What is a first-year associate’s time worth? It’s a simple question with a not-so-simple answer. The value of a first-year lawyer, like that of any lawyer, is intrinsically tied to his level of knowledge with respect to his client’s legal and business issues and his ability to accomplish a desired outcome. Ideally, he or she can not only do the work, but can do so efficiently.

But first-year associates, by definition, have very limited knowledge of lawyering. A typical first-year associate’s exposure to substantive, real-world legal work is limited to a summer clerkship after the second year of law school. (While a small minority of students may find a legal position for their 1L summer, most firms do not have robust internship programs for first-year law students.) And yet many big law firms are billing their first-year associates, who often have only eight to 12 weeks of practical experience, at rates as high as $300–$400-plus per hour. It’s akin to asking a culinary student to prepare a meal at a five-star restaurant after only reading cookbooks. For a general counsel who is responsible for managing the P/L of the legal and compliance departments, it is difficult to rationalize paying these rates for a novice lawyer.

At American Stock Transfer & Trust Company LLC (AST), whether we pay for the work of a first-year associate is dependent on the nature of the matter. We typically insist that the most junior members of our deal teams are third-year asso­ciates. Our experience is that the work of associates with two full years of experience is more consistent, and we are willing to pay the higher hourly rate for more efficient work performed by more experienced lawyers.

With regard to litigation matters, our view is more fluid, because new associates have had more training in legal research and writing, and those skills may be more directly relevant to the task at hand. We typically discuss staffing at the beginning of each case and decide, according to the complexity of the matter, if it’s appropriate to have a first-year associate on board. There are certain tasks, such as legal research, recording testimony evidence, and client interviews, where first-years can be utilized appropriately. In those instances, we will pay for their time.

But rather than bemoaning the current paradigm, I offer the following suggestions as a possible blueprint for fixing this problem.

Law School During law school, students have relatively few opportunities to obtain substantive legal experience and exposure to the inner workings of in-house legal departments at corporations. Law schools are partially to blame, as most institutions offer a curriculum that typically favors (with the exception of legal writing) a theoretical and philosophical approach to law rather than a practical approach. One way that law schools can restore the proper balance to their curriculum is by developing cooperative programs that would allow students to intern at local businesses and nonprofit organizations. At AST, we collaborate with New York–area law schools to provide opportunities for several law students to work in our legal and compliance departments each semester. We provide students with substantive experience and, in exchange, the students receive academic credit that can be used toward graduation.

This model could work elsewhere, too, with both law schools and corporations gaining value. Law students would be exposed to the in-house corporate environment and get to work on meaningful projects while also bolstering their substantive legal experience. It would also help build up students’ resumes, and this could give them a competitive advantage in this challenging labor market. The Greater New York Chapter of the Association of Corporate Counsel is a strong proponent of the legal internship program, and I would encourage more law schools and corporations to embrace such a program.

In addition to offering school-year internships, AST hires law clerks during the summer after their second year of law school. We typically start interviewing candidates in January, after the large law firm recruiting process has ended. While this summer clerkship does not lead to a full-time job, the students have a better understanding of how corporate legal departments are run and will be better prepared to serve corporate clients immediately upon graduation.

Law school curriculum There are some changes that law schools can make to better prepare young lawyers. First, law schools should include a broader range of classes that focus on practical legal projects in their academic curriculum. Law schools could adopt the case method model used largely in business schools and create semester-long courses around several case studies. For example, a corporate transaction class could focus on teaching the intricacies of an M&A transaction or an IPO process, from the negotiation of the term sheet to the closing. Since public companies are required to file their deal documents as part of their Securities and Exchange Commission filings, the documents to be used as teaching materials are abundantly available and easily ­accessible. Additionally, law schools could invite alumni with relevant experience to assist in the teaching process. Active practitioners can also give targeted presentations on industry topics to explain the current trends in indentures, credit agreements, restructurings, etc., that may not be otherwise available to the students. Law schools may also want to consider developing a business track that requires a number of these practical classes. For instance, a corporate governance class that includes instruction on drafting resolutions, board minutes, and other board-related documents would help develop skills that are often demanded of junior law firm asso­ciates. Similarly, law students should also make a conscious effort to obtain practical legal skills and business knowledge. Some examples of relevant business school classes include capital markets, corporate finance, tax, and basic accounting.

Secondments In the aftermath of the global slowdown, a number of large law firms placed first-year associates to work on-site at client companies’ offices for six-to-12-month stints. Although the recession was painful, one positive by-product of these secondments was that a group of new lawyers had the chance to obtain relevant experience and an understanding of corporate culture by working as part of the in-house legal department. For example, my former employer Thomson Reuters arranged with its outside law firms to provide office space and hands-on training to a couple of classes of recent graduates, under the supervision of their in-house attorneys. These first-year lawyers worked on a variety of corporate matters including mergers and acquisitions, intellectual property matters, and complex contract negotiations. Further, because they worked closely with the in-house attorneys and interacted regularly with the business personnel, they became more familiar with the company’s culture and processes. This type of hands-on experience is invaluable to young associates because it is precisely what these freshly minted law graduates need to add value to their firm’s client base.

In general, law firms should institutionalize a secondment process for new associates. Working with their existing client base, law firms can subsidize the cost of their young asso­ciates and place them with their clients. The corporate client will be pleased to receive an eager law graduate who can assist its typically understaffed legal department, and the law firm benefits by getting an associate who will become well versed in the corporate culture and the inner workings of a particular client. If all goes well, the corporate client will develop a rapport with the secondee, and, upon completion of the secondment, the secondee will return to the law firm to join the team that regularly services the client, and with a better understanding of the client’s needs. While this program will require law firms to cover their first-years’ pay, they will be investing in their new associates by giving them the tools to succeed, while also reinforcing their long-term relationship with clients.

Under the current setup, many clients are effectively paying a high cost to cover the on-the-job education of first-year lawyers. Some corporations have had enough. Currently 54 percent of law firms have clients who will not pay for the work of first- and second-year associates, according to The American Lawyer ‘s Law Firm Leaders survey [see "Building a Breakout Firm,"]. Without meaningful change to the current training of law students, this number will inevitably rise. The educating and training of law students must evolve to reflect the business realities faced by in-house corporate legal departments. Law students pursuing corporate legal careers must be equipped with practical legal curricula and meaningful exposure to corporate legal ­departments in order to make an immediate contribution. Ultimately, students become more effective lawyers faster, law schools will benefit by graduating better-equipped students, and clients will get better legal representation.

David Brill is senior general counsel and ­corporate secretary of American Stock Transfer & Trust ­Company, LLC.