Large Law Firms

Unlike solo practitioners, large law firms maintain long-term relationships with their clients, and many are on retainers by large corporations. Large firms offer a variety of specialized services, with departments specializing in a number of fields such as tax law, mergers, antitrust suits, and certain types of government regulations. These firms deal generally with repeat players and provide the best possible information and legal remedies to their clients along with creative and innovative solutions for the clients’ problems (Jacob, 1995).

Large firms have a pronounced hierarchical organization structure (Nelson, 1988). Young lawyers are hired as associates. Beginning associates are seen as having limited skills, despite their elite education, and are assigned the task of preparing briefs and engaging in legal research under the supervision of a partner or a senior associate. In 7 or 8 years, they either become junior partners or leave the firm. For a new associate who has a strong desire to move into a partnership position, the competition with cohorts is very strong.

Associates are on a fixed salary, whereas partners’ incomes are based on profits. In most firms, law partners earn profits largely on hourly billings of associates: the more associates per partner, the higher the profits. A small committee of a firm’s partners usually decides how profits are divided among all the firm’s partners; this committee considers such factors as work brought in, hours billed, and seniority. The traditional rule is that associates should produce billings of at least three times that of their salaries. A third of money collected from this minimal expectation pays for the associate’s salary, another third pays for overhead, and the remaining third contributes to the firm’s profits (Carter, 2015). If the associate earns more than three times her or his salary, the extra amount (after paying for the associate’s salary and overhead) again goes to the firm’s profits.

These profits can be considerable. To illustrate, let’s take a relatively new associate at a very large law firm who is earning $200,000 annually and bills at $400 per hour, the average associate billing rate at very large firms (Strickler, 2014). If an associate works 50 hours per week, the median workweek at large law firms, for 50 weeks a year (with a 2-week vacation), a little arithmetic indicates that the associate’s billable hours will amount to $1 million annually After paying the associate’s $200,000 salary and having the same amount go to overhead, the firm’s profits amount to about $600,000 per associate. Because dozens of associates work at the very large law firms, this profit per associate quickly amounts to many millions of dollars that the firm’s relatively small number of partners divide among themselves.

One of the most complete analyses of large law firms is still Erwin O. Smigel’s (1964) Wall Street Lawyer. The large law firms he investigated perform a variety of functions. Then and now, they are spokespersons for much of big business in the United States. But they not only represent business; many members of the firms also serve as members of the boards of directors of corporations they represent. These law firms also act as recruiting centers for high-level government service. Members of the firm are appointed to important government positions and seek national political offices. Many of their members are also active in various capacities in national, state, and local governmental agencies. Wall Street lawyers also participate in civic and philanthropic activities, such as the Metropolitan Opera, various museums, and other cultural and charitable affairs.

The Wall Street law firms Smigel studied were very large, ranging from 50 to several hundred lawyers on the staff. Over 70% of their lawyers attended Harvard, Yale, or Columbia Law School and were top students. As might be expected during the time of his study several decades ago, Smigel found very few black or women attorneys in the Wall Street firms, and he also found relatively few Catholic lawyers.

John P Heinz and Edward O. Laumann (1994) authored another influential study of lawyer’s employment, this time of the Chicago bar. Their study highlighted the dramatic differences between the practice of law in large law firms and the practice of law by solo practitioners or in very small (two- or three-person) firms. They noted that much of the “differentiation within the legal profession is secondary to one fundamental distinction— the distinction between lawyers who represent large organizations (corporations, labor unions, or government) and those who represent individuals. The two kinds of law practice are the two hemispheres of the profession" Most lawyers, they said, “reside exclusively in one hemisphere or the other and seldom, if ever, cross the equator" (Heinz and Laumann, 1994:319).

These two sectors of the profession, Heinz and Laumann noted, are associated with the social origins of lawyers, the schools where they were trained, the types of clients they serve, office environment, frequency and type of litigation, values, and different circles of acquaintance. Large cities, Heinz and Laumann concluded, have two legal professions— one that is recruited from more privileged social origins where lawyers serve wealthy and powerful corporate clients, and the other from less prestigious backgrounds where lawyers serve individuals and small businesses. Thus, “the hierarchy of lawyers suggests a corresponding stratification of law into two systems ofjustice, separate and unequal" (Heinz and Laumann, 1994:385).

Government Roughly 12% of the members of the bar in the United States are employees of the federal, state, county, and municipal governments, exclusive of the judiciary. Because young lawyers may take positions in government agencies to aid their upward professional mobility, the ranks of government attorneys often include persons who do not come from wealthy backgrounds and who did not attend elite law schools (Spector, 1972).

Young lawyers who begin their career working at some level of government gain valuable trial experience, specialized knowledge of regulatory law, and government contacts that eventually might be parlayed into a move to a large law firm or to private industry.

Many lawyers in government work at the federal level for Cabinet departments, such as the Department of Justice and the Department of the Treasury, or for regulatory agencies such as the Interstate Commerce Commission. Other lawyers in government work in the various legal departments of cities and deal with matters such as planning, zoning, and eminent domain issues. Still other government lawyers work as prosecutors or as public defenders. The president appoints federal prosecutors, while state prosecutors are commonly elected by the county in which they work.

 
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