Susan Hackett, the general counsel of ACC, has recently thrown down the gauntlet: associates at elite law firms are paid way too much and sensibly outraged general counsel should spurn them and their profligate firms. She fulminates against the recent jump in associate pay and its tsunami effect on rates and therefore law department costs. She thinks it self evident that value doesn’t equal cost, and calls for law departments to vote with their feet.
With few exceptions, no one forces a general counsel to hire a firm that pays top dollar for its associations. It is irrelevant that the $165,000-a-year, wet-behind-the-legal-ears pup out earns Court of Appeals judges. Overgrown kids who can reverse dunk earn way more than their erstwhile inner-city teachers. Costs of elite law schools rise every year, but do college seniors boycott Yale, Harvard and Columbia? A BMW 745 may top $100,000 but have buyers sworn off? Maybe you can’t come out of a five star restaurant for under $150 a person, but have those elite restaurants closed for lack of business? The market expresses our values.
The market of aw department buyers perceive quality differences among law firms (or their partners) and sometimes perceive that top-shelf work is worth top dollar. The firms that have raised their pay scales are humming with work.
In a non-monopolistic industry like the law, price closely tracks demand, and demand represents the free-will choices of consumers. Law departments are welcome to boycott firms that shower blue chips on 4Ls; others will hire them because they feel the firms, with their bulging-wallet new associates, are smarter, more experienced, more respected, and deeper than other law firms.