-management techniques if they're suggesting that a 10 percent fee discount followed by a 20 percent pay raise for their associates and an increased hourly rate for partners adds up to anything other than an overall larger bill for the same work.

At the same time, ACC also is working with a coalition of organizations that are focusing on the dire need for an increase in pay for our federal judiciary and state court judges. The idea that a first-year associate with no experience makes more than an associate justice of the U.S. Supreme Court makes absolutely no sense. Worse yet, the impact of low judicial wages is being felt in every quarter. Judges who are appointed for life are leaving the bench because they can't fund a mortgage or their kids' college educations on their salaries. Many attorneys who should be considering the idea of working toward the pinnacle of their careers--an appointment to the federal bench--quickly discard the idea unless they're independently wealthy. And the stress and workload of life on the bench these days makes the judiciary an unattractive alternative for older attorneys after they retire from "active" practice. Those of us in the corporate community know that as fewer attorneys with corporate practice backgrounds join the judiciary, the courts will become even more perilous for corporate defendants.

By accepting unwarranted salary increases for associates and ignoring the long-overlooked need to increase judges' pay, corporate counsel and the clients they represent stand to lose on both counts. And our profession will be the poorer for these shortcomings as well.

Let's work together to ensure that what is valued is what gets funded. Let's demand sane pay for associates, value for legal services provided to our clients and a reasonable wage for the most experienced leaders of the profession in our judiciary. ACC pledges to work on behalf of the in-house profession in the next year to accomplish these goals. Write me if you're with us: hackett@acc.com.

Susan Hackett is senior vice president and general counsel of the Association of Corporate Counsel (ACC).

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