When you're in the business of selling hours
When you're in the business of selling hours
Paul Hastings and Kirkland & Ellis show us how the law firm world really works
As many of you know, I’m fascinated by the unspoken rules of the legal profession. It’s often hard to figure out what those are though. So whenever something unexpected takes place, I believe it’s a great opportunity to see how things *really* work. This week, the big news was an over-the-top career advice slide from Paul Hastings, and to a lesser extent, the simultaneous announcement of layoffs & massive profitability by Kirkland & Ellis. I will discuss what it all means for those of you who are still trying to move up in the law firm world. But first:
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Unless you’ve been living under a rock you have probably seen the Paul Hastings “non-negotiables” slide that made the rounds on social this week.
The slide (which I’ve screenshotted below) generated huge amounts of media coverage and discussion about the legal profession.
I won’t rehash much of what’s been already said. Yes, the tone is terrible. And yes there are some laudable ideals for all lawyers, like taking ownership of your work. But from my point of view, the most fascinating point about all this is that nothing in the slide is there to make you a better lawyer. Instead, it’s all about how to become a better servant to senior lawyers, and how you can help them justify billing you out to clients at $850 an hour.
That was the basis of my statements to The American Lawyer in their article “I'm Aghast': Viral Paul Hastings Presentation Garners Strong In-House Reaction.” From the article:
“Law firms are so concerned about where associates are working from, and whether they’re at their computer at all times. All to justify billing them out at exorbitant hourly rates,” Su said.
He said that this has led legal departments to turn to alternative legal service providers or legal tech to get the work done.
“At the end of the day, it’s all pretty funny to me. There’s such a huge disconnect between what firms care about and what clients care about,” he said.
The difference in alignment between clients and these “high end” firms doesn’t just impact the business. It also impacts career development. Which is the subject of today’s newsletter.
Selling your time keeps you from having a meaningful career and makes you expendable
I’ve written a lot about these themes before. Biglaw is in the business of selling hours, and they continue to raise the price of each of those hours. Choosing that business model has all sorts of ramifications. When I was a junior associate I thought it made no sense that I had to be constantly available to update drafts by correcting formatting issues, typos, and grammatical errors. I had to build these elaborate chronologies and binders.
None of it made sense to me until I realized that it was enormously profitable for the firm to organize things this way. Last year I collected by thoughts about this kind of grunt work in an essay titled Profitable Misery, and coined the term shitwork.
I truly believe that shitwork is a big part of the reason why so many lawyers are unhappy with their careers. Many of them are perceived as shitwork processors, which admittedly does help the senior partners generate more revenue. But on the job market, that type of work is highly commoditized and is at risk of getting commoditized. It’s certainly *not* the type of work that inspired them to go to law school.
The real problem is that shitwork—and any type of highly commoditized work—is makes you incredibly expendable by the firm.
Earlier this week, Kirkland & Ellis, one of the world's most successful law firms let go of associates en masse while announcing record financial results. The firm denied that these were layoffs and insisted that the departures were due to performance-related issues, but the timing of the move raised eyebrows. Immediately after the layoff announcement, Kirkland released record-breaking financial results. Which supports the view that these departures were actually a cost-cutting measure in response to a drop in demand for legal services.
All this reminds me of what I wrote about Kirkland several months ago, in Expensive Lawyers. Basically everything about the firm is focused on revenue and profits. Like how they create a non equity partner tier that’s designed to justify higher hourly rates. As I wrote then:
You don’t become a massively profitable firm without some of these practices. Not only are Kirkland partners generating huge amounts of revenue for the firm, they’re also finding new clients, cross selling, and finding new revenue opportunities. Again, from the article:
a lawyer’s rating is decided by senior members of the firm based on a combination of a variety of factors including hours billed, revenue generated, business development activities such as cultivating relationships with and winning clients, knowledge management and pro bono work.
Knowing how to acquire clients and how to leverage technology is the real superpower
This is why I keep banging the drum on young law firm associates learning how to sell. What’s ultimately valuable to the firm isn’t the actual work you’re doing.
It’s the ability to source that work. Can you get new clients? Can you cross sell services to existing clients? That’s what’s truly valuable. Which is why we see this two sided treatment of Biglaw laywers: the fungible associates who get laid off vs. the rainmaking partners who are getting paid more than ever. As one Biglaw partner explained to me, off the record:
In other words, the rich get richer, while the rest of us who did exactly what the senior lawyers told us to do, are left scrambling to figure out why things haven’t worked out for us.
The broader conversation about law firms and shitwork gets even more interesting especially in light of the lightning-fast advancement AI. I highlighted this last week, but Goldman Sachs just released a report predicting that 44% of legal tasks will be automated by generative AI. I think that’s a bit of a stretch, but honestly with AI moving as quickly as it is now—I’m not sure it’s as crazy as it sounds.
Over the past few months I’ve played around with ChatGPT. I’ve seen what Ironclad’s product team is working on and rolling out in record speed. I’ve also been speaking with startup founders who are building technology I didn’t even realize was possible a year ago. There’s a lot of things being released that will change the nature of the work.
The upshot of all this? Don’t blindly listen to advice from those who succeeded in another place or time. Things are changing fast. That doesn’t mean that lawyers are on the verge of being replaced. But it does mean that if you work for a firm that only knows how to sell your time, you better make sure to find another way to add value.
Latest News
This entire debacle has also highlighted the brand risk all firms are facing these days. As I mentioned on Twitter, the now-infamous slide seems to have negatively impacted Paul Hastings’ brand, all because of a rogue associate made this. Between this and what we’ve seen with the run on Silicon Valley bank, there’s no question in my mind that social media has changed the game.
In legal tech news, congratulations to my friend Ed Walters, CEO of Fastcase, who announced a merger with vLex. I don’t have a ton of firsthand insight into the merger, and will just share a quote from Ed: “Legal research is the most used and most important legal tech that exists … That market has been dominated worldwide by two companies for as long as anyone can remember. This is the beginning of the end of the duopoly in legal research.”
Gunderson Dettmer emerged as a big winner from all of this drama because the news about their mass layoffs largely flew under the radar. The layoffs were caused by, surprise, surprise—shifts in demand. However I respect the fact that the firm was candid about it in their public statements, as opposed to blaming “underperforming” associates.
What do you think?
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I wrote about this theme last week in Being A Great Associate Is Overrated
Love this. All the more reason you need to come on Law Subscribed and have a deep dive discussion on eliminating the billable hour.
They're talking about you on reddit https://www.reddit.com/r/biglaw/comments/12ff54v/paul_hastings_slide_a_success_with_in_house/ "lol @ Alex Su bragging about getting 900 clicks for that article. It just goes to show you that there is a numerical metric for EVERY job. For us, they count the number of hours we bill. For people like Alex, they count impressions, likes, and clicks. I'll take the billable hour over desperately asking people to look at me, thank you."