The career situation for Big Law Associates is as good as its ever been, with associates working shorter hours for more money.
How can that be?
A report from Bloomberg indicates that the short hours/big pay situation is due in large part to a reluctance by large law firms to let associates go at a time of less work.
This shift is attributed to a lack of growth in demand for Big Law services combined with law firms’ reluctance to cut down on their workforce.
This has resulted in the average work hours for attorneys at the top 100 firms dropping to an all-time low, as reported by Wells Fargo’s Legal Specialty Group, alongside a significant increase in associate pay.
Last year, attorneys at these leading firms billed an average of 1,551 hours, a decrease from the 2021 peak of 1,683 hours, according to Wells Fargo.
Big Law Associate Down Time
This reduction may seem minor, translating to roughly 2.5 fewer work hours per week bit to can also lead to significant lost revenue for law firms.
For law firms, this decrease in work hours could potentially lead to over $100,000 in lost revenue per associate, based on an assumed billing rate of $775 per hour—a rate applicable to 2023 law school graduates, with even higher rates reported.
In 2021, during the height of associate productivity, the billing rate for first-year associates at one firm was $765 per hour. Fast forward two years, and the same firm was charging $885 per hour for 2023 graduates despite a dip in productivity.
A simple calculation reveals that the less active yet higher-earning 2023 associates contribute approximately 6.5 percent more in revenue than their more industrious, lower-paid counterparts from 2021, assuming the full collection of billed hours.
Owen Burman, managing director at Wells Fargo’s legal specialty group, explained that the swift rise in associate billing rates in recent years allows firms to maintain similar profitability levels without necessitating as many work hours from their lawyers.
Last year, law firms implemented the largest law associate billing rate hikes in history, surpassing 8 percent, with similar increases anticipated this year, according to Burman.
This rapid rate increase might cause concern among clients, as law firms have become just as profitable with a larger workforce paid higher salaries than ever before.
Will The Reduced Time Last?
Associates should enjoy this period of reduced workloads and increased pay while it lasts.
Burman and others predict a busier year ahead for law firms in 2024, expecting a resurgence in major corporate transactions. This will likely result in associates facing longer work hours.
For law firms, the silver lining is that any increase in productivity from retaining a larger workforce will directly enhance their profitability.
Big Law Pay Rates Show Continued Growth
