“In the Long Run We’re All Dead”

by | April 3, 2004 | Articles, Compensation, Finance, Partnership Structures

Econ. 101 would tell us that a law firm’s demand side is its clientele
and its supply side is its partner and associate ranks.  Unfortunately,
when your supply chain consists of professionally trained human beings,
there is no such thing as just-in-time inventory or production.  Which
can lead to transient mis-matches when a spike in client demand
meets down-sized associate ranks, as evidently may be the case with these
Silicon Valley firms.

The next question is whether this supply shortage will lead in the short
run to higher prices, higher associate salaries, both, or neither.  On
this Econ. 101 provides no guidance; all it can teach is that equilibrium will reassert itself in the long run.

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