Justifying summer student pay [split]

[Dinsdale]

OK, just for fun, let's assume that your highly questionable proposition that any student legal work you care to add to an invoice will be recovered at 80% is accurate.  Let's also make the generous assumption that the student creates 1,000 billable hours in his or her eight months of articles.  We bill the student at $250/hour, so the gross revenue is (0.80)(250)(1,000), or $200,000.  We pay the student $100,000.  By any reasonable metric (at a firm large enough to be paying students $100K at least), the student's overhead amount is at least $150,000 (a very conservative estimate).  So we're still $50,000 in the hole on this top-performing student.  God knows where we are on the slackers.

Edited March 29 by Dinsdale

[myth000]

11 minutes ago, Dinsdale said:

OK, just for fun, let's assume that your highly questionable proposition that any student legal work you care to add to an invoice will be recovered at 80% is accurate.  Let's also make the generous assumption that the student creates 1,000 billable hours in his or her eight months of articles.  We bill the student at $250/hour, so the gross revenue is (0.80)(250)(1,000), or $200,000.  We pay the student $100,000.  By any reasonable metric (at a firm large enough to be paying students $100K at least), the student's overhead amount is at least $150,000 (a very conservative estimate).  So we're still $50,000 in the hole on this top-performing student.  God knows where we are on the slackers.

Thank you for a providing scenario that can be logically analyzed.  It's pretty ridiculous that a straightforward discussion about the financial viability of hiring law students has somehow turned into a bunch of personal attacks and accusations of "sealioning".  

The bottom line is that law firms are businesses. Analyzing whether a student's work brings in more money than it costs to hire and train them is a totally legitimate question. 

What's with the idea that asking for evidence is inappropriate or shows a lack of understanding? In court, when a family judge asks for evidence to prove a spousal support claim is it met with accusations of sealioning?  That the judge doesn't understand the "realities of family life"? But apparently, when it comes to discussing the business side of law, we're supposed to just accept anecdotal stories and vague references to the "realities" of practice?

The fact is, there's nothing wrong with taking a hard look at the numbers and making data-driven decisions.

[BlockedQuebecois]

The reason folks are reacting negatively to you demanding evidence is because: (i) you absurdly stated that nothing but objective accounting evidence from law firms would settle this internet debate, not even sworn affidavits from lawyers; and (ii) you keep making statements of fact without supporting evidence, notwithstanding your statement summarized above. 

If you want us to take “a hard look at the numbers and mak[e] data-driven decisions”, feel free to share the data on which you’re basing your statements. If you’re not going to do that, perhaps objecting to everyone else’s statements on the basis they’re anecdotes rather than spreadsheets is not the most persuasive approach? 

[Yogurt Baron]

When I was an aspiring law student and this place was 80% applicants, 18% students, and a couple of lawyers, I was happy to hold forth because, hey, nobody here knew any better than I did. Some guy behind a keyboard says he's a lawyer? Well, I've got a keyboard too, fuck you.

Decades later, I know a hell of a lot more than I used to know, but I'm also a lot more aware that others know far more than I do. So I don't hold forth nearly as much. Working in a paraprofessional role, I could probably tell you more about legal topic X than some lawyers who focus on topic Y could...but also, we've got practitioners here who practice in topic X, and people are better off hearing from them than from me. A little knowledge is a dangerous thing, etc.

Sometimes "you don't know enough about this to be worth arguing with" isn't an ad hominem. Sometimes it's just how it is. If someone walks in ignorant with a question, there are plenty of people here who'll answer it. But if someone walks in ignorant with an assertion, there are plenty of people here who'll answer that, too.

[myth000]

2 minutes ago, BlockedQuebecois said:

The reason folks are reacting negatively to you demanding evidence is because: (i) you absurdly stated that nothing but objective accounting evidence from law firms would settle this internet debate, not even sworn affidavits from lawyers; and (ii) you keep making statements of fact without supporting evidence, notwithstanding your statement summarized above. 

If you want us to take “a hard look at the numbers and mak[e] data-driven decisions”, feel free to share the data on which you’re basing your statements. If you’re not going to do that, perhaps objecting to everyone else’s statements on the basis they’re anecdotes rather than spreadsheets is not the most persuasive approach? 

The people making the generalization about students are the ones with the burden of proof, not me. You should know the basic rules of evidence. When arguing in their own defense, sworn affidavits by lawyers with facts baldly stated won't be given credence by an actual judge unless there are attachments containing accounting evidence.

There is something very off about this forum. It doesn't have many reasonable people, or maybe it's just the regulars such as yourself that are the problem.  

[CleanHands]

1 minute ago, myth000 said:

The people making the generalization about students are the ones with the burden of proof, not me.

You are also making generalized assertions about the value of law students as employees though.

I know you're just going to write me off as one of the regulars here who always agrees with all of the other regulars, but I actually don't purport to know anything about the economics of law student value to firms either way (I have almost no private sector experience in law). I just don't understand how there would be a burden on only one specific party here in the face of two competing assertions.

[Diplock]

I still haven't got beyond "prove with numbers and evidence that the value of work actually performed matters, rather than the ability to issue a bill demanding payment for it." I'm amazed anyone else is willing to continue to engage beyond that point. But to those that want to, have at it.

[myth000]

DipBlockedHandsBaron has been written off.  But let's be clear: the primary burden of proof here lies with those who made the initial generalization about law students being categorically unprofitable. I don't have an obligation to prove the opposite simply because I questioned that unsubstantiated assertion.  Providing some evidence for my argument would certainly bolster my case and make it more persuasive. But it's supplementary to the core burden of proof, which remains with the initial claimants.

[BlockedQuebecois]

1 hour ago, myth000 said:

I find your response to be more focused on attacking me personally than addressing the substance of the discussion.

 

3 minutes ago, myth000 said:

DipBlockedHandsBaron has been written off. 

Amazing what can change in an hour. 

[Diplock]

At @myth000. Let's be categorically clear. Literally everyone reading your assertion that you have the right to declare the framework of this discussion, as well as the legitimate participants in this discussion, thinks you are a clown. This discussion is continuing because of you and it is continuing about you but literally no one is continuing this discussion with you. Just FYI.

[myth000]

Written off. 

[Yogurt Baron]

Look, myth, I'm more sympathetic to you than you think I am.

You've come here, initially, to cry on our shoulders about how you didn't fit in at law school. Now you're not fitting in on the forum. I mean, my question to you would be:

52 minutes ago, myth000 said:

The people making the generalization about students are the ones with the burden of proof, not me. You should know the basic rules of evidence. When arguing in their own defense, sworn affidavits by lawyers with facts baldly stated won't be given credence by an actual judge unless there are attachments containing accounting evidence.

There is something very off about this forum. It doesn't have many reasonable people, or maybe it's just the regulars such as yourself that are the problem.  

Do you encounter a lot of communities where people respond to you with the deference one would show "an actual judge" in a court of law? I'm assuming you don't. I'm assuming you do, however, encounter a lot of communities where you find that you don't fit in, and where you then announce that the people there are "written off" - because they're bullies, because they were mean to you, because they wouldn't engage with you on your terms. I say, kindly: this is a you problem, and unless you sort your interpersonal shit out, it's not going to get better.

Ever hear the old saw, "If you run into an asshole in the morning, you've met an asshole, but if you run into assholes all day long, you're the asshole?" I'm not calling you an asshole, exactly, but the underlying principle applies. CH, BQ, Diplock and I are extremely different people. (The only two things I'd say we have in common are that we all like a scrap and we all have nothing better to do than engage with this bullshit on a long weekend.) It doesn't worry me that you don't like any of us. But the "everyone who won't play with me is one big indistinguishable mass of in-cahoots bullies" is not going to serve you well if you hope to become a professional (and I'm not clear on whether you still do).

Edited March 29 by Yogurt Baron

[canuckfanatic]

1 hour ago, Diplock said:

I still haven't got beyond "prove with numbers and evidence that the value of work actually performed matters, rather than the ability to issue a bill demanding payment for it." I'm amazed anyone else is willing to continue to engage beyond that point. But to those that want to, have at it.

This is precisely the reason why I didn't respond to them when they responded to me on the other thread. One look at their initial comment was enough to realize that any discussion with them would rapidly devolve.

Oh look, it did!

[myth000]

I don't care for the strange turn of this thread from economic matters to psychoanalysis. I'll end this thread with something I find more thought-provoking.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices'." - Adam Smith

[Yogurt Baron]

Just now, myth000 said:

I don't care for the strange turn of this thread from economic matters to psychoanalysis. I'll end this thread with something I find more thought-provoking.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices'." - Adam Smith

As someone said upthread (jeez, I guess maybe we are all the same person!), even leaving aside substance, the imperious tone you bring is in and of itself deeply irritating, and I promise you, if you're going around acting like this in real life, you're rubbing people the wrong way. You don't get to dictate that you're "ending this thread", much less with a not-too-veiled declaration that you think everyone's engaged in a conspiracy against you, and also, no one except for maybe your mom cares what you do and don't "care for". Exactly who in the fuck do you think you are?

I'm not seeing any "psychoanalysis"; just people trying, with varying levels of patience (mine is wearing thin, so I'm going to bow out now), to help you get along better with others. Looks like a lost cause.

[myth000]

WTF. 

[GoatDuck]

This thread was truly a Warhammer 40k

[loonie]

Completely agree with the common sentiment being expressed in this thread. However, I just wanted to touch upon the following quickly because I'm genuinely curious: 

6 hours ago, Dinsdale said:

  By any reasonable metric (at a firm large enough to be paying students $100K at least), the student's overhead amount is at least $150,000 (a very conservative estimate).  So we're still $50,000 in the hole on this top-performing student.  God knows where we are on the slackers.

@Dinsdale Are you suggesting that the average student's overhead cost to a firm in Big Law is $150K+ per student? Intuitively, this seems kind of ridiculous. Are you arbitrarily factoring in variables such as cost of rent per square foot of office space the student utilizes? Otherwise, I find it difficult to think of any overhead costs that could be attributed to such a figure. 

Edited March 30 by loonie

[WiseGhost]

To get back to what this conversation was originally about, I think that students are not as much of a burden as some claim.

Bay street firms likely aren't breaking even when they pay students a $100k annualized salary, but that is not the only situation where firms hire students. Relatively low paid students can do time consuming research work that lawyers would otherwise have to do, write articles to increase firm visibility, do admin tasks, etc. A good student can provide value. 

This is based on my personal and inexperienced analysis of the situation, and I won't pretend otherwise. But sometimes people act as if hiring law students is a huge favour, and I think that is an incomplete take. 

[Turtles]

27 minutes ago, loonie said:

Completely agree with the common sentiment being expressed in this thread. However, I just wanted to touch upon the following quickly because I'm genuinely curious: 

@Dinsdale Are you suggesting that the average student's overhead cost to a firm in Big Law is $150K+ per student? Intuitively, this seems kind of ridiculous. Are you arbitrarily factoring in variables such as cost of rent per square foot of office space the student utilizes? Otherwise, I find it difficult to think of any overhead costs that could be attributed to such a figure. 

Just wait until you find out how much enterprise technology licenses, group benefits, employer-paid payroll taxes, meals, direct reimbursable expenses, training, events, and Bay St rent and utilities cost.  Your salary is a small part of the picture. Then add in the time of assistants and support staff who make your job easier (and thereby lead you to bill more). When those factors make your billable rate possible and workload possible, it's not arbitrary to use it as the cost base against which your revenues are adjusted,

If such high overhead feels wrong to you, you should look up what's market for associate fee splits. Overhead is expensive. While big law has more lawyers, and therefore a bigger base against whom overhead is spread, it also tends to have a lot of expensive "extras" to compete against the biggest players, so it's not miraculously lower.

Big law should pay students and juniors more, but it has less to do with what is fair or just, and more to do with retaining top talent.

[loonie]

36 minutes ago, Turtles said:

Just wait until you find out how much enterprise technology licenses, group benefits, employer-paid payroll taxes, meals, direct reimbursable expenses, training, events, and Bay St rent and utilities cost.  Your salary is a small part of the picture. Then add in the time of assistants and support staff who make your job easier (and thereby lead you to bill more). When those factors make your billable rate possible and workload possible, it's not arbitrary to use it as the cost base against which your revenues are adjusted,

If such high overhead feels wrong to you, you should look up what's market for associate fee splits. Overhead is expensive. While big law has more lawyers, and therefore a bigger base against whom overhead is spread, it also tends to have a lot of expensive "extras" to compete against the biggest players, so it's not miraculously lower.

Big law should pay students and juniors more, but it has less to do with what is fair or just, and more to do with retaining top talent.

I guess where we disagree is that I feel like using the term overhead costs in such a way is silly. 

That's not the overhead cost of hiring a student per se, but an overhead cost of the firm operating in a particular location for the purpose of carrying on business. All business incur overhead costs and I'm not saying overhead costs in itself are not expensive, but I've never heard of it being attributed as a cost of having employees work there. If we go down such a path, we also have to include that all employees (admin clerks, law clerks, legal assistants) are costing the firm hundreds of thousands of dollars in overhead costs. It becomes a somewhat meaningless metric for what we are trying to argue. Not to mention it changes drastically between each firm -- which is the reason I said it was arbitrary -- because one firm might provide a student with a 60-100 square foot office, whereas another firm will have 10 students working within the same 100 square feet in cubicles. It just seems wrong to allocate rent costs and fee splits with regards to students. I can see it being more reasonable to discuss in terms of associates and partners who utilize support staff and assistants, and where you can more accurately attribute office space rent towards. 

Instead, when I think of overhead costs attributed to students, I think it makes more sense to include costs such as software licensing fees, articling fees, training programs, and things of that nature that you mentioned. Still, it will get no where near $100K+ per student. 

Edited March 30 by loonie

[Turtles]

20 minutes ago, loonie said:

I guess where we disagree is that I feel like using the term overhead costs in such a way is silly. 

That's not the overhead cost of hiring a student per se, but an overhead cost of the firm operating in a particular location for the purpose of carrying on business. All business incur overhead costs, but I've never heard of it being attributed as a cost of having employees work there. If we go down such a path, we also have to include that all employees (admin clerks, law clerks, legal assistants) are costing the firm hundreds of thousands of dollars in overhead costs. It becomes a somewhat meaningless metric for what we are trying to argue. Not to mention it changes drastically between each firm -- which is the reason I said it was arbitrary -- because one firm might provide a student with a 60-100 square foot office, whereas another firm will have 10 students working within the same 100 square feet in cubicles. It just seems wrong to allocate rent costs and fee splits with regards to students -- I can see it being more reasonable to discuss in terms of associates and partners who utilize support staff and assistants, and where you can more accurately attribute office space rent towards. 

Instead, when I think of overhead costs attributed to students, I think it makes more sense to include costs such as software licensing fees, articling fees, training programs, and things of that nature that you mentioned. Still, it will get no where near $100K+ per student. 

Look up variable vs fixed overhead.

[loonie]

Just now, Turtles said:

Look up variable vs fixed overhead.

?? Lol. Are you saying rent is not a fixed overhead cost? 

[Turtles]

Just now, loonie said:

?? Lol. Are you saying rent is not a fixed overhead cost? 

What do you think happens when the firm grows by adding an nth fee-earner? What do you think happens when it shrinks? Rent is "fixed" until they need to add space, then it grows as productivity grows (variable), then it remains more fixed-like until the new capacity is again hit or they shed need for the new space, etc. Remember, if the firm shrinks, it may be able to give up space (e.g., an entire floor or half floor, etc) to save significant $$$ in rent. Effectively, it's pretty hybrid. (Some inefficiencies result from actual availability of space or interest in others to take your space or terms of long-term leases, etc, but we digress.) 

[loonie]

1 hour ago, Turtles said:

What do you think happens when the firm grows by adding an nth fee-earner? What do you think happens when it shrinks? Rent is "fixed" until they need to add space, then it grows as productivity grows (variable), then it remains more fixed-like until the new capacity is again hit or they shed need for the new space, etc. Remember, if the firm shrinks, it may be able to give up space (e.g., an entire floor or half floor, etc) to save significant $$$ in rent. Effectively, it's pretty hybrid. (Some inefficiencies result from actual availability of space or interest in others to take your space or terms of long-term leases, etc, but we digress.) 

This is kind of silly to bring up with regards to students, no? This was already discussed in our posts above and why I believe it is silly to factor in overhead costs as a method of trying to figure out how much of it could be allocated to a single student. Not even necessarily wrong, just redundant. 

I think it's implied and obvious that rent costs could be variable if a firm decides to increase or decrease the amount of office space they use. This is not what we're talking about here though. It is not common for firms to be constantly expanding or altering their leases and such a decision will rarely be caused by student hiring decisions. Students very rarely drive or grow a firm's productivity. Again, I understand that you're trying to say students using office space = more rent costs. But, like I said before, this seems arbitrary as it will drastically depend upon the space allocated to students by the firm and, using this method, you must say that, in each given firm, support staff, assistants, and admin clerks (who typically use the same amount of office space as students) are also costing the firm hundreds and thousands of dollars. 

Now, like I previously stated, if we're talking about associates and partners, then I think it is much more reasonable to discuss things like fee-splitting and allocating rent costs per associate/partner, as they have more fixed office spaces, resources, and actually use support staff and assistants. Importantly, unlike students, associates and partners do, in fact, impact a firm's productivity and, in doing so, their production can cause a firm to have to increase or decrease their rent space and other additional costs such as support staff/assistants. It, therefore, makes sense to attribute these costs to them in order to adjust revenue and find out how profitable their production actually is due to the variability of such.

Edited March 30 by loonie