Permanent associates as a mission-critical approach

In a recent article in New York Times, “At Well-Paying Law Firms, a Low-Paid Corner” by Catherine Rampell, it is described how two law firms (Orrick and WilmerHale) have created so-called “permanent associate” positions that make much less money and have no chance at partnership, but that require far fewer hours and come with no billing pressure. But, as analyzed by Jordan Furlong in his article “The Two-Tiered Associate Myth”, the “two-tier associate tracks are nothing new”. The interesting point is that these “permanent associate” positions are offered in small city offices set up specifically to handle low-value work at much lower costs than the firms previously incurred in major urban centers, i.e. work that has been outsourced from other law firms.

“Outsourcing, at its essence, is about assigning a given task within a system such that its value is aligned with the skill of the task’s performer and the cost of the task’s location. Traditionally, law firms have assumed that everyone who performs its tasks should be highly qualified, located centrally, and compensated accordingly. This assumption no longer holds, and these four firms are among the first to realize this fact and act on it.”

In another article, “Not on the Partner Track – and Maybe That’s Okay” by David Lat, the news has also been analyzed with pros and cons for the associates, but also the clear benefit for clients: “Regardless of how these new career tracks might be received by young lawyers – gratefully, or disdainfully, or somewhere in between – the benefits to clients are clear. As WilmerHale executive director Scott Green said to the Times, speaking about the firm’s “in-sourcing” facility in Dayton, “There’s a big, low-cost attorney market there. That means we can offer our services more efficiently, at lower prices.”

In this article there are some further conclusions by Ian Nelson at PLC on the news as merely a reflection on the changing legal profession: “It’s interesting to see this issue of Biglaw and efficiency / new models of practice make it to the front page of the Times. What they are describing, essentially, is the rise of the professional support lawyer and looking at newer, higher-level outsourcing, so that firms can focus on client-facing work and control costs. They are basically spelling out the need for a new solution to reinventing the wheel – and this is exactly what PLC does. Firms need to make educated, informed decisions on the whole “buy” versus “build” debate, and get content from the best, highest quality source. That’s absolutely right. The economy is changing, the legal profession is changing, and smart firms need to change with the times.”

The rise of “permanent associates” is one part of this transformation. And even if some lawyers might not like this development in the short run, waxing nostalgic for the days when everyone could be a $160K-a-year, partnership-track associate, it’s happening because it’s helpful in delivering high-quality legal services to clients, in a cost-effective manner.

As Jordan Furlong concludes, the news about the “two-tiered associates” is interesting, but “don’t be misled: this isn’t primarily about “two-tiered associates.” This is about law firms figuring out that not everything they do is mission-critical, and changing their approach accordingly.”