Doing Good

Anna,

I read your blog before making the decision to attend law school and right on through my 1L year. I've learned a lot. Thank you.

I attend the [deleted] School of Law and received a public interest fellowship to do a summer internship at [deleted], an NGO that provides free legal services to poor farmers in Cambodia. I'm part of the land law unit, which tries to protect rural farmers from land seizures.

In a nutshell, I signed on for a summer internship in a foreign country and have done almost no substantive legal work, partly because I was placed in a dysfunctional unit, partly because of the low English level of my colleagues, and partly because I'm having a hard time creating good opportunities to do legal work.

My dysfunctional unit. One problem is my colleagues and supervisors don't seem to do much. I nicknamed one attorney "man that stares at his cell phone" in honor of his 8 hour a day activity. The lack of work is partly due to the fact that government doesn't respond to motions, follow its own laws, or respect the court system. It's common to wait months for rulings, only to find out the court is "too busy" and will not issue any ruling at all, or the case file has been lost. As a result, the attorneys often wait around and do nothing.

I think my boss is depressed about the corruption. The program's two showcase lawsuits have been going on for 7 and 4 years respectively. In the first case, the local prosecutor has refused to correctly implement the presiding judge's verdict, and in the second case everyone involved in facilitating the fraudulent sale of indigenous land has admitted to taking bribes in a transaction that was, on its face, against the law (the land was sold to the sister of the Minister of Finance).

I should provide a little more context. At the end of the Vietnamese occupation following the Khmer Rouge, there were only a handful of lawyers in Cambodia. By 2007 there were 574. A good number work for NGOs and legal aid organizations. So it's understandable that attorneys have only a shallow pool of legal experience to draw upon when considering legal strategy, but we mainly do nothing. (A side note: At our organization the lack of activity is partly due to poor organizational structure. The bylaws allow the employees to elect the management team, which creates a huge disincentive for the management team to "crack the whip" leading to the current very weak executive director).

I know that one of the themes of your blog is that Gen Y's self-involvement leads to unreasonable expectations and more than an acceptable level of complaining. So I decided to create a writing project for myself where I would investigate how to go about filing a complaint in US courts against a Cambodian-American that dispossessed 23 families using armed men and bulldozers. I thought several allied NGOs were representing the families. I went to the province and met with people from the 3 other NGOs, but no one spoke sufficient English to discuss the case. I had to get the moto taxi driver to translate, which of course didn't work since the taxi driver's English was limited to "right, left" and not "motion, complaint." Then I went and interviewed an American ex-pat restaurant owner who witnessed the seizure. He was smoking pot during the interview. Anyway, long story short the NGOs weren't representing the families anymore because they never had actual title to the land and the Cambodian-American is politically connected and paid an acceptable bribe to the local families. The memo, while a nice academic exercise, would be functionally useless. Instead I'm writing another grant proposal and shadowing my boss to his infrequent meetings with court officials (going to an hour meeting in the provinces can take 3 days after factoring in driving).

But that's it. I've got an interesting story or two about the outrageous facts in the cases, but I haven't done much substantive legal work. In on campus interviews, I can show an attorney a picture of a client meeting with a monkey in the background but not a legal memo.

I am concerned about on campus interviews. Although I am doing public interest work this summer and will have meaningful service in my legal career, I would like to have the opportunity to work for a mid-size to larger local firm next summer and after graduation. My big hairy audacious goal is to be part of the legal community that shapes [US city's] land use regulations to meet the transportation and environmental challenges of the next century.

What advice do you have? I'm actually pretty down on my summer experience. The land law unit has a poor reputation with its donors and will probably lose its funding because of its failure to do much for its clients. For me personally, the unit's inactivity means I have a lot of dead time. I also haven't learned directly from any legal professionals that speak English well. When I'm asked to comment on what I did and how I liked it, I don't want to be too negative or dishonest. But honestly: "I sat around a lot in a foreign country, went to meetings that I didn't understand, and helped absolutely no one, in part, because the judicial system is utterly corrupt" is probably a conversation killer.

A final thought. Friends and family point to the value of a foreign experience and I think they're right. But for me, I think the marginal value of this experience is low. Like a lot of students that graduated from college around the time I did, I was fortunate enough to study abroad. I went to [deleted] for a semester. I also taught English in [deleted] after graduation for six months. Granted Cambodia is very different from either of those countries, but I still have a hard time saying with conviction that for me just being in a foreign country is a good use of my 1L summer.

I look forward to your thoughts. Any advice on how to spin gold out of this straw will be carefully studied. Thank you.

Holy cow, you've lived a lifetime in a summer. The only thing that could have been worse is if you'd spent the summer at Latham/Cravath/Kirkland/Perkins/BlahBlah. Seriously.

To prepare for interviews, you need to take the email you wrote me, put a far more positive spin on it, and outline at a practical level the barriers that stand between land-reform-in-theory and land-reform-in-practice. That’s the perfect (short) law review article to start writing now, and the fact that you've got it under way is a great talking point during an interview. "What did you do this summer?" "I started the summer trying to protect rural Cambodians from property seizure. The summer I got was more interesting than what I signed up for – I ended up studying what’s broken about the Cambodian legal system in practice, and now I’m writing an article about it." You're going to call it "Three Barriers to Real Property Protection in Cambodia," and I will be expecting a signed copy.

I also told a lawyer friend of mine about your predicament, and here's what he said:

It’s interesting because we’re trying to get a legal clinic going in Tanzania; that’s my next uber-project, I think. Same challenges all around, though we do expect less corruption than in Cambodia. We also expect just as much inactivity, lack of movement in the courts, etc. Property rights is a big thing.

If you take the narrow view of "what law did I practice?", then yeah, his experience is limited. But that’s not what law is in developing countries anyhow. My work in Tanzania so far has been spent trying to *see* a copy of the Tanzanian legal code. I finally did in South Africa, at the supreme court.

Incredibly experienced lawyers have a tough time getting anything done in the developing world, and you are at the teeny, weeny start of that learning curve. You have to start there, so try not to get frustrated just because you're facing as many hurdles as the superstar lawyers who are also getting stuck in the mire of "international law."

Back to interviews. What else can you do? You can talk about how grateful you are to be an American living in a country with laws and rights. You can talk about how hard it is to do any real legal work in a country where the government and the courts are hopelessly corrupt and no one bothers to do much about it. That’s not an interview killer; it’s an interview opener, especially if you approach it with humor and grace.

In the meantime, there's no need to mope around being depressed. You're there to help people, right? OK, you can’t do much legally, and I think you're right about that part of it. But you can do two things – you can learn and you can help. You should learn all you can about Cambodian law and government so that if it ends up being a country you care about, you can work for change there the rest of your life. You should go out into the community and do anything you can to help them. Teach English. Help with infrastructure projects. Pitch in at the local medical clinic. Anything. You went there not only to get experience for yourself, but to serve, right? So serve in whatever way you can, whether it's through your NGO or not. You'll be helping the people you came to help, albeit not in the way you originally intended. Add to that a positive attitude, good war stories, and a sense of humor, and law firms would be crazy not to hire you. They'll see a self-starter, a team player, and a smart guy who knows how to make lemonade. What more could you want in an employee?

You are also infinitely wiser than you were at the start of the summer. You've been up to your elbows in the glamorous world of "International Law" that every law school applicant and his brother swears he wants to practice. Good for you that you've gone out and done it, and figured out what that really means, and have a bunch of stories to tell.

And to think you could have been sitting around in some air-conditioned American law firm writing memos that no one will read about Section 226 of the Labor Code ("Social Security Number Truncation on Pay Stubs"). You are way, way ahead.

I was so excited to hear about Princeton's plans to formalize a Princeton-sponsored gap year for their students before they start college. In this case, the gap year program will be for applicants who have already been admitted to Princeton, but gap years are also a great idea for high school students who have not yet finalized their college plans.

I have almost daily conversations with parents in which I recommend a gap year for their high school students, and most of the time, those parents are resistant. Many of them aren't familiar with the concept, worry that admissions officers won't like it, and wonder if a gap year will put their children at a disadvantage.

I've written here before about gap years, but here are my two cents in summary:

Admissions officers love gap years. Freshmen who arrive on campus after a gap year have had an extra year to mature, see the world, learn about themselves, gain a better sense of what they want out of college, and recharge their batteries. Every day I see what happens when people start college before they're really ready to make the most of it -- you can spot that in their transcripts a mile away. It helps when heavy-hitters like Princeton and Harvard and Yale officially get behind the gap year concept.

To get a sense of the cool things people do during their gap years, see Harvard's admissions website. Below is an excerpt from their page called "Time Out or Burn Out for the Next Generation." Note especially the last sentence: "While no one should take a year off simply to gain admission to a particular college, time away almost never makes one a less desirable candidate or less well prepared for college."

Perhaps the best way of all to get the full benefit of a "time-off" is to postpone entrance to college for a year. For over thirty years, Harvard has recommended this option, indeed proposing it in the letter of admission. Normally a total of about fifty to seventy students defer college until the next year.

The results have been uniformly positive. Harvard's daily student newspaper, The Crimson reported (5/19/2000) that students who had taken a year off found the experience "…so valuable that they would advise all Harvard students to consider it." Harvard's overall graduation rate of 98% is among the highest in the nation, perhaps in part because so many students take time off. One student, noting that the majority of her friends will simply spend eight consecutive terms at Harvard, "wondered if they ever get the chance to catch their breath."

During her year off, the student quoted above toured South America with an ice-skating company and later took a trip to Russia. Another interviewed in the article worked with a growing e-commerce company (in which the staff grew from ten to a hundred during the year) and backpacked around Europe for six months....

Members of one recent class participated in the following activities, and more, in the interim year: drama, figure skating, health-care, archeological exploration, kibbutz life, language study, mineralogical research, missionary work, music, non-profit groups, child welfare programs, political campaigns, rebuilding schools, special needs volunteering, sports, steel drumming, storytelling, swing dance, university courses, and writing - to name some chosen at random. They took their interim year in the following locales: Belize, Brazil, China, Costa Rica, Denmark, Ecuador, France, Germany, Guatemala, Honduras, India, Ireland, Israel, Italy, Mongolia, Nepal, Philipines, Scandinavia, Scotland, Spain, Switzerland, Taiwan, Thailand, Uruguay, United States and Zimbabwe.

Many students divide their year into several segments of work, travel, or study. Not all can afford to travel or to take part in exotic activities. A number have served in the military or other national service programs. Some remain at home, working, taking part-time courses, interning, and still finding the time to read books they have never had time to fit into their schedules or begin to write the "great American novel." Others have been able to forge closer ties with parents or grandparents from whom they may have drifted away during the hectic pace of the high-school years....

Students taking a year off prior to Harvard are doing what students from the U.K. do with their so-called "gap year." Other countries have mandatory military service for varying periods of time. Regardless of why they took the year off or what they did, students are effusive in their praise. Many speak of their year away as a "life-altering" experience or a "turning point," and most feel that its full value can never be measured and will pay dividends the rest of their lives. Many come to college with new visions of their academic plans, their extracurricular pursuits, the intangibles they hoped to gain in college, and the career possibilities they observed in their year away. Virtually all would do it again.

Nevertheless, taking time off can be a daunting prospect for students and their parents. Students often want to follow friends on safer and more familiar paths. Parents worry that their sons and daughters will be sidetracked from college, and may never enroll. Both fear that taking time off can cause students to "fall behind" or lose their study skills irrevocably. That fear is rarely justified. High school counselors, college administrators, and others who work with students taking time off can help with reassurance that the benefits far outweigh the risks.

Occasionally students are admitted to Harvard or other colleges in part because they accomplished something unusual during a year off. While no one should take a year off simply to gain admission to a particular college, time away almost never makes one a less desirable candidate or less well prepared for college.

As application season starts to peak and applicants everywhere get a bit crazed with anxiety, it's good this time of year to try to keep things in perspective. (Same goes for me, too.) I was moved by this account of Mark Daily, a recent UCLA honors graduate who lost his life in Iraq. It's a great blessing to sit in our cozy and safe environments while we work on applications and fret about the "walk in someone's shoes" essay for Chicago GSB or the grading curve on the September LSAT. It's good once in a while to take a step back, breathe, and realize that the sky won't fall if you don't get into School X.

It's rare that I hit on a topic that allows me to write about issues of importance to both MBA folks as well as law school/aspiring policy wonk types. You'd think that not many people would care about the special tax treatment received by partners in private equity firms and hedge funds (in particular, the capital gains treatment for their "carried interests"), but two opinion pieces in today's NYT demonstrate why the issue should matter to many more people, including many who read this blog.

First up: "The Under-Taxed Kings of Private Equity" by Alan S. Blinder, professor of economics and public affairs at Princeton, former vice chairman of the Federal Reserve, and adviser to Democratic politicians. His piece lays out in very understandable terms what that "carried interest" is, why it matters, and what kinds of dollar amounts are at stake for the public treasury.

Next up: "The Hedge Fund Class and the French Revolution," by lawyer, law professor, writer, actor ("Bueller? Bueller? Bueller?"), economist, and Nixon speech writer Ben Stein. Stein takes Blinder's argument one step further and asks about the policy implications behind a tax law that has hedge fund and private equity gazillionaires paying a much lower tax rate on their income than normal people:

We are in a war. We are apparently not winning the war. The military is desperately shy of funds, to the point where our fighting men and women are being shortchanged in training and equipment.

We also need more money for our soldiers’ pay, so their families do not have to live like church mice while their spouses are deployed in Iraq or Afghanistan. In these circumstances, is it fitting and morally right for the richest of the rich to be paying either very low taxes or no tax at all?

Is it right or even admissible in the human conscience that while teachers, emergency room technicians, police and firefighters are taxed at full earned-income rates — and often underpaid — that the highest-earning people in this country should pay at either very low tax rates or none at all?

Stein is no class warrior, so coming from him, this argument lept off the page (screen) at me.

Why does or should all this matter to a big chunk of my readership? For the following reasons:

1. For my MBAs and aspiring MBAs, so many of whom are itching to get into private equity: I've written before about how the economics of PE are very possibly about to change, and how that doesn't bode well for their career prospects, or at least their earnings prospects, in PE.

As Blinder puts it, "If we tax Activity A at 15 percent and Activity B at 38 percent, a free-market economy will give us more of A and less of B." If we start taxing private equity incomes at 38% rather than 15%, expect to see less capital and less top talent gravitating towards private equity.

(And the issue of capital gains treatment of their income doesn't even touch the problem of what happens to the buy-out market once interest rates rise, as they inevitably will. Could be a perfect storm brewing.)

2. For my law school types: I would guesstimate that a solid majority of law school applicants seek a law degree because they want to effect change on a policy level and make society better. (And they usually misspell "effect" as "affect," a spelling faux pas from which spellcheck won't rescue them.) In the same breath, when I ask them more specifically what kind of law they want to practice, they start rattling off the kinds of law they're certain they don't want to study. High on that list: tax law. That they don't realize how intertwined tax law is with the fundamental policy choices we make as a society and the give-and-take that happens through the legislative process suggests to me that most applicants have no idea what they're talking about.

Stein's article is a reminder that if you don't know anything about tax policy like carried interests and amortization of goodwill during an IPO, you're going to have a hard time making a rational or convincing argument about whatever activities you would rather have the government encourage, or what programs we should be funding over other ones, in a world of finite treasury resources.

Care about AIDS or cancer research? Global warming initiatives? More subsidized health care? Better life-saving equipment for our soldiers? Fancy technology for national security efforts? Those all take federal dollars, and if you want some of them for whatever your preferred cause might be, better that you start understanding things like the policy argument behind capital-gains treatment for carried interests.

Which leads me to my final point for law school types: Don't graduate from law school without having taken financial accounting and being able to read a financial statement. It could be the most useful class you take in law school, even if -- and I would argue especially if -- you're a policy wonk at heart. And if you retort that you're "just not a numbers person," you're not going to be as effective an advocate for your cause.

I'm a bit of a design nut, and recently I've been salivating over the most beautiful vacuum cleaner I've ever seen (the Electrolux Pronto, pictured over on the left). It's gorgeous, as in iPod gorgeous, although the photo doesn't do it justice.

I've had mine for about a week (lots of dog hair at my place), and I thought I was going to blog about what a great product this is for people still in college, or people who live in small quarters, or people who are too lazy to push around a big, hulking machine, or people whose aesthetic sensibilities weep when they have to look at ugly design every day (twenty-somethings think beautiful design is their birthright, thanks to Michael Graves for Target and Jonathan Ive at Apple).  And then I stumbled on the Electrolux Design Lab, which is even more exciting. It's a design competition for undergraduate and graduate design students around the world, and this year's Design Lab challenges aspiring industrial designers "to create eco-friendly, sustainable household appliances for 2020." How cool is that? The contest closes in 5 days. More design competitions here.

Generation Y's transition from college and grad school into the working world has been a bumpy one, to put it politely. "Extended adolescence" is real, "helicopter parents" are real, and organizations that hire twenty-somethings are finding that many of them don't walk and talk and act like adults. Making them fit for the professional world now falls on the shoulders of corporate America, where older and wiser managers are struggling to find the best ways to recruit, manage, "professionalize," groom, and retain Gen Y.

Whatever kind of business or organization you run, 70-million strong Generation Y is going to be at the heart of your success or failure, so you have no choice but to figure out what makes them tick. You won't be able to "hire around" the quirks of your next generation of employees and future leaders.

Here are the top fifteen points I communicate to employers grappling with the best ways to motivate and retain top Gen Y talent. Newsflash: it's not the salary. If it were, then throwing more money at Gen Y employees would do the trick.

(A note to twenty-somethings reading these tips: My regular readers know by now that I'm all about tough love, so I won't sugarcoat the biggest complaints about Gen Y in the professional world. Smart twenty-somethings will take these tips and use them to their advantage.)

1. Give them feedback.

This generation is obsessed with feedback. Half the time, they're not even hungry for new feedback; they just want to hear, over and over again, that the memo they wrote was well done, or that the presentation they gave was effective. What you think of as needy, they think of as a totally natural. And if they're not doing well on the job, they're handing you the perfect opportunity to tell them so, because they do respond well to constructive feedback and mentoring. That hunger for feedback should make your life as a manager easier, even if you find the neediness a bit much in the short run.

2. Give them teams.

In fact, they can’t work without them. And if you don't let them work in teams, they'll find a way to build them anyway. They hate making decisions by themselves, and they don't like to do things without getting six or eight or twenty different opinions first. If you don't give them a group to run things by, they'll seek opinions from their cubicle mate, their girlfriend, and their dentist. That approach can lead to crummy results, stunt their leadership growth, and paralyze them when they discover that seeking eight different opinions results in eight conflicting suggestions. However, those are all management issues that can be handled if you're aware of them, and the upside is that you can use that preference for teamwork to pair up more senior employees with more junior ones -- pairings that everyone says they want, but that most employers don't make a priority.

3. Be prepared to negotiate.

Since these young adults could talk, they have been negotiating with a generation of parents who’ve had a real distaste for imposing rules ("Here's why it's a good idea to wear your dancing froggy raincoat today..."). They’ve spent their entire college careers negotiating grades and deadlines and feeling entitled to accommodations for anything under the sun… or having their parents do that for them. They do not respond to top-down orders because they have rarely encountered them before (unless they've done a stint in the military). Good luck trying to boss them around. This generation will question anything you ask them to do and expect to be persuaded why they should do what you’re asking of them. And be prepared for mom and dad to jump in and try to negotiate on your employee’s behalf.

4. Give them lots of small deadlines.

They can’t get anything done without them, and then they'll wait until the last second to start. They treat their work assignments as if they were college term papers to be written the night before the due date. They have trouble with longer deadlines and project management, not least because they are used to their parents managing their lives for them. However, they are happy to learn time management and project management techniques if someone is willing to teach them.

5. Flatter them.

They think very highly of themselves. To older generations they seem arrogant and overconfident, and it's true that they have little respect for acquired wisdom, age, or a higher spot on the org chart. They will show up on their first day of work and think they can do your job better than you can. If you can see past your initial irritation, you might find them dropping some great ideas in your lap from day one. If you can harness that creativity and penchant for problem-solving, your business will benefit.

6. Don’t assume technology savvy.

Despite what the media says, they are savvy about only certain kinds of technology. They can type ten-page memos on the go with their thumbs and will happily program your cell phone for you, but many of them have only the most primitive experience using corporate workhorse software like Microsoft Office. A surprising number are stumped by those magical little round things called bullets and plenty of other basic features corporate veterans take for granted. I have heard more than one twenty-something ooh and aah at a heavy-duty email program like Outlook because they've only ever used stripped down web-based services like Yahoo or Gmail.

The good news is that they’re quick on the uptake and absolutely fearless about learning new technology. The bad news is that they are overconfident and won't ever confess ignorance about how to use a piece of software -- not because they're proud, but because it doesn't occur to them that they haven't already mastered it just by clicking a few buttons. Their overconfidence can sometimes wreak real havoc, so make sure to teach them the basics of productivity software even if they don't ask (and they won't - they'll just hit that delete button, wipe out the database of your most important sales leads, and then cheerfully lecture you about how to use technology more efficiently).

7. Teach them how they’re making a difference.

After they get out of college, they go through various degrees of frustration as they realize they won’t get paid well to do what is essentially volunteer work. Their entire childhoods and college applications have hammered into them that it's their volunteer work that makes them productive and decent human beings. Even when they come to realize that only private industry makes big paychecks possible, on a daily basis they struggle with that tension between wanting to make six figures right out of the gate and dedicating themselves to non-profit work, especially when every day they are bombarded with images of Angelina Jolie and Bono living the good life while trying to solve third-world poverty. Understand that any Gen Y employee in the for-profit sector is going to feel that pull towards the non-profit world, so you have to show them how they can do good while in private enterprise.

8. Give them flexibility.

They are willing to work hard and think nothing of being "findable" at all hours -- they are permanently online anyway. In exchange, they don’t want bosses to abuse that findability, and they expect the flexibility to mold their work lives around their personal lives. Don't haul them in over the weekend or make them eat their twentieth conference-room dinner in a row unless there's good reason.

9. Teach them how to work face-to-face.

More experienced workers know that sometimes you need to sit in the same room to get something accomplished, but twenty-somethings would rather just send you a text message. You'll have to insist on a live meeting to get one. They also need to be taught how to interact professionally when meeting with clients and senior colleagues.

10. Teach them how to write.

Their writing -- especially professional writing -- is atrocious. They are willing to learn if you are willing to teach them. Colleges are not teaching them how to write, and it’s now your job to do so.

11. Assume they’re venting about you online.

They think nothing of complaining about work to the whole world on MySpace or their blogs and will happily use company email to complain about you, the company, the office refrigerator, and the idiot in the next cubicle. You may be surprised to discover what they are saying online, and you’ll likely have to have a conversation about the propriety of venting in public and using company resources to do so.

12. Tell them what you’ll do for them.

That attitude may drive you crazy, but they think of employment as their birthright, and whatever current job they have as a temporary stop until they move onto something better. Get ready for the jumpiest resumes you've ever seen. Unemployment isn't even considered a possibility -- they think that they can move into and out of jobs on a whim, and that there will always be opportunities available to them. They expect you to impress them.

13. Reward them intelligently.

Young investment bankers work their tails off, but they don’t gripe nearly as much as, say, young lawyers do because their work environment is much more of a meritocracy than a lock-step reward system. The best performers should be rewarded more than mediocre ones… quite a bit more. And guess what: they can do math. If that "bonus" you're paying amounts to $20 an hour in exchange for canceled honeymoons or delayed surgery, they're going to feel insulted no matter how high you drive up their base salaries. And finally: unlike Gen Xers back in the day, they aren't wowed by cool views or foosball tables or free junk food or even casual dress codes (much as they need a lesson on dressing professionally). They are, however, dazzled by the latest and greatest technology that lets them do their jobs more efficiently and get the heck out of the office.

14. Feed their entrepreneurialism.

They consider themselves free agents, and however hard they work for you, they are plotting their escape to start their own ventures. The more you can indulge their entrepreneurial instincts on the job, the less likely they will be to defect.

15. Facilitate their lives outside of work.

Once they're out in the working world, they are hungry for the intellectual growth and extracurricular opportunities they took for granted in school. Facilitating their continuing education and hobbies goes a long way toward keeping them happy… and on the job.

Are there exceptions to these rules? Of course, and the biggest ones are the children of parents who have struggled to break into the middle class. A Gen Y employee who grew up watching her immigrant parents split six jobs to make ends meet isn’t going to take any job for granted. And the employee who has been working since age 9 at his family’s convenience store or gas station or restaurant isn’t going to entertain such romantic and untested notions about the glamour of self-employment. If you think all Gen Y hiring candidates are coddled and overprotected, you haven’t been looking hard enough.

Guess law firms are hoping that throwing more money at associates will encourage them to stay (until they're up for partner, of course). This just in: Simpson Thatcher in NYC has broken from the pack and raised salaries...announced this afternoon.  See email below.

>  The Firm has been very busy and we expect the high level of> activity to>  continue. We are proud of the results we are helping our> clients achieve. >>>  We believe we have the finest legal team of any global law firm. In>  appreciation of your efforts, we are pleased to increase> associate base>  salaries as follows, effective January 1, 2007: >>>  Class of 2006 - $160,000>>>  Class of 2005 - $170,000>>>  Class of 2004 - $185,000>>>  Class of 2003 - $210,000>>>  Class of 2002 - $230,000 >>>  Class of 2001 - $250,000>>>  Class of 2000 - $265,000>>>  Class of 1999 - $280,000>>>  Class of 1998 - $290,000>>>  We are also raising the base salary for the members of the > Class of 2007,>  who will arrive in the fall, to $160,000.>>>  Counsel and classes senior to 1998 will be addressed on an individual>  basis.>>>  Again, on behalf of the Firm, thank you for your commitment > and hard work.>>>  January 22, 2007>>>  Pete Ruegger

I had started writing a reply to the comment Michael (the law school professor) wrote in my original "Law Firm Brain Drain" posting, and my response morphed into another long posting, so I’ll start a new thread here instead.

First of all, thanks for your insight, Michael. I'm honored that my "Brain Drain" post has worked its way into a law school classroom discussion.

One clarification: Perhaps I’m not interpreting your comment correctly, but I never meant to suggest that graduating from law school with a lot of debt and going to Big Firm compromises or undermines ethical lawyering, or that one can practice ethical lawyering only by going into non-profit work. I believe -- strongly -- that Big Law attorneys provide a real and important service to their clients and add value that I appreciate even more now that I’m a businessperson myself (and not just a former corporate attorney). Not that I hire Big Firm attorneys – I am far from a Fortune 500 client --  but I do from time to time need the services of for-profit/commercial/business attorneys more generally and, well, God bless ‘em. And there are people who take a lot of pride and derive a lot of enjoyment from their work at BigLaw, although I tend to think they are in the minority.

One of the messages I try to get across to law school applicants is that they are adults, that they are about to make a huge financial investment, and that they should be smart about it. There's no duress there -- no one is forcing them to take out huge loans to go to law school. There is, though, a lot of thoughtlessness involved in that decision-making, and that's why I'm trying to educate people about the financial and work-related realities of committing to law school so that they can make better and more informed choices.

I’ve reflected on Michael’s comment, I still doubt very much that many students with substantial law school debt (or even without debt) can go straight to work for a prosecutor's office, the government, or JAG. Indeed, that's the reason so many end up paying their dues at Big Firm first.  Here are some direct quotations that (again) speak best for themselves.

I asked a young prosecutor working in a major metropolitan area how his job works out financially. His response:A "lifestyle job," despite the conventional wisdom, does not
mean "few hours for mediocre pay." "Lifesyle" means being able to lay
your head on the pillow at night knowing that you've done some good on
behalf of people who need it (rather than corporations, shareholders,
or fiduciaries--not that they aren't worthy parties sometimes).

But look at the salaries for prosecutors--$40,000 for rural areas, $44,000 for metropolitan areas.  Do the math: $44,000 x .30 = $13,200 (federal taxes). That leaves you $30,800 after taxes -- and that assumes you have no state income tax. $30,800 is $2566 per month.  Rent, utilities, groceries? Optimistically, those come to $1000. That’s $1566 per month left over.

Health care/pension payments? I pay 11% of my gross in required pension payments, so let's say it's an even 10% ($4,400) per year.  That's another $366 per month.  Add vision, dental, life insurance, health savings accounts, and my take-home is down to $1100 per month.

So after all of those fixed costs, you still potentially have: undergraduate loans, law school loans, car payments, vacations, Christmas presents, clothes, a beer or two, and savings/retirement contributions (hahaha...as if that's possible).

I think it boils down to how you interpret the "life" the professor is describing. JAG is an option for a lot of people (I considered it), but look at what you're comparing: $150,000 (if not more) to start at Big Firm v. $45,000...plus active military service.  Lots of people enjoy it, but is that really what's required to have a life with a law degree? Enlisting in the military?

The prosecuting jobs and other public service positions are attractive for a lot of people, but most of my friends were unable to do it because of the size of the loans they were facing, and/or their positions in life.  One of my closest friends got married during third year of law school and was planning to have a child.  If you plug "wife and child" into the $44,000 analysis above, I think the balance would break down relatively quickly.

Or take me...I want to be able to buy a house at some point this year, and I'm single, have no children, and no significant debt.  I did the spreadsheet routine with my starting salary (which is about $5000 lower than the median metropolitan area prosecutor's salary) and I realized I needed a second job.  Between 25-35% of prosecutors in my office have another job because they just can't afford to live without the extra income. Those are full-time workers, mind you -- many of whom have wives and husbands, mortgages, and children.

I don't know...I guess you could say that there are choices out there that allow you to make a living doing non-law firm work.  The issue in my mind is the discrepancy between the law firm salary and the public service salary.  While law firms are keeping miserable people onboard by jacking up the pay, public sector jobs are bleeding qualified (and loyal/devoted) labor because they can't offer a reasonable salary. Each group "endures" something in exchange for a reward, but they are very different burdens and benefits. So we’ve got prosecutors working second jobs… and not necessarily glamorous ones. Take a look at this recent Boston Globe article that profiles prosecutors moonlighting as bartenders and house painters. One guy mans a supermarket deli counter in his spare time, while another works at a funeral home. That’s probably not what most law school applicants see themselves doing after they graduate from law school. (One prosecutor in the article notes that his girlfriend – a law firm paralegal – makes more than he does.)

As for JAG Corps, I talked to another recent graduate who turned down a JAG offer. His response: I was offered commission into the JAG Corps and seriously considered it as an option before deciding not to pursue it. Ideological motivations aside, the reality is that it is difficult for graduates of private law schools and certain public law schools to seriously consider JAG and many other public interest positions as an option upon graduation. As many know, compensation is often less than what elementary school teachers make in certain geographic regions.  I was offered $39,000/year salary (first year) and a graduated housing stipend that increases or decreases according to the assigned geographic location. I did the math, and the math did me in.

After deducting taxes from the federal salary, I would be bringing home $2400 a month. While the prospect of trying cases early in my career, representing the military and therefore the interest of the American public, and having the ability to travel to myriad destinations was very attractive, I came to the conclusion that ironically enough, I would be placing myself at a financial disservice in the name of public service. At this pay rate, I could not pay off my school loans, could not afford some of the luxuries I enjoyed in college, and would have to rely on my parents for additional income. Sometimes I wonder what good I am affording to the public while representing corporations and people with deep pockets. On the other hand, I am glad that I don't have to look at my parents and ask them for money. After all, I am not a teenager.And think tanks?

Some of the most highly paid think-tank JDs make less than they did as a first-year associate at Big Firm, even factoring in all the free think-tank lunches and fabulous benefits.

I’m also not able to find many prominent think tanks that hire JDs straight out of law school. As a think-tank insider told me: “I can't imagine that there are more than a half-dozen such spots open every year, and not at any of the good think tanks.”

The JDs I am able to find at the top think tanks (doing a cursory search) all have insanely impressive resumes and experience under their belts. A sample:

Brookings has three JDs:

• Robert Litan: Yale JD/PhD + experience in OMB and Treasury + former Deputy Asst Attorney General
• Huge Price: Yale JD + former CEO of Urban Institute + board of F500 companies + NYT editorial board
• Kenneth Dam: Chicago JD + Supreme Court clerkship + firm experience at Cravath + Chicago Law School professor + former Deputy Secretary at Treasury and State Depts

Center for American Progress has quite a number of JDs. A sample from just A’s and B’s:

• Mark Agrast: Yale JD + Board of ABA + former practice at Jones Day
• Jessica Arons: William & Mary JD + VA Supreme Court clerkship + former attorney at ACLU + private firm experience
• Melody Barnes: Michigan JD + former chief counsel to Ted Kennedy + former practice at Shearman & Sterling
• Spencer Boyer: NYU JD + clerkship at International Criminal Tribunal + former director of Georgetown’s Constitution Project + former practice at Jones Day
• Cassandra Butts: Harvard JD + former senior advisor to Dick Gephardt + former assistant counsel to NAACP

Manhattan Institute has two:

• James Copland: Yale JD/MBA + Winter clerkship + McKinsey + board of two manufacturing companies
• Peter Huber: Harvard JD + MIT PhD in Engineering + two Supreme Court clerkships +  name partner at law firm + Forbes columnist + MIT professor

Heritage has three:

• Edwin Meese: Boalt JD, former US Attorney General, former member of National Security Council, former law professor
• Todd Gaziano: Chicago JD + Jones clerkship + House subcommittee chief counsel + OLC
• Brian Walsh: Bowman clerkship + former practice at Kirkland & Ellis

Progressive Policy Institute has none.

American Enterprise Institute has two lawyers:

• Peter Wallison: Harvard JD + former GC of Treasury + partner at Gibson Dunn
• Ted Frank: Chicago JD + Easterbrook clerkship + experience at three Big Firms

Institute for Policy Studies has one:

• Stacie Jonas: Yale Law School student

Perhaps Competitive Enterprise Institute or Cato hire people right out of law school (I haven’t checked), but that’s more public-interest work than think-tank work.

I also heard the following from a think tank insider: “Drum Major Institute just got a lot of plaintiffs' bar money for a newly-minted law school graduate to be a hack, but that appears to be a temporary position.”  (That DMI position is advertised at $50K).

If there are JDs who took the think tank route right out of law school and made it work with substantial law school loans, I would love to hear from them. Maybe they’re out there.

Let’s turn to debt coming out private vs. public law schools. (Although note that the prosecutor I spoke with above had no law school loans and is still working a second job.) My research indicates that public law school debt is between $46,000 (ABAnet link below) and $51,000 (Newsweek link below), while private law school debt is between $70,000 (ABAnet) and $78,000 (Newsweek).  Those numbers don't quite mesh with the general debt studies below (quoting $84,000 in average debt), but then there’s also a Chicago Sun Times article reporting on Sen. Durbin's bill to reduce debt for public interest lawyers, and his estimate of average debt for public vs. private law schools is $66,000+ and $97,000 +, respectively. So graduates of public schools have plenty of debt themselves.

Here are the links on private vs. public law school debt if anyone wants to sleuth out the numbers some more:

• Newsweek
• ABA
• National Law Journal
• Chicago Sun Times

And studies on public interest vs. private firm salaries:

• NALP
• ABA (See in particular pages 10, 11, 17, 18)
• From Paper Chase to Money (a great article to read in its entirety)

And finally: yes, there are law school loan forgiveness programs, and this link offers more details on who’s offering them. (Loan forgiveness programs are also called LRAP programs.)

A note of caution: Do not assume a given loan forgiveness program is well-funded enough, or that its eligibility rules are going to be generous enough, to make a meaningful financial difference in your intended career path. Once you have an acceptance offer from a law school as well as a financial aid offer, sit down with the person who administers the school’s loan forgiveness program and ask her to run the numbers for a couple of realistic scenarios. Some questions to ask:

• At what annual salary would your loan forgiveness phase out?
• What happens if your spouse has a well-paying job?
• Does job X or Y count as a “public interest job” eligible for loan forgiveness?
• What about undergraduate or other grad school loan burdens?
• Does the program cover loans that aren’t deemed “need-based” (i.e. you or your parents were deemed to have enough resources not to need loans when you first received your financial aid package, but you had to/chose to take them out anyway)?
• Does your financial aid offer letter even specify whether your loans are deemed need-based? (If not, demand that those amounts be broken out.)

These are just some examples of things to ask. (There’s a longer discussion of loans, financial aid, and loan forgiveness programs in my book.)

Bottom line about loan forgiveness programs: Do not automatically assume the program will cover your future situation, and note that public interest jobs are still awfully hard to make work financially for a lot of people, even if they graduate debt-free or a loan-forgiveness program makes all of their debt go away.

Hat tip to the blog “Paragon to Pieces,” which drew my attention to this recent article in the New York Post about the flight of Gen Xers from top New York law firms:

Young, Gen-X lawyers in their third to fifth year in the business are walking away from their $200,000-a-year positions in record numbers -- at times without another job in view.

The reason? They are unhappy with their Blackberry lifestyle - being tethered to the job 24/7 and having to rush back to the office at a moment's notice when e-mail orders pop up on the ubiquitous PDA.

The exodus of law firm associates is unprecedented, according to the National Association of Law Placement, or NALP, which found that 37 percent of associates leave large firms within the first three years.

A whopping 77 percent of associates leave within five years, according to NALP's latest survey.

Ponder that for a second. Over a third of associates leave within the first three years, before a good number of them will have paid off their law school loans.  And close to four fifths leave before they come up for partner, meaning they bail after putting in five years of grunt work but before making the really big bucks. That's quite a measure of how miserable they are. Been there, done that -- I've been part of that exodus, so it's not news to me, but apparently the ranks have swelled. (I recall whispers about a honeymoon being canceled for some deal. Because that’s what you’ll remember on your deathbed: that deal you worked on back in 199X.)

The article also quotes an anonymous law firm partner who fears for his business model:

It's the mid-levels, the third through fifth years that are leaving, so you're losing people you've spent lots of money on training, and just as they start to run things, they leave, and firms become less profitable.

So I wonder, what does that exodus mean for the law firm business model? That model is a pyramid structure, where the folks at the top make money by billing out the hours of young associates while paying them more or less a fixed salary. More hours per associate means more money per partner and diminishing hourly incomes for those associates. (A lawyer I know once calculated that his yearly bonus – the carrot firms dangle in front of associates to encourage more billing – amounted to something like $20 for each hour he worked above the yearly minimum. Big whoop.) Does that model fall apart without a self-replenishing pool of law school graduates eager to take a heap of abuse in exchange for a shot at the brass ring of partnership? It’s a big topic, one that deserves a longer post.

I asked a consultant (and former lawyer) who advises in-house counsel at big corporations (the really big ones, the kind that hire fancypants New York law firms). He tracks law firm business models, HR practices, and law firm value propositions very carefully and had some interesting observations to share. I found them very persuasive, so rather than paraphrase, I’ll let his words speak for themselves.

Is Gen X/Y a real threat to the business model? Nope.

Empirically, the big law firms have made more money per partner every year, year over year, for the last decade. The increases have been dramatically greater than CPI, inflation, or any other metric of cost increase. The claim that the law firm model is in any way in jeopardy is so disconnected from their financial performance that it has no real weight. As long as the money continues to flow as intensely as it does to the top 100 or 200 law firms, there’s just no basis for them to change.

Is associate attrition bad for law firms? Nope.

The business model depends on winnowing out the vast majority of those people and not making them partner, because new partners dilute the profits of current partners. If associates don’t quit on their own, you have to tell them to go or not make them partner. It’s better for the firm to keep them as long as possible – senior associates are very profitable – and then not make them partner, but the pain and inconvenience of that probably makes the self-initiated departure of 77% of them almost as good.

Are law school loans traps? Yes.

The oversupply of law students with substantial loans has, as you know, prevented any exodus from being a real problem – firms have a massive pool to choose from.

Is Gen X/Y really so special? Nope.

My firm does a huge amount of empirical work on employee preferences, and one thing the studies have shown time and time again is that all generations behave the same where money is concerned. Money is money is money, and Gen X, Gen Y, Baby Boomers, etc. behave the same with respect to it. Some percentage of every generation is willing to do nearly anything for money, and the breakdown of the generations just doesn’t vary that much. Managers like to bitch about Gen X or Gen Y. Whatever. I can tell you that they are “cosmetically” different, but they are not different in the hard money choices they make. And that’s backed up by the fact that, in this context, law firms are making more money every year than in every prior year.

Are in-house legal jobs the holy grail that law firm associates assume they are? Nope.

General counsel are always going on about the problem of talent management, needing to create a compelling career path for lawyers, needing to retain them, fearing they will leave, talking about the new generation, etc. Here’s the fact of the matter. Unlike law firms, in-house legal departments – however surly their lawyers might be – have incredibly low turnover. The lawyers stay; they stay at much higher rates than employees in other parts of the company. In-house lawyers are unhappy, yes. They are bitching. They are working as many hours as they did at their firms. But they are not leaving because they have nowhere to go, which means that talent management/career advancement/retention efforts at companies that may be targeted at in-house lawyers have exceedingly low return on investment, since there is not a retention problem to begin with. In-house lawyers won’t even take other jobs within the same company because it invariably involves a very serious pay cut.

His bottom line: "Lawyers: Your lives suck. And you’re still making money.”

I also received interesting feedback from a very astute acquaintance who recently graduated from a top law school and bypassed the big-firm track entirely to work in public service. (One summer at a big firm during law school was enough to make him head for the hills.) His take:

I think the doomsday scenario offered by a lot of people is over-stated. Law firms don't want 80% retention because they don't want to be considering 8 out of every 10 associates for partnership later on (at least the "big" law firms).  Using 85% of the associates for "grunt work" will continue to make tons of cash for the law firms, and will allow a "natural" culling of the ranks in anticipation of partnership consideration.

Even more sadistic: I think many partners view the dramatic drop-off as part of the "testing" of associates.  By their logic, if you can survive the years of misery when 8 out of 10 of your friends are fleeing like the building is on fire, then you are the sort of person fit for partnership at the firm.  They would never admit this, of course, but I think that's the thought process for some of the worst partners.

In that way, I consider the big law firm to be like a stereotypical fraternity from a huge public school.  They have thousands of students to choose from during rush period, and they ask a very small percentage of those students to pledge.  What are they offering? Hazing and status.  That's it.  Status is the right to say you're in "the frat," to walk into the frat house during parties like you're a member and brag to other undergraduates that you belong there (i.e. "I work for Cravath..."). The hazing? The most foul, degrading stuff you can imagine being done to other humans short of actual criminal behavior.  Examples? I'd happily fill you in about the friend of mine who was asked to keep his Crackberry on him and respond to discovery problems while his wife was in labor, and the phone call he received from his partner/boss during his son's circumcision asking him to get back to the office to look something over (and yes, his boss knew exactly what was going on with his personal life at the time). [Reality at Big Firms is so easy to parody -- see Anonymous Lawyer's contribution here. - Anna]

The reason it's like a fraternity is that each new entering class comes into the house and says, "This hazing sucks, I can't believe I'm doing this, I will never do this to people if I'm in charge."  Sure enough, 2 years later as seniors, they're running the hazing just like their predecessors.  So while the HUGE percentage of first year associates that experience law firm life end up leaving in droves, they never made it into the fraternity.  But by the time the next hiring/recruiting cycle ends, a brand-spanking new 8th year associate turned junior partner is in charge of assignments or work schedules, and he has just suffered through a divorce, a receding hairline, an ulcer, and way too many vacations interrupted by phone calls and texts.  [I remember a partner's retina detaching, and he wasn't doing anything about it because of some deal. Yuck. - Anna] You think he's going to let up? No way--so he continues the cycle of miserable treatment of associates, even though he was once in their shoes.

That's the firm/partner end of things.  From the student/associate perspective, the law firm model will also be able to survive because no matter how badly you are treated at these places, there are always at least a few of your friends, classmates, and colleagues willing to persevere through all the hazing to climb the ranks to that coveted junior partner position.

As for the grunt work, so long as student loans are a part of the education process, there will be fresh meat to build widgets at the enormous law firms.  As you pointed out, the associates may be leaving before all of their loans are completely paid off, and that does demonstrate how unbearable the law firm life can be.  But if you have $100,000 in loans and can throw $25,000 a year toward those loans for 3 years by working for "Big Firm," it's a lot easier to "go public service" in year four.  $25,000 in loans is manageable when you’re in public service, especially if you have a solid job after Big Firm (because of the status that entry on your resume can offer).

Bottom line is this: the traditional pool of associates may shift over the next 10-20 years, and you may actually see more 2nd and 3rd tier students being courted by top firms, but the overall power dynamic and business model of the law firm will survive.  The changes in the law firm labor pool are not going to be dramatic enough to threaten the pyramid.  As much as I wish it weren't the case, the "Big Firm" is going to survive, I think, because there are enough jackasses graduating law school to fill the partner ranks each year (the "gunners"), and a healthy supply of students who will still need to take a bite out of their loans before moving on to greener pastures.

Whew.

When I counsel prospective law school applicants and give talks at colleges around the country, I talk to a lot of people who

•    are certain they want to work at big law firms without having spent a single day experiencing one  (kudos to the paralegals and case clerks -- at least they know what they're getting themselves into when they apply) or
•    think it’s easy to go into public interest work right out of law school or
•    think nothing of spending five years at Big Firm before going off to do what they really want to do, when they have no earthly idea what that might be, or whether it even requires law school + firm experience to get there.

I do my best to give them a sense of what they’re in for, and in response I encounter various levels of resistance and faces that say, “This is too much cognitive dissonance, so I’m going to pretend I didn’t hear that.” Not always, but often. Maybe the message will sink in eventually, but a lot of people have to learn the truth the hard way, after three years of law school and another three to five years at a firm that they will likely want to flee. And mind you, most law school graduates aren’t even in the running for those top firms; those are considered the plum firm jobs. At least those associates get paid well.

The fact is that most of these folks have no idea what law school is like, what legal practice is like, whether it’s something they’ll enjoy, whether BigLaw is a good move for them, or what they want to do after their time “inside.” Those are an awful lot of unknowns, and yet thousands and thousands of people go jumping on that very expensive, very time-consuming bandwagon year after year, usually because they lack the courage or are too lazy to think hard about other options or are being pushed into it by their parents. It’s not a mistake for everyone, but there’s a reason there are so many miserable lawyers out there. (On that subject, see the last paragraph of my other post here.)

I’m excited about the launch of a new magazine in September 2006 called Good. It’s the brainchild of Ben Goldhirsh, a 26-year-old who is using the proceeds of his fat inheritance to launch a magazine for 21-to-35 year olds who want to merge their respect for capitalism with their idealism and “do well by doing good.” What a great concept! Even more interesting: 100% of the proceeds from your charter subscription goes to one of twelve charities.