Yesterday I was privileged to be able to speak to students at Harvard Law School in a talk I titled "Law Firm Finances (and Other Realities): Explained." My invitation came from the office of career services, and I accepted with gratitude and alacrity. I anticipate giving a similar talk at Stanford, Columbia, Georgetown, and NYU law schools.
First, here’s an outline of what I presented. And second, I have a question for all of you.
- Income and expenses of law firms; the P&L
- With profound pressures on both components of the income statement
- If we hew to the billable hour model, the components of revenue [rates x hours x realization] all face intrinsic limits.
- Yet there are no intrinsic limits to the aspirations of PPP
- Are we therefore facing a train wreck down the road, or, at last, the emergence of genuine alternatives to the billable hour
- The economics of young associates
- The reality is that $160K/year, plus benefits, plus rent/occupancy, plus other allocated overhead, is a very large number (in the neighborhood of half a million dollars, I estimated)
- To cover that, do the math of billable hours
- And you’ll understand why you’ll be in the office 60 hours/week or so
- The importance of picking a practice area
- Based on intrinsic financials, such as leverage, of practice areas
- Based on your personal temperament
- Based on economic cyclicality of practice areas.
- The unprecedented importance of picking a firm
- Single-tier vs two-tier?
- Segmentation of the AmLaw 100:
- The evolving structure of our industry
- Truly global firms
- New York City "bulge bracket" firms
- "Formerly from California" firms
- The "hollow middle"
- The salience of geography
- The evolving structure of our industry
- And what it takes to succeed in this increasingly competitive, pressurized, high-tempo world:
- Passion
I’d be interested in what any of you think about these topics. I tried to put together the presentation by asking myself a simple question: What do I wish I’d known when I was in their shoes?
And my experience overall?
I feel privileged every day to work with some of the smartest people at some of the leading law firms in our English-speaking world, and I’ll tell you something: These Harvard students are every bit their peer, at least if you consider them peers in formation. Probing, inquisitive, sincerely curious, asking deeply thought-provoking questions, appreciative and not a cynical bone in their bodies.
Now, my question: Had you been me, what would you have wanted to tell these students? Let me know.
