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One of the biggest challenges confronting associates is understanding how market and organizational forces influence the focus of their career choices. At corporate law firms, partner promotion principles are the most significant factor driving associate mobility. It is generally well-known that between the first and the fifth years at a law firm lies the optimal window of inter-firm marketability. This window of opportunity is constrained on one side by the length of a firm’s partnership track and the requirement for a lateral to wait before being promoted to partner. On the other side, an associate is not productive or marketable until after two years of law firm experience. But this optimal window of inter-firm lateral mobility requires the associate to make a strategic risk assessment based on limited information. Ironically, these middle years are typically the time when associates are happiest because they are challenged by a high learning curve and experimentation with various specialties. And because they are experienced and therefore valuable, senior associates are paid well in order to keep them from departing. At about the fifth year, when an associate’s learning hits a marginal limit, marketability begins to drop dramatically. The lag between when associates must choose whether to wait for partner promotion and when the decision is actually made is several years. An associate at a top firm with generally favorable individual performance reviews and high relative compensation will tend to wait for the promotion decision, despite strong market exit options beckoning an early departure. Although partnership criteria include culture compatibility, personality, firm needs, practice specialty, credentials, productivity, excellence, leadership and popularity, the promotion decisions largely come down to an economic competition between contestants. As with any competition, there are rules. The economic rules governing professional organizations indicate that it is relatively harder to make partner at firms with higher profits and leverage. Understanding this principle will help an associate make a rational decision. The main determinants governing associates’ access to partner opportunities are relative law firm partner compensation and associate-to-partner leverage: generally, the higher the ratio of associates to partner, the harder it is to make partner. These data are readily available and should guide associates as they realistically assess their chances of making partner at their present firm or prospective firms. Other objective signals are prior partnership promotion decisions and rate of firm growth. A high-growth firm is more likely to provide more partnership opportunities. The incentive maximization path is for the strongest Ivy League graduates to go to the top Wall Street firms. But these are precisely the firms with the smallest partner promotion chances. In fact, what makes these top firms so attractive for learning, prestige, and compensation also makes them poor choices for career security. Consequently, at these super-elite firms the chance of promotion is poorest and the risk of failure is the highest. Attorneys departing the most profitable firms tend to go to more moderately profitable firms. The partnership decision criteria are primarily economic. The partners must decide which associates will be economically comparable to the average firm partner in terms of revenue within a reasonable time, typically 10 years after partner promotion. Since the average revenue per partner is three times partner profits — as revealed by averaging the AmLaw 100 firm data — then a $700,000 average partner profit at these top corporate law firms will need about a $2 million book of business (that is, average revenue per partner) in order to maintain the status quo. At the top 10 AmLaw firms (ranked by partner profit), the threshold is about an average of $5 million revenue per partner. The chance of making partner, therefore, is 2.5 times more difficult at the top 10 firms than at a firm in the top 100, other things being equal. If, at the time partner entrance decisions are made, the chance of making partner is one out of five, there is a four times greater chance of having much poorer opportunities at that late date, while the chance is perhaps 50-50 or better if a decision is made at four to five years of experience — when an associate is happiest — to go to a less-distinguished firm with a relatively lower partner profit and lower leverage and wait three years for partnership. Is it better to have a 50 percent chance of making $500,000 within a decade, a 25 percent chance of making $800,000, or a 15 percent chance of making $2 million? An associate must understand these economic and timing factors in order to assess career mobility options. The top firms offer a trade-off: present prestige for sharply reduced chances of future partner promotion. A decision whether to risk the wait at these firms must be made before the fifth year, when the associate is still marketable. Waiting until the eighth year, when marketability is lowest, is a substantial risk because being passed over for partner reduces the pool of career options. Only rarely will an associate make partner at a competing firm without a waiting period. Exceptions may be made if the attorney is so outstanding, the firm’s need is so strong, or the candidate’s ability to build a large book of business presents a compelling argument for immediate partner membership. Waiting for the perfect exit opportunity, such as a lateral partnership, will “time out” an associate from otherwise appropriate market options. Therefore, while the window of marketability is still open, each individual must accurately assess her skill set and future economic value, and compare the economic data of her present firm with the data of prospective firms. OTHER OPTIONS There are, of course, exit options for associates other than law firms. These include corporate law departments, primarily offered to transactional attorneys, and government and nonprofit opportunities, primarily offered to litigators. Waiting as long as possible before partner promotion at an elite firm will provide valuable experience for jumping to an in-house position. On the other hand, working for a corporation usually means taking a significant cut in pay — and it’s usually the case that only general counsel or deputies return to a firm as a partner. For associates thinking of leaving their firm for a government job and returning to private practice later, even if a firm is willing to hire a relatively more expensive senior associate, the wait is still typically three years for a partner decision at a top corporate law firm. Consequently, it is often inefficient for a sixth-year associate to move to government for three years and then return to wait three more years for the prospect of partnership. THE BUSINESS CYCLE While these general rules of law firm economics apply to an ordinary economy, the business cycle tends to compress and elongate the natural forces. During boom times, persistent labor shortages multiply the bidders for associate talent, accelerate salary inflation, and extend the outside parameter in the window of exit opportunities. During economic decline, jobs lost to firm downsizing and a general dearth of opportunities suggest a more rapid decline of career options. Unlike salary inflation during boom times, in economic decline salaries tend not to decline because the salary threshold provides a marketwide compensation floor. The limited exit options during the trough of the business cycle can present severely restricted employment opportunities, especially for those in the most affected practice areas. Market extremes modify the career path flow of associates, widening or narrowing the window of opportunity. The relatively higher partner profits of the elite law firms present correspondingly higher partner entry thresholds. The exit of associates from elite firms to second-tier firms reveals a downwardly mobile trend, but also an increasingly higher chance of long-term success. The best time for associates to make a lateral move is between the second and fifth years at the high point of the economic cycle. Failing to assess and act upon optimal opportunities can lead to unsatisfactory career compromises. Neal Solomon is a consultant with California Legal Search. Though his practice is national, he has focused on recruiting Wall Street and California attorneys. He can be reached at [email protected]

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