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The National Law Journal and the Association of American Law Schools co-sponsored a roundtable discussion on associate retention in today’s law firms on Feb. 12 at the Southern Methodist University Dedman School of Law. Co-moderators were AALS President John H. Garvey and NLJ staff reporter Leigh Jones. Panelists were Thomas F. Cullen Jr., Alan D. Feld, Bailey Pham, John M. Rogers, Karen Sargent and Heather L. Stobaugh. John B. Attanasio, dean of Dedman School of Law, provided opening remarks. Excerpts from the discussion appear below. John Attanasio: As I go around to law firms, I can tell you what will be no surprise, I think, to anybody in the audience, that there’s no issue that interests them more. When all is said and done, retaining experienced associates within law firms’ ranks is probably the most crucial strategic issue facing any law firm. Firms invest millions of dollars in recruiting and training new associates, only to have their very best and brightest � some of them anyway � leave, taking their skill set with them. Associate retention continues to be a hot topic, especially as law firms seek ways to hold on to the associates they have attracted. In order to continue supplying associate ranks with top talent, elite firms are paying top dollars by raising first-year salaries to the incredible $160,000 a year in major offices. But associates today are not just looking for financial compensation. They are looking for firms providing career guidance and development, innovative mentoring and a blend of good work and good quality of life. Law firms, on the other hand, may place higher demands on associates to justify those salaries, which can exacerbate the problem of associate dissatisfaction. John H. Garvey: Let me begin by asking Mr. Cullen this question: The National Association for Law Placement estimates that, by five years out of law school, 80% of associates at law firms will have left to go somewhere else. So the question that I want to ask is really a question about what effect this has on law firms. When firms hire young associates, they obviously don’t expect everybody to stay until they become partner and retire, but I wonder whether a turnover rate that serious is a problem for law firms. Tim? Thomas F. (Tim) Cullen Jr.: Well, as John mentioned, having been with Jones Day for 30 years, I might be a little bit disqualified, because I’ve been overretained. But actually I don’t think that 80% over five years is a bad number, depending on how it sorts itself out. A law firm is a living thing. It evolves by natural selection to some degree, and the natural selection runs both ways. By about five years out, people have decided whether they bonded with the place or not and whether the place has bonded with them. Whether they find that that’s a satisfying way to live. Now, that 80% can be arranged differently, so it is a problem. If, for instance, a given practice group has not had a partner up in three or four years, that’s a bad sign. There’s some bad parenting going on there. If you are spending, over a three-year period, hundreds of thousands of dollars on headhunters to fill holes, that’s a terrible sign, because you’ve lost the recruiting money, and you’ve had to spend it again a different way. Garvey: Does that sort of turnover bother you, Alan? Is that a number that you would be concerned about? Alan D. Feld: I think that what Tim said is correct. I think it depends on what the number is made up of, and so if you have some symmetry across practice areas and across classes, it’s not anything that would be disturbing to me. I think what happens is you find that law firms do make mistakes in their relationships with the associates, and despite the best intentions. So you do have some attrition based on people that really don’t fit in the culture. You have some attrition for other reasons, but I think the figure itself is sort of meaningless. Leigh Jones: Bailey, how does that make you feel, though? Bailey Pham: You may see people like over the summer, you know, lawyers that were there one day and don’t return the next week, and so I think that you [as a student] already know that. If your goal is to stay there long term, you need to figure out what is the proper way and path to take in order to do so. Garvey: Can I ask, Bailey, what your goal is? What do you picture yourself doing in 10 years and 20 years? Pham: I may be a na�ve law student right now, but I would like to say in 10 or 20 years that I will be a partner at a law firm. I do realize that there are a lot of obstacles and challenges along the way, but my goal right now is to make it to partner, and when I start my career out, I will try to find the mentors out there that will help me do so and try to reach that path, that goal. Jones: I wanted to ask Judge Rogers, as someone who has a perspective as a practitioner, a practicing attorney and some experience from the bench, how have you seen, or have you seen, a change in enthusiasm for the profession? Do you sense that there is some disenchantment with the young people in the profession? John M. Rogers: At times I do, yes. I think a lot of young people are not interested in ultimately becoming a partner but rather interested in having a lucrative job that pays off those high education costs. I get a bunch of clerks every year, and that’s remarkably something that they’re thinking about a lot is: how they’re going to deal with that [debt] load. And that wasn’t so widely the case when I graduated from law school. And so if you have people who are economically impelled to go to a law firm, and that’s the reason they’re going, then it seems to me they’re less likely to stay than if they go with the kind of goal of becoming a senior partner. Garvey: Karen, you see a lot of these students go through your office and prepare to enter the practice of law. How would you rank the motives that move recent graduates to go to work for big law firms? Karen Sargent: For the students who qualify with the large firms’ criteria, it’s a great place to start. But in the long term, I’d say an association with a large firm is a very fine credential that you will take with you for your life, and it will open many doors, and so it is a stepping stone to other opportunities that don’t present the long hours and the politics of working with a large law firm, but it’s a very fine credential and excellent training and opportunity as you pointed out. My experience in working with the recent grads is it’s not necessarily that they are leaving the big firm practice. They’re jumping from firm to firm, and it’s not necessarily that they are so unhappy but that they want to start over with a clean slate. They graduate from law school. They enter a large firm. They learn their skills. They develop relationships with their co-attorneys, and they may develop a pattern of interacting with these attorneys that may give them the perception some years down the line that they’re not moving ahead professionally in the way they want to be. Garvey: You can imagine an arrangement where it works for the law firms, and it works for the young people. It works for the law firms, because they have bodies to do the work in their various departments. It works for the young people because they get training and get their debts paid off, but you sometimes hear a different story about the experience of young lawyers: that the hours are too long sometimes, that the work is unpleasant, and they leave not because they’ve reached zero net worth, but because they’re really not happy at what they’re doing anymore. Do you think that’s a common experience? Sargent: Let me reflect back on your first question about the NALP statistics that 80% leave within the first five years. Rather than work it out where they are, they look to other opportunities to go where the grass is greener, or at least they think the grass is greener. They may learn it might not be. I think that is what may be happening more so than leaving the large firm practice. Jones: Heather, I wanted to ask you: Despite the efforts of career services professionals such as Karen, I sense that there is a disconnect between what students expect and what the actual experience is, and partly being because you can’t ever know what it’s like until you’re there. Could you identify for us some misperceptions that law students have about practice and what surprises that you had when you went to work in the real world? Heather L. Stobaugh: For me, I was surprised at how detail-oriented the practice is, and that there are mundane tasks associated with it and with every job � everything from entering time to running conflicts checks to engagement letters to clients. It’s a service industry, which is something I didn’t realize, and it’s a client-driven industry, so it’s easy to get lost in a project that you’re working on for a specific partner, when ultimately it’s the client who is driving the case and whose needs you need to please. It’s very humbling to start a job and to come out at the top of your class and realize that you don’t know anything. Jones: What didn’t you know? Stobaugh: Well, a lot of practical stuff. I mean, law school taught me how, I think, to think like a lawyer, but it didn’t teach me how to practice like a lawyer. One instance specifically came to mind when a partner asked me to draft a motion to compel, and he said, “Be sure to attach a proposed order to it.” Well, I had no idea what a proposed order was, and, I mean, not only was I embarrassed to ask and thankfully I figured it out, but I just didn’t know what that was. I never learned that in law school, and things like, you know, a certificate of conference and just practical things that are everyday parts of my practice, but that I had no idea what it was. And maybe they taught it, and I wasn’t paying attention. Or maybe it’s just the actual application of what I learned in law school. So that was surprising to me and humbling to know that I don’t know everything. But I think you do have to seek out mentors as a young attorney, and part of the responsibility to develop yourself as an attorney is to seek out mentors, to ask questions, to not be afraid to ask questions and to volunteer and take opportunities that are presented to you. So, thankfully, I’m at a firm that just has a wonderful mentor practice, and I sought out attorneys that were a few years older than me at the beginning, and they showed me the way. Garvey: Do you think, Tim, Alan, that the practice of hiring lateral partners or hiring lateral associates within firms is becoming more common? I wonder whether you feel the effects of that, too? Feld: I’m a baseball fan, and I think that the free-agent market has ruined baseball. I mean, it used to be I knew all the players on my favorite team, which was the St. Louis Cardinals, and they came and they stayed until they died or until they quit. What we have in the law practice today, in my view, is a free-agent market. People are constantly measuring, partners included, their performance plus what their income is against the so-called market, which is an elusive term obviously, but I guess it’s what some other firm would bid for a given person. And you find yourself in that market more and more for associates and for partners. I think homegrown lawyers that come with you in the beginning and stay all the way through and are involved in understanding the culture of your firm are obviously better able to contribute to the welfare of the firm as a whole than somebody who comes in because he’s perhaps dissatisfied with a compensation issue or some other issue at another firm. Cullen: Actually, I feel a little bit differently about it. I find that often someone out of law school will choose the first firm they go to for the wrong reason or for an inchoate reason. I chose Jones Day for all the wrong reasons and got lucky, but I think that there are some, the equivalent of tramp ballplayers, who will leave you for a nickel. You know, it’s the difference between a three- or a five- or a seven-[series] BMW. Big deal. It’s not, by and large, “change your life” money. Garvey: What has been the cause of the new free-agency principle in the firms? There was a time when people grew up in their firms and made partner and didn’t leave, and the firms would even fund their own retirement plans, but now you can take it with you. Feld: I don’t think it’s all for money. I think that it really probably started with the associate ranks, because of the student loan issue. I mean, the average student comes to your firm with a heavy load of educational loans, and you pay them an obscene � what I consider an obscene � amount of money, but you also require an obscene amount of work from them. You have no choice. So you’re asking these associates to work very, very hard. Of course, they’re very well paid, but after about three years of that or four years of that, they’re in a situation where they’ve paid their loan down to some extent, they’re burnt out because it’s really had an impact on their life, and a lot of these people will gravitate to corporations which are now, by the way, in the marketplace much differently. I think that’s sort of built up through the system over a period of time, and so those people, as they become partners or as they become senior associates, they begin to look around at other opportunities. Jones: One of the things, judge, that you touched on was the idea of student loan debt. Part of that, too, or related to that is the goal of associates. In some of the reporting that I’ve been doing, it seems that a lot of people in the profession don’t have that goal. They don’t want to stay at the firm long enough to make partner. Do you think the profession has changed that much? Or do you think the younger generation has changed that much? Rogers: I think there are real changes. I’m not sure the minds of the graduates are that different in terms of what they want or what they value, but they’re in a system where the economic incentives are different from the way they’ve been, and so they react to the system, and the system is as you’ve described it. There is a comparative advantage added to the whole system by having strong big- and medium-sized firms, and I’m concerned that we maintain that, and I think if these symptoms that we’re looking at are an indication of a lack of institutional commitment of the parts, of the elements of the firm, then that I think is a problem, because it is that kind of institutional commitment that drives the comparative value of the firms. Garvey: What we’re talking about, in a way, what Mr. Feld and Judge Rogers are talking about, is the glue that holds big institutions together. It keeps young people at firms until they are old people and keeps partners from leaving for greener grass or walking off with their clients. Mr. Feld suggested that one of the things that attaches people to big firms is that they pay well, and they help to pay off debts, and that’s a sort of economic attachment, but it’s not a basis for a long-term marriage. Jones: Among the things that we’ve reported on at The National Law Journal are things that law firms can do to make associates feel more valued, and there are some kinds of silly perks out there: dog walking services that the law firm will provide or giving away free hot chocolate to associates. Heather, I wanted to ask you, what can law firms do that really make the associate feel valued? Stobaugh: It’s not in-house dry cleaning. I’ll tell you that. Really, to me, very early on when I started practicing, I was included in the cases from top to bottom, and I was involved in client meetings. I attended mediations and hearings, and someone sat down with me and gave me the background of the case. So I wasn’t just working on one discrete part of the case with complete detachment, and that’s how I get invested in a case and start to care about it and feel valued and feel included. So for me, that is the biggest thing is to be included in a case from top to bottom as much as possible. The second thing, too, is, you know, I think, be respectful. Associates have schedules and time and weekends as well, and I think when you have deadlines that are client-driven or court-driven, obviously you can’t change those, but [then] there are internal deadlines that really don’t need to happen on a Friday afternoon at 5 o’clock . . . .Today I received two e-mails from attorneys at my firm, telling me what a good job I did on something, and that matters to me a lot. Garvey: I sometimes wonder about this very point. There’s a firm called Chapman and Cutler in Chicago that tried this idea of two different tracks, and they weren’t a smart track and a dumb track or a mommy track. They said we’ll give you 2,200 hours and more money, or we’ll give you 1,800 hours and less money, and it takes longer to get to make partner on the second track. I’m often puzzled about why this isn’t more attractive to associates, and why it’s not offered by more law firms if it would work. Feld: I think the use of staff lawyers has become a big thing with law firms, and we use them, and there are people with excellent academic records who were at a firm, and they just don’t want to work that hard. One of the problems is: You’ve got to make sure they really understand that there’s not a partnership down at the end of the line. But for the most part, that is a very effective tool for law firms now. Cullen: This is a talent and service business. Talent gets away with murder. Always will. Always should. There have been people who have made it all the way to partner, billing 1,600 hours a year and wearing their tie backwards, because they were just really, really talented. There are 20 gradations of value that they are giving to the law firm on different levels, and you’ve got to recognize the different ways that they can give, but they’ve got to recognize that you’re making those discriminations all the time. Jones: Bailey, I wanted to ask you, it seems that part of the attrition problem is, and we’ve touched on this, that some law graduates go to places where they really don’t want to be. But there also seems to be this kind of message that a lot of students buy into in law school that the definition of success is to go work for the large law firm, make the big bucks. Can you address that issue, because it seems like something that law students get caught up in. Pham: I don’t think that all law students think, that to be successful from law school, that you have to go work for a large law firm. I think ultimately most 2Ls and 3Ls would define success as just graduating, passing the bar and getting a job � any job � and. however, I do know that there are some individuals that are in law school that do place more value on defining success as being in the top 10% of your class or graduating with some honor distinction and getting to the large law firms, but I don’t think that that is the end-all, be-all to success from law school. Garvey: We’ve been talking about the effect that the expectation of billable hours might have on associate retention or young people’s or partners’ happiness, and one way of going with that is to lower the expectation about billable hours. Another way to go is to attack the other piece of the equation. I remember the American Bar Association recommended six or eight years ago that law firms go away from billable hours. Is that something that firms consider? Feld: Well, large firms normally are dealing with general counsel of corporations, and every time I go to any panel discussion or anything with general counsels, they talk about how they want all these alternate billing arrangements, and then when you go talk to them about it, they say, “Oh, no. Just bill us by the hour.” I mean, they’re all scared to death that you’re somehow going to figure out a way that, you know, you’re going to get away with something. Cullen: I think it’s very hard, and what makes it hard is you’re trained as lawyers to be impeccable, not to be adventurous. Sure. I can bid a litigation, but somebody’s taking a risk there, either the guy on the other side or me, that I’m going to out at that number or a different number. I’d be perfectly willing to bid a lot more of the business and drive it away from the billable hour. I think it would be much healthier for the profession for the reasons we’ve talked about. Jones: Do you think there’s a possibility of value in perhaps eliminating the billable hour for associates first or second? I know there’s a firm in Atlanta, Ford & Harrison, that has done away with billable hours for their newest associates. What do you think about that? Cullen: It’s certainly worth thinking about because that would appeal to general counsels, because they don’t think new associates are worth much, and when they came out, they weren’t getting that kind of money. It’s one of the things they rant and rave about. Jones: More and more law firms are using the two-tiered system where you have equity and nonequity partners. In some cases, even those within the firm don’t know who’s an equity partner and who’s a nonequity partner, and I’m wondering if the increased use of that kind of structure, you think, helps or hinders the associate-retention issue. Feld: The trouble with the system, as I see it, is that by the time you get through six or seven years, the associates that are more senior, these are very valuable people. The clients know them, and if you have an up-or-out policy where you say to these guys, “Well, sorry. We’re going to take one of you. There’s four of you in the room. Three of you are not going to make it,” you lose significant assets. So if you’re able to say to the one guy, “You’re going to be a capital partner,” and the other three, “You’re going to be an income partner,” and you can save them, it’s very beneficial. Now, one of the problems you get into is that income partner is supposed to have a life to it � so many years, and then you’re out. Well, I think what firms are finding is it has an indefinite life. It just keeps going. Jones: So the partner remains a nonequity partner indefinitely? Feld: Well, for a long period, and the thing is, you’re right about what you said earlier is that you don’t distinguish between . . . you don’t say, John Smith, equity partner, John Smith, income partner. You just say partner, and so around the firm and with the clients, the person is a partner. That’s also a value. Garvey: We haven’t talked at all about this, but one of things, a phenomenon separate from this and related or not, I’m not sure, is the kind of surprising increase in the size and reach of American law firms. Jones Day is a good example. Akin Gump is another good example. Firms that have offices all over the country and are getting increasingly large, and the organization becomes so big that it’s impossible to know who all of your associates and [who] even all of your partners are. I wonder whether this is something that’s related to these other phenomena � the loyalty issue. Is this something that we can’t solve because we’ve passed the point � and I don’t know what the point is, 30 or 200 � where you’re no longer one organization? You’re like a small state. Feld: I don’t think there’s anything that can be done. I mean, look, I think the best place to look in that regard is to look at the British firms, because those firms have come over and acquired American firms, and because of the weakness, I guess, of the dollar now, they’re going everywhere, and those firms have huge numbers of people in them. And you see mergers of firms and consolidation of firms continuing, so I guess it’s going to continue. I personally feel like after you have a few hundred people in your firm, it doesn’t matter. You might as well have 1,000 people, because you’re not going to know all the 200 very well. It’s tough. Cullen: I think that one of the things is precisely: What does a big, national, international company, what do they need to do to manage their legal function and have some kind of reliability of communication and result? A generation ago, it was “We hire lawyers. We don’t hire law firms.” Well, that turned out to be a nightmare, because Procter & Gamble would have 800 different lawyers. They’d have 800 different relationships, and just the management of that is an impossible nightmare. So there is a huge advantage in dealing with big companies of being a big law firm. Now, within a big law firm, they’re all cross-hatched into little cells. There is the local office you’re in. There’s the practice group that you’re in which is kind of your affinity group, your platoon, that you attack the business with. But also even the largest law firms, there are 3,000 lawyers in Jones Day. If you said you came from a town of 3,000 people, people wouldn’t say, “God damn, how do you get around a place that big?” It’s a lot of people for what people’s historical conception of a law firm is. It’s not a lot of people to figure out the social dynamics of. It’s like Oxford, Ohio, from that point of view, and you can figure out the dynamics, and you can have ties within it, and you can know how the place works with a relatively little amount of effort. It is less comfortable to be dealing with a partner in San Francisco than it is to be dealing with a partner down the hall, but it is far more comfortable than dealing with a client or having to pitch a client or convince a client. So there’s a lot of security in that that isn’t obvious if you just step back and say, “God damn. Big law firm,” I think. Feld: I agree with you. The other thing is: You really have to have the expertise and you may have a partner. Your example in San Francisco that just has better expertise than the fellows in your local group, and you know it, and it’s easy to sell that person and merchandise is so much better, and you feel more comfortable. It’s fairer to the client. Garvey: Well, I think that there are two different kinds of relationships that we’re talking about, though, and one is the relationship to the client, and it may very well be that the size of the law firms is driven by the work they need to do for their clients and by the size of their clients, and there’s just no getting around that, so firms are going to be big, and that’s that. The other part of it, though, is the internal relation of the associate to the firm and the group dynamic within the firm. When you have a bigger firm, there’s more money sloshing around, and it collects in pockets. Partners at the top of big firms make, as a rule, more money than partners at the top of small firms. I wonder whether the size of the firm has other side effects. I mean, for example, a side effect of the high associate salary and billable hours phenomenon is more contract lawyers. Women leave in higher numbers than men. Firms examine practice areas for profitability. It may be that there’s less pro bono work done by lawyers who have used up all of their free time, and I wonder whether having a big firm as the social structure makes a contribution to these side effects. Cullen: I think that there is a thought that a big institution is necessarily less flexible and individual in its relationship with the individual lawyers than a small institution. I would actually argue the reverse, because if I’m in a law firm and . . . actually, when this was happening, it was my observation that the turning point was about 80 lawyers. At about 80 lawyers, you knew everybody � the lawyers and the associates and everybody in an office � by their first name. But you got too much beyond that, and that was not possible anymore, and that changed that tenor of the place, but up to that point, that’s a very close-knit family, and to be part of the family, you got to be part of the family. You don’t have a boatload of choices as to the people you’re going to have dinner with, the people you’re going to go skiing with, the issue areas you’re going to work in. A big law firm lets you sort yourself out, and a good big law firm can have a lot more flexibility and patience than a small law firm. I can take on a large number of half-time people. If I have 20 partners, and half of them want to go half-time, I’m in real trouble. If I have 600 partners, and 100 of them want to go half-time, I can deal with that. It gives you a lot more flexibility and people a lot more options. It doesn’t say that a lot of people aren’t more comfortable in small places. I’m just saying that the idea that bigger places are more rigid in dictating results � because these aren’t big places in absolute terms � I don’t think it’s quite right. Garvey: I wonder, we’ve spent a lot of time looking at the law firms, and I wonder if I could ask about the role of law schools in all this. Are there things that we should be doing that we’re not to prepare our students and graduates for practice in this world? Are there ways to prepare them for the culture shock of going to a firm where they’ll be doing things that are new to them? Pham: I think the only real thing you can do is panels like this and trying to make law students aware of what the realities are for, you know, practicing and what to expect, but I also think another good thing would be to give them advice as to whatever their goals are, finding ways to meet their goals and, if their goal is to stay and become partner at a law firm, I guess helpful hints or tips [as to] what they can do in order to make that a reality. I think the biggest thing is just awareness and expectation. Jones: Karen, did you want to weigh in on that? Sargent: Actually, Heather and Bailey touched on some of the major things that I have come across [as to] why associate retention is an issue and what makes associates unhappy, and firms are trying to address it with their mentorship programs. I mean, the dialogue is great, and the programs that the firms are creating are wonderful. Many times, the clerkship experience is still a little bit unrealistic for what is going to come later, and so many times I hear from students that they are just not at all prepared for entering the world of a large law firm. They don’t understand the demands. They don’t understand the sophistication of the clients and their more sophisticated demand for services, and that it is so client-driven, and that if one law firm doesn’t meet those demands, there’s another big law firm waiting for that client. And so it’s truly bringing these opportunities to the school [that] really will help these students as they get out to practice.

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