A New Observation

Summer Clerkship Tradition

The infamous lore of the Big Firm Summer Clerkship is old news to those familiar with legal career development. For big firm attorneys living within its annual cycle, the peculiarity of this phenomenon becomes deceptively normal, as it admittedly did for myself.  The years I spent steeped in this economically nonsensical pattern of Big Firm culture started off with a bang of jaw-dropping extravagance in heart of the new millennium's hay-day.  My first taste was observed as the spouse of a law student, followed by my own clerkships at four firms during my 1L- 2L summers, as Big Law rode the tech-boom wave seemingly without limits.

 

We flew to New York for Broadway plays and Los Angeles for black-tie galas. We sat court side at NBA games and watched the Dallas Cowboys at the 50-yard line. We learned to play golf with private lessons, catered with wine and cheese. We spent mid-week working hours getting spa treatments at the Four Seasons. The daily five-star lunches and nightly 6 course dinners had no budget to speak of and so routine that they were not listed in the "event calendar" of weekly theme parties and larger events handed to each clerk on their first day. There were other surprises not included, such as the impromptu scavenger hunt ridden in a fleet of stretch limos stocked with Cristal, the winning team claiming their "prize" of $5000 at the final stop: the "After-Party Casino Night" at the Art Museum rented out by the firm. These are but a few examples from my whirlwind summers of wine tastings, Cuban cigars and "is this really happening" moments.

The wasteful expense inherent to summer programs is impossible to ignore, however, I nonetheless chalked it up to a quirk of the profession and thought not much more of it until recently, when a subtle nuance became alarmingly clear. There is an ironic connection to a firm's billing rates and the leveraged inexperience of the lawyers making up its roster. I note the disclaimer that I am not officially trained in law firm accounting systems, however I failed to find a more powerful common thread to this disturbing connection. While summer clerkships are mostly known by a legacy of excess, the more significant fallout seems to be the creation of a system which practically ensures clients receive less value and a higher bill and the problem goes deeper than the mere costs expended on lavish summer programs.  The perverse connection can be summed up as follows:

 

Your legal fees are likely to be more expensive at firms having the highest ratio of

inexperienced talent to senior expertise.

Many of the reasons for this seem to be driven largely by a single factor: The Summer Clerkship

 

Small law firms rarely hire first year or junior lawyers because they can't afford to.  A small or mid-size firm competing for a steady income stream and client loyalty cannot risk their reputation by exposing hard won clients to novice lawyer error.  Firms trying to put food on the table do not have the luxury of using the "billing for training" model common to big firms that can afford to bank on the client's expectations of costly representation tied to their brand name.  Smaller firms also lack the manpower for mentorship and a budget for intensive in-house training programs does not exist.  Therefore, mid-size and small firms almost exclusively hire attorneys with enough real world experience to independently handle client matters without much supervision.  As a result, client's engaging smaller to mid-size firms are almost exclusive represented by experienced attorneys.

In fact, first year lawyers are rarely, if ever, hired at any law firm outside the scope of a summer clerkship.  A sober name for what is traditionally known to be an eye-popping boondoggle summer "job," highly coveted for many reasons, not the least of which is a paycheck amounting to twelve-weeks salary of a full time big firm lawyer.  And for essentially doing nothing more than attending lavish parties, sporting events, long lunches, along with the occasional "sit in meeting" and obligatory written "one-page memo."

Moreover, it is customary that most, if not all, summer clerks are offered permanent full-time positions at the firm following graduation and immediately paid "a signing bonus" upon their acceptance.  During their third year of law school, the firm also pays stipends to cover the costly "incidentals" of the BAR BRI Summer Training Class, Bar Exam Fees, Attorney Dues and Taxes, as well as travel costs and moving expense for the student's family moving from their law school's city to the law firm's city.   Combined with twelve weeks of full-time big law salary and the exorbitant expense of the summer program itself, millions of dollars are spent each year on this fleet of budding lawyers before they generate one penny of value for the firm enterprise as a whole.   

The obvious question is how firms afford this, and perhaps more importantly, why do they do it?  The first question is easier to answer than the second.  The only firms that can afford the "opportunity" to host a paid twelve-week interview for ten to thirty-five law students bidding for post-graduation permanent job offers leverage their billable rates year round to yield profit margins large enough to sustain the six figure salaries, costly perks and flashy experiences lavished upon law student clerks every summer, all while banking on the fact that such investment will not produce any tangible current or near-term market value to the firm or its clients and can expect nothing return other than a "yes" to the full time job offer extended to their rising stars at the summer's conclusion.   

 

In summary, the answer to the "how" may sound circular (because it is).  Firms that can afford summer programs, basically, are firms that can afford summer programs.   The significant point to take away is how this circularity breeds a self fulfilling prophesy that is not a "gift that keeps on giving," but a "bill that must keep rising," with the metric of success being a greater number of lawyers with zero experience added to the payroll each and ever year.  And herein lies the crux of the problem.  This "metric of success" sought both by the biggest firms and law students alike creates a high degree of probability that clients paying the highest fees will be represented by the least experienced lawyers.  

As for the "why," it may seem as if someone is playing a cruel joke on unsuspecting clients or else the law firm business model has suffered a bad concussion.  The second option is somewhat true, as the origins of the summer clerkship stem from traditions of a bygone era, and its application in the the modern world of law firm rankings and lateral hiring make it both insensible and infeasible. For more on that historic tradition and how its lost its way, see here

Post -Recession Aftermath

As a seasoned attorney serving on my former Big Firm's Recruiting Committee, I witnessed our navigation from the tech boom bubble to the 2008 legal market crash, and it's subsequent ebb and flow.  After several Big Firms went extinct or merged into more solvent ones, Law Journals ran articles on the urgent need to cut expenses, including those of summer clerkship programs.  Several firms cut their programs altogether, but most held fast to the tradition until the bitter end, opting instead to tweak other segments of their budget (or raising billable rates firm-wide).  The summer associates in our 2008 class were fortunate enough to have chosen a firm with a client base diversified among sectors largely immune to the brunt of the financial crisis so as not to fall pray to the sword of Damocles as as the economic climate began to drastically turn for many of our counterparts.  The only official change to our program was the size of the summer class and a reduction of the lunch budget to $40 per person.  More generally, summer associate offers across the country became more limited post recession, both in size and scope, with offers extended strictly to students hailing from top ranked law schools with GPAs within the top 30% of their Law School's grading curve.   The three differences I observed post-recession as compared to my law school summer clerkships were as follows:  the most egregious "over the top" experiences became less likely to occur, landing a 1L summer clerkship became nearly impossible and the summer-split between two different firms each summer is no longer allowed.   

 

While many experiences I had as a summer associate seem implausible today, the band of lucky witnesses sharing my limo would all agree that we saw too much for too long to say that such things would not return given the right market conditions.  For the time being, gone were the days of orgies of expensive lunches, Broadway shows, and casino nights,  but overall, the shift most firms made was more a matter of degree than substance and never went  far enough to solve the problem discussed above. 

 

For the highest ranked (and most expensive) firms, summer associate programs remain intact as the PRIMARY method of recruiting new legal talent.  The size of the summer class, the offer acceptance rate and the law school ranks of students hired remain badges of honor for Big Firms.  Likewise, the most sought after law students will always flood the highest ranked Big Firms for their status and prestige.  In the wake of this mutual admiration, one glaring fact remains:  Millions of Big Firm dollars are expended year after year on a questionable prize pool of shiny resumes with no proven practical skill set.  The larger the summer class, the higher the cost which demands a return on the investment - often found in ever-increasing billable hours by first year lawyers at an exorbitant rate.  After all, no Big Firm is a charity and will eagerly collect receivables by the millions based on first year lawyer hours.  Whether by passing on a high number first year lawyer billable hours to the client or increasing billable rates firm-wide, you can guarantee that Big Firms always expect a return on their investment and will find a way to collect it one way or another.  

 

After reading this disclosure, my hope is that more clients will not allow this return to be reaped through their bill. 

-  Tricia Steele Boutros, Managing Partner