Justifying summer student pay [split]

[myth000]

5 hours ago, canuckfanatic said:

Most smaller firms don't hire summer students because summer students cost money and don't generate revenue - it's not worth the financial burden. Larger employers hire summer students because they can afford to and they've built it into their business model.

I see this repeated by lawyers ad nauseam: summer students or articling students don't make money for the firm. This is patently not true for most students, whose work is billed at $100-$200 (or sometimes, dishonestly, even at the counsel rate) but who are paid barely minimum wage, if at all. I've scrutinized the billing of a small firm that seems to survive on student and other low-paid labor; I simply don't see how any small firm would make a loss by hiring an averagely competent student. In many cases, the supervising lawyer spends barely a few minutes every day providing guidance or mentoring, so the cost of mentoring isn't a major factor either.

It may only be true for the small minority of students who make an excessive number of mistakes requiring rectification after the student leaves. Even then, clients do not scrutinize their bill in detail and accept paying for the hours spent fixing mistakes, such as amending pleadings, set aside motions etc. 

The minority of students who cost more than they bill should not lead to the generalization that all students do not make money for the firm. Similarly, the minority of firms that take their responsibility towards students seriously and provide extensive, costly training should not be used to support this generalization.

Unless hard evidence justifies the generalization, I think it should not be asserted because it will seem to an objective observer a self-serving justification for exploitatively low pay.  This is not a matter that can be resolved by tendering affidavits of lawyers swearing that students cost more than they are worth.  There needs to be objective law firm accounting evidence.   

[BlockedQuebecois]

13 hours ago, myth000 said:

This is not a matter that can be resolved by tendering affidavits of lawyers swearing that students cost more than they are worth.  There needs to be objective law firm accounting evidence

Sir, this is a Wendy’s. 

[myth000]

He attac

[Dinsdale]

14 hours ago, myth000 said:

I see this repeated by lawyers ad nauseam: summer students or articling students don't make money for the firm. This is patently not true for most students, whose work is billed at $100-$200 (or sometimes, dishonestly, even at the counsel rate) but who are paid barely minimum wage, if at all. I've scrutinized the billing of a small firm that seems to survive on student and other low-paid labor; I simply don't see how any small firm would make a loss by hiring an averagely competent student. In many cases, the supervising lawyer spends barely a few minutes every day providing guidance or mentoring, so the cost of mentoring isn't a major factor either.

 

Sorry, but you do not know what you are talking about, at least as far as BigLaw is concerned, where many if not most students reside.  Virtually no students in BigLaw are a profit centre. Do you call an annualized salary of almost $100K "barely minimum wage"?  Then on top of that salary, there is overhead attributable to said students.  Believe me, very few students are billing and collecting mid-six figures.

Edited March 29 by Dinsdale

[myth000]

1 minute ago, Dinsdale said:

Sorry, but you do not know what you are talking about, at least as far as BigLaw is concerned, where many if not most students reside.  Virtually no students in BigLaw are a profit centre. Do you call an annualized salary of almost $100K "barely minimum wage"?  Then on top of that salary, there is overhead attributable to said students.  Believe me, very few students are billing mid-six figures.

I seriously doubt most students reside in BigLaw or are being paid anything close to $100K.  It's just not realistic.  Also, the poster I was replying to was arguing that students are more of a burden to small firms, with big firms being able to afford it.   

[WiseGhost]

I'm getting paid ~50k annualized as a big law summer student in a non Toronto market. I doubt my peers are being paid much more, if at all. 

 

 

[GoatDuck]

Calgary big law summer salaries are $75k-85k annualized as far as I know

[Dinsdale]

Bay Street summer / articling salaries were $1,900/week last time I checked.

Anyway, obviously articling student compensation varies widely across the country.  My point was, you often hear it said that "we don't make any money off students" because it is true for 90% of summer and articling students in Bay Street firms, and also likely true in the Vancouver / Calgary / Montreal / Ottawa offices of those firms, though I don't have as much first-hand experience with the latter.

[myth000]

I don't care about Big Law. Why does every topic have someone chiming in about Big Law and then generalizing their experience to the entire legal profession? Only 20% of lawyers work in big firms; most students will not end up in such firms. If students are being paid $100,000, then maybe it's possible that the firm just breaks even when they hire a student, but this is not the norm. There is no point in being deliberately obtuse and claiming that it is.

[LMP]

Firms that "make money" on students probably aren't doing it through billing. Especially when you consider what gets written down. 

Where I can see students being a net good (in an immediate fiscal sense) is at firms that hand a lot of the administrative work off. Those smaller firms that essentially make summer students legal assistants with more porous boundaries. 

[myth000]

Students can and do work as essentially law clerks.  Law clerks do everything other than appearing in court.  

[Dinsdale]

30 minutes ago, myth000 said:

I don't care about Big Law. Why does every topic have someone chiming in about Big Law and then generalizing their experience to the entire legal profession? Only 20% of lawyers work in big firms; most students will not end up in such firms. If students are being paid $100,000, then maybe it's possible that the firm just breaks even when they hire a student, but this is not the norm. There is no point in being deliberately obtuse and claiming that it is.

Because you "hear it said ad nauseum" that articling students are not profit centres, when you believe it is untrue.  Which is false.  The statement that firms make no money on students is very much true for a significant proportion of articling students in Ontario; possibly the majority.  How many students graduate from Ontario law schools annually, about 1,000 to 1,100?  How many articling positions are there on Bay Street?  At least 500 I expect.   In any event, fine.  If your argument is that a sole practitioner will only hire a student if it is likely to be profitable, then sure, I agree.  Sole practitioners typically have tight budgets and aren't in the habit of deliberately losing money in the short term.

Also, the firm has to collect a heck of a lot more than $100,000 (i.e. the salary) to "break even" on a student.

Edited March 29 by Dinsdale

[LMP]

23 minutes ago, myth000 said:

Students can and do work as essentially law clerks.  Law clerks do everything other than appearing in court.  

Is this in response to me? I don't get your point here. I was agreeing with you that it is possible for students to be hired and the firms to make money off them. I'm not really following how your post relates to that? 

[myth000]

1 minute ago, LMP said:

Is this in response to me? I don't get your point here. I was agreeing with you that it is possible for students to be hired and the firms to make money off them. I'm not really following how your post relates to that? 

I was just saying that there is more money to be made by billing them for law clerk-type work, like drafting pleadings, than by using them for legal assistant-type work, such as scheduling appointments. 

[Diplock]

The starting fallacy of this argument is that just because a firm can theoretically generate a bill that charges $100-200/hour for the time of a summer student, that creates a client willing to pay the bill. And the logic goes downhill from there.

[myth000]

1 minute ago, Diplock said:

The starting fallacy of this argument is that just because a firm can theoretically generate a bill that charges $100-200/hour for the time of a summer student, that creates a client willing to pay the bill. And the logic goes downhill from there.

It sounds like you are making an anecdotal argument. Most clients pay, and the average firm recovers more than 80%. Your own recovery rate may be low, but you shouldn't generalize. If you are hiring a student for minimum wage, then even if half the bills are not paid, you can still break even.  But that is not likely to happen.  Clients don't care if clerks do the work as long they believe the lawyer is supervising.   

[Dinsdale]

4 minutes ago, myth000 said:

It sounds like you are making an anecdotal argument. Most clients pay, and the average firm recovers more than 80%. Your own recovery rate may be low, but you shouldn't generalize. If you are hiring a student for minimum wage, then even if half the bills are not paid, you can still break even.  But that is not likely to happen.  Clients don't care if clerks do the work as long they believe the lawyer is supervising.   

Fallacy #2: you do not "break even" if you recover only the student's salary.   Are you familiar with the concept of overhead?

[Diplock]

3 minutes ago, myth000 said:

It sounds like you are making an anecdotal argument. Most clients pay, and the average firm recovers more than 80%. Your own recovery rate may be low, but you shouldn't generalize. If you are hiring a student for minimum wage, then even if half the bills are not paid, you can still break even.  But that is not likely to happen.  Clients don't care if clerks do the work as long they believe the lawyer is supervising.   

Your need to comment on my practice like you think you have a clue only emphasizes your desire to sound like you know what you're talking about rather than learning from people with knowledge. I never imagined before running my own practice I knew what that reality actually entails. Speaking as someone who has an unhealthy sized ego, even I can barely imagine the hubris required to go that far.

[myth000]

Just now, Diplock said:

Your need to comment on my practice like you think you have a clue only emphasizes your desire to sound like you know what you're talking about rather than learning from people with knowledge. I never imagined before running my own practice I knew what that reality actually entails. Speaking as someone who has an unhealthy sized ego, even I can barely imagine the hubris required to go that far.

The statistical fact is that the average recovery rate is above 80%, so logically, the only reason you would think it was different is if that has not been your personal experience. I have no interest in disparaging your practice; I am just inferring the reason why you might believe the recovery rate is low. As I said in my first comment, I want to see hard facts that prove the generalization that students don't make money for the firm.

[Dinsdale]

The average recovery rate on bills issued to clients is very likely over 80%, sure (actually much higher than that at any successful practice) but you are again missing the fact that lots (and I mean lots) of student time never gets billed in the first place, as the partner knows perfectly well that the client doesn't want to pay for some kid to learn the law.

[myth000]

You are assuming honest billing where student work is actually billed as student work rather than a senior counsel taking credit for it. If that is the practice in your firm, and if your firm also pays the student $100,000, then I can see how a student does not make money for the firm.

[Diplock]

11 minutes ago, myth000 said:

The statistical fact is that the average recovery rate is above 80%, so logically, the only reason you would think it was different is if that has not been your personal experience. I have no interest in disparaging your practice; I am just inferring the reason why you might believe the recovery rate is low. As I said in my first comment, I want to see hard facts that prove the generalization that students don't make money for the firm.

The terrible thing about arguing with you is that you have a terrible attitude and you are genuinely clueless. So I end up with this instinct where I want to correct the cluelessness without engaging with the attitude, and it's just about impossible. But here I go.

I don't care what the overall recovery rate of all legal billings happens to be. I have no idea where that number would be generated in some authoritative sense, but if you want to claim it's 80% I have no reason to argue with you. I'm not even going to get into my own practice area which is probably outside the framework of your assumptions along with vast swatches of the legal marketplace. I just want to engage with the central logical fallacy here.

Your basic argument is that if 80% of all bills are paid then any bill a lawyer generates has an 80% chance of being paid. So lawyers should just hire more students, bill their existing clients at $100/hour for the student, and watch the money pour in while paying their students very well as 80% of those bills are collected. And that is, due respect, completely fucking insane.

You genuinely don't know the legal marketplace. I mean, you just don't know. And if you wanted to learn, rather than bitch, there are people here who'd teach you. Except that I briefly forgot your entire presence here is really just an extension of feeling screwed by the legal profession you no longer want to enter, so I don't know why I'm surprised. Mainly, I'm posting for others at this point.

Here's a basic snapshot of the reality. Almost all clients have a limited tolerance for legal billings. They have a budget. Sometimes that budget is very explicit - as in they are able to pay X for the matter they are involved with and no more. Virtually all Legal Aid work exists in this framework btw (and I won't even engage with how far off reality you are there) but even when the budget isn't explicit it's still real. Clients don't just pay whatever bills you lob at them. They do, in fact, have limits. And if this information is outside the reality you've assumed, you've got some basic remedial economics to study.

You don't want to accept anecdotal information that students are not routinely billed at the rates you suggest, that their hours are heavily written down, etc. So fine, you don't want to accept people simply telling you that happens. So I'm giving you the analytical framework. You've basically just assumed that any bill has an 80% chance of being paid, so lawyers should charge clients these rates and the money will appear. I'm telling you, on an abstract level, clients with that kind of flexible tolerance for legal billings are extremely rare. Maybe if you happen to be working on an app for the government no one blinks when your bills inflate overnight. Everyone else does care.

Most legal work exists completely outside the framework you imagine - nevermind that your ideas about event that framework are bunk. We aren't talking about clients who pay monthly bills in the five and six figures for ongoing legal support. We're talking about individual clients paying total legal bills in the $5k and $10k range. You can't just tack on a couple thousand dollars for student time spent researching and drafting and imagine throwing that amount on a bill will generate additional revenue. You just can't. And your insistence it should happen that way because 80% of all bills are recovered isn't going to bend reality in that direction, no matter how many times you type it into the Internet.

Hope that helps with your knowledge base. The attitude, I leave to you.

[Dinsdale]

11 minutes ago, myth000 said:

You are assuming honest billing where student work is actually billed as student work rather than a senior counsel taking credit for it. If that is the practice in your firm, and if your firm also pays the student $100,000, then I can see how a student does not make money for the firm.

Not sure I follow what you are saying here, but (1) Bay Street firms pay students $100,000/year because that is the going rate for the top achievers they wish to attract, and they see said students as a long-term investment that may pay off in 3-4 years' time.  There is no expectation to "make money" on them until that point; and (2) senior counsel don't dishonestly "take credit" for student work, they remove it from their invoices because the client has no tolerance to pay for it (see Diplock's post above) and quite often it is of limited utility to the client anyway.

[myth000]

19 minutes ago, Diplock said:

The terrible thing about arguing with you is that you have a terrible attitude and you are genuinely clueless. So I end up with this instinct where I want to correct the cluelessness without engaging with the attitude, and it's just about impossible. But here I go.

I don't care what the overall recovery rate of all legal billings happens to be. I have no idea where that number would be generated in some authoritative sense, but if you want to claim it's 80% I have no reason to argue with you. I'm not even going to get into my own practice area which is probably outside the framework of your assumptions along with vast swatches of the legal marketplace. I just want to engage with the central logical fallacy here.

Your basic argument is that if 80% of all bills are paid then any bill a lawyer generates has an 80% chance of being paid. So lawyers should just hire more students, bill their existing clients at $100/hour for the student, and watch the money pour in while paying their students very well as 80% of those bills are collected. And that is, due respect, completely fucking insane.

You genuinely don't know the legal marketplace. I mean, you just don't know. And if you wanted to learn, rather than bitch, there are people here who'd teach you. Except that I briefly forgot your entire presence here is really just an extension of feeling screwed by the legal profession you no longer want to enter, so I don't know why I'm surprised. Mainly, I'm posting for others at this point.

Here's a basic snapshot of the reality. Almost all clients have a limited tolerance for legal billings. They have a budget. Sometimes that budget is very explicit - as in they are able to pay X for the matter they are involved with and no more. Virtually all Legal Aid work exists in this framework btw (and I won't even engage with how far off reality you are there) but even when the budget isn't explicit it's still real. Clients don't just pay whatever bills you lob at them. They do, in fact, have limits. And if this information is outside the reality you've assumed, you've got some basic remedial economics to study.

You don't want to accept anecdotal information that students are not routinely billed at the rates you suggest, that their hours are heavily written down, etc. So fine, you don't want to accept people simply telling you that happens. So I'm giving you the analytical framework. You've basically just assumed that any bill has an 80% chance of being paid, so lawyers should charge clients these rates and the money will appear. I'm telling you, on an abstract level, clients with that kind of flexible tolerance for legal billings are extremely rare. Maybe if you happen to be working on an app for the government no one blinks when your bills inflate overnight. Everyone else does care.

Most legal work exists completely outside the framework you imagine - nevermind that your ideas about event that framework are bunk. We aren't talking about clients who pay monthly bills in the five and six figures for ongoing legal support. We're talking about individual clients paying total legal bills in the $5k and $10k range. You can't just tack on a couple thousand dollars for student time spent researching and drafting and imagine throwing that amount on a bill will generate additional revenue. You just can't. And your insistence it should happen that way because 80% of all bills are recovered isn't going to bend reality in that direction, no matter how many times you type it into the Internet.

Hope that helps with your knowledge base. The attitude, I leave to you.

I find your response to be more focused on attacking me personally than addressing the substance of the discussion. Your assumptions about my attitude, motivations, and background are not only unhelpful but also largely irrelevant to the topic at hand.

I'm here to have a fact-based discussion about legal billing practices and economics, not to be psychoanalyzed or condescended to by a stranger on the internet. If you have actual data or evidence that refutes the 80% recovery rate I referenced, then present it. But spare me the lectures about my supposed lack of knowledge or the realities of the legal marketplace.

It's quite presumptuous of you to dismiss my perspective as entirely outside the realm of reality just because it doesn't align with your anecdotal experiences. I never claimed that my experience was universal, but I also don't accept that it has no bearing on the discussion just because you say so.

If you want to have a substantive debate about the applicability of the 80% recovery rate to different types of legal work, then bring some concrete evidence to the table. But if all you have to offer are personal attacks and unsubstantiated opinions, then don't be surprised when I have no interest in continuing this conversation.

I'm not here for your unsolicited mentorship or life advice. I'm here to discuss the facts and data surrounding legal billing practices. If you can't engage with the topic on that level, then perhaps it's best we end this unproductive exchange.

[Diplock]

Just to add to my points above, I don't want to engage with @myth000 any more because whether he realizes it or not (and I don't think he does) he's sucking us all into sealion territory. And thank you to this forum for teaching me about that lately. Great term to have available. Because what we're talking about here is something that lawyers in real practice know and feel on a day-to-day level, but proving it somehow is damn near impossible. I want to step away from proving it for a moment and bring this back to reality.

Talking about legal billings as though it's a topic divorced from the delivery of legal services is a mistake only a law student or perhaps a very green associate could ever make. Clients are paying to get work done - they don't care very much how it gets done as long as it gets done well. We can talk about marketing and the stupid things that clients care about that they shouldn't some other time, but the real task is simply getting the job done at a reasonable price. If a firm can do that, anything else is solvable.

So, let's stop talking about what a student can be billed at completely, okay? Because that is genuinely a distraction. If three hours of a student's time billed at $150/hour can add significantly more value to a file than one hour of a mid-tier associate's time billed at $450/hour then absolutely that student is contributing value. Which means that the bill should be paid willingly by a client (because the work is getting done) and the student should be compensated well for their work (because the firm is generating value). The question was never "is a client going to pay this bill when practice management software spits it out at them?" The question is "can the student actually deliver meaningful value on the file by working those hours?" If the answer is "yes" we're in the territory just mentioned. If the answer is "no" we're in fantasy land, as advocated by @myth000 where the value is irrelevant if you just bill the time.

That's why any time someone asks what students should be paid, knowledgeable lawyers want to talk about what that student can contribute in terms of meaningful value with their work - not how a bill gets generated. And the reality is, almost all of the time, a completely green summer student takes more time to supervise than their work is actually worth. In a practice where that isn't true, we can absolutely be talking about what that student deserves to earn. In a practice where it is true, the student is a net loss and more an investment in the future than an income-generating asset. I mean, honestly, if you've ever done HR work you know that onboarding a new employee at all - even a fully trained professional - takes significant time and investment. That's why unnecessary churn in a workforce is detrimental to any business. It strains credibility to imagine bringing on a student for just the summer is going to generate profit. That would have to be one star student, with significant related skills, ready to hit the ground running. Just saying.

Anyway. I'm not unwilling to have a conversation about this. But let's talk reality. The marketplace pays for actual work. Billings reflect reality. If students generate meaningfully valuable work for their employers during the summers they are employed, significantly in excess of the costs of having them in the first place, then that is the argument for paying them well. And that's true, btw, even if their time never appears on a bill. What they are billed at, or even if they are billed at all, is a complete distraction from the meaningful question at hand.