Associates v. Staff Attorneys, and Another Example of Thomas Cooley Reasoning

Crain's Detroit has an interesting article about the trend in large firms to move associate positions to lower-paid staff attorneys (and, occasionally, to move work from staff attorneys to partner-track employees). It gives a nice overview of the differences between the two, why firms prefer one or the other, why they switch, etc. It's fair, even-handed, and informative, probably because it was written from the business side and not by some hack academic.

But at the end of the article sits this odd remark from Thomas Cooley dean John Nussbaumer:

[R]ecent graduates are under increasing pressure to consider alternatives to partner tracks if they want to enter private practice. But he is convinced that trend is cyclical and the tide will turn again soon.

Keeping in mind that about 10,000 Americans will turn 65 every day for the next 19 years, he said: "That group includes the majority of current equity partners. The median age of attorneys today is 52 years old," he said.

"So while the short term is rough, we think the long-term picture is those people retire in increasing numbers. And they won't be retiring from second-tier or career associate positions."

Yeesh.

Is there a written rule that partners are replaced on a one-to-one basis? No. There's no preordained ratio of partners-to-proletarians in the legal community. Sure, when partners leave the profession, their clients have to go somewhere, and so there's a pool of available business that younger attorneys may take.

But recent large-firm behavior suggests the big boys aren't too worried about a leadership/partner-class drain, and are perfectly fine consolidating the ranks of the elite. And this leaves out the rise of non-equity partnership as an alternative way for firms to build loyalty and keep clients while consolidating the real wealth.

As an aside, to even get in those positions, one almost always has to have an associate position with the firm or build up a practice worth taking. In other words, why is a Thomas Cooley dean even thinking about these things?

Furthermore, have they even sat down to do the math on this?

Let's assume that 10,000 people will, in fact, hit 65 every day for the next 19 years. Let's further assume that the lawyers per capita rate is currently 1 per 285 and (for giggles) let's assume that the per capita number is a constant across all ages. Let's also assume (for even greater giggles) that attorneys, along with the rest of the population, will retire or die at an average age of 65.

10,000 people x 365 x 19 = roughly 69 million retiring adults. Of those 69 million, roughly 240,000 would be retiring licensed attorneys.

Currently, there are about 45,000 people graduating law school every year, with approximately 28,000 full-time jobs that require a J.D. available. In all likelihood, these available jobs fully account for work that trickles down as a result of a partner retiring, but for the sake of argument, let's say it doesn't. Let's pretend that the current number of job openings reflects only economic growth and non-partner departures and that the 65-year-olds Mr. Nussbaumer speaks of are a completely separate phenomenon.

The overage is currently about 17,000 a year. The vacancies created by retiring baby boomer partners would be 240,000/19 = roughly 12,000 a year. There'd still be an overage of 5k (>10%) per year, i.e., there'd still be an oversupply, and all its attendant problems, and there'd still be no rational reason for Thomas Cooley to exist.

And that - 95,000 extra attorneys with no place in the economy - is the best case scenario, barring drastically reduced enrollment. I imagine the attorneys-per-capita ratio may be lower for the 45-65 crowd than it is for the 25-45 crowd (I'm not sure where he's getting his 52 = median data; maybe practicing and practice-eligible?). And the number of boomer partners - few of whom will likely retire at 65 - is lower still. And all this, again, ignores the idea that the current labor market already factors in aging and departing attorneys quite well. Successful large firms aren't stupid, and they aren't just going to sit by and watch a generation retire without protecting the firm and the existing partnership, nor are they going to call up a Cooley grad and give him a share because they need a warm body in an old partner's office.

Nussbaumer does, however, exhibit a common argument by the interested educators: that it's all cyclical; that when the boomers retire, someone has to be in their place; that current graduates should all be optimistic for eventually getting their pickings off the money tree, etc.

Bull. We're already producing enough graduates to absorb boomer retirement and then some (like 25% extra). We could shut down all law schools for two whole years and still be in fine shape without any question. Likely much more, as there are a lot of non-practicing JD holders who have been shifted into other professions.