20220807 How to Understand the Prestige Level of Law Firms and What it Means for the Careers of Attorneys Working in Each
[00:00:00] All right, so we're gonna get started. This is actually very important, I think, webinar in a lot of respects and topic. It may be for some people one of the most important, topics you ever hear, because it involves the choices that you're going to make in your legal career about where to work and about the a lot of preconceptions you have, it involves your ego.
It also involves understanding different types of firms choices you make. Your choices are going to be depending on these different prestige levels are going to really have a lot to do with how happy you are practicing law depending on your personality type and just an awful lot of very important, very crucial information.
And it will also tell you if you're inside a law firm and you're in a recruiting role there what, where your firm, how your firm appeals to attorneys, how it doesn't appeal to attorneys the type of people you should be attracting to your firm. If you're applying to firms, it'll tell you.
The type of firms, you should be applying to the type of firms that are a reach, the type of firms that are [00:01:00] beneath you in terms of your experience and a whole lot of other stuff. And this is in my opinion one of the most important topics any attorney can listen to and understand or any law student or any person inside of a recruiting role in a law firm.
And it's something that is we've always kept confidential. But I think that it's important enough for you to understand it that that it will help you quite a bit. So it, what, just in real briefly I will do this presentation. I'm gonna try to do the whole presentation if I don't do the whole presentation.
I, at the end of the presentation, I'm gonna share a sh a chart with you of all this information and I'll put it in the the chat to everyone. But this and then we'll also do questions. There's a lot of information to cover and people may have a lot of questions. So if you do have questions, I'm definitely gonna try to answer them at the end, but this is there's a lot of things to cover today and it's it's, there's, its, it should be very interesting if you're concerned about the type of law firm you're working in, why you're working and so forth.
Every attorney that comes into BCG and every law firm that's in [00:02:00] BCG is ranked and you're essentially ranked and law firms are essentially ranked based on what I would say is access to money. And what that means is the law firms, essentially the type of money that they're accessing.
And and so the firm rank that's a one is typically consumer facing firms. They typically represent unsophisticated consumers for the most part that primarily do not have a lot of money to spend. So that may mean they're doing simply, they're doing personal injury, they're doing things along those lines.
And in later presentations, I will talk about the practice areas. They may be doing consumer facing trust, the states, consumer bankruptcy things along those lines. Now, just because it's a firm rank, one does not mean that the attorneys working there are bad attorneys. As a matter of fact I'm having a party tonight.
And one of the people coming is a guy that has That was a, I think it was a us attorney. He was a youngest graduate in history of Harvard law school. And and started a personal injury firm. I've known other people. Another guy that worked for me was third in his [00:03:00] class at university of Texas law school.
And and he started a firm line. That's a consumer facing firm. So just because you own McDonald's does not make you dumb lots of attorneys choose to work in firm rank one or start firm rank one firms. And because it's a very good thing for them. Now, there's obviously different hiring standards.
A lot of times at those firms. And a lot of the work that's done is different. That's different, obviously running to McDonald's and it is a five star Michel in the restaurant. But at the same time that's a lot of people choose this and there's nothing wrong with it. It's not a, it's not an indictment of anything, but there are characteristics that go along with working at those firms.
A firm rank too, is typically working for consumers. They may also represent some small businesses but that's not typically the majority of their work. Insurance defense is an example of a typically would be most insurance defense firms are even though they're representing insurance companies that, which are big companies, the insurance companies most often do not have a lot of money to spend on their attorneys.
So that would be a firm rank too. But [00:04:00] for the most part firm ranked twos are representing consumers and small, smaller businesses think local law firms that represent upstarts and things that are, may not have a lot of money to spend or smaller businesses. So they represent slightly more sophisticated clients with more money to spend.
So those clients, again, may have businesses. They may be wealthy individuals or, people with money, but they're not that sophisticated. And I'll talk a little bit about that. Firm rank three are primarily firms that represent small to medium sized businesses that have money to spend, but are cost conscious, but not overly cost conscious.
So if you send someone in a firm that's, if a firm rank one, bill sends a bill for $10,000, the client's gonna be very scared. If they send a bill for $15,000 the client to a firm rank two that the client may not be as upset but at a firm rank one, that's definitely gonna be the case firm rank three can send out much larger bills.
But they typically the clients are gonna be cost conscious and and they're gonna be a little bit more [00:05:00] sophisticated in terms of how they view the bills. So most. Law firms that are get, beyond a a certain number of attorneys in large cities and medium size cities and even smaller markets would be firm rank twos.
Your most common firms of course, are your firm rank ones. Those are what most firms are firm rank. Two firms are firm that are also very common and firm rank. Three firms are when a firm's just starting to grow and get access to larger clients firm rank four. And just to give you a kind of a quick overview of how firms start and so forth when Quinn Emmanuel is a perfect example when they started they started off representing smaller clients they would do employment defense.
There wasn't a lot of money in that at the time. They were probably a firm rank too. They did more and more employment defense and started getting commercial litigation. And then they started getting larger clients and eventually became a firm rank for as that started happening. And what a firm rank for is a firm rank for is most of your AmLaw 100 and 200 firms they're representing [00:06:00] medium to large size businesses.
Those businesses do have money to spend meaning. They're certainly want the best attorneys working for them. They they're they're the big firms that everyone wants to work at. They pay the most, and they're really very good law firms. But there's differences between firm rank fours, obviously firm rank threes a firm rank for is a little bit more established.
They have tend to have very good names nationally. Sometimes they can be local, extraordinary boutiques that represent very big clients. But for the most part, other the firms you've heard of your firm three ranked three firms are firms that may be trying to become firm ranked fors.
And but they're not quite there. They will have people in there from the best law schools that did well there and so forth. There's nothing wrong, many times they're regional firms and located in a state or region sometimes they're national. But they don't really have the pricing power and name of a firm rank for, and then of course you have your firm rank five, which are represent the largest and most prestigious [00:07:00] businesses.
And these firms many times are their clients are absolutely very less cost conscious. They can send out bills for hundreds of thousands, if not millions of dollars a month. And pretty much know that their clients are gonna pay them and not have to worry about it. And and they hire obviously the top people and so forth.
And they're more like a I would say they're more like a, very fine Michelin star restaurant than than even a very good local restaurant they're and there's very few firm rank fives. And I'll talk a little bit about that in, in, in in the future, but the thing to understand about all of these rankings whether it's a firm rank one or a firm rank five.
Is your qualifications are typically what qualifi you to or, and to work in one of those. So depending on the choices you've made in your career, you may choose to work in a one firm. If even if you have five qualifications, you may choose to work in a four firm instead of a five firm. Even if you have the ability to do it firms that are firm rank fives and threes and so forth are typically hiring a [00:08:00] certain type of person and know that certain types of people will take offers others.
Firm rank fours for the most part are fighting over all the same people that they want. And I'll talk a lot more about these rankings in a few minutes, but it's really all about access to clients, willing to write large checks. And the way to think about it, when you think about clients writing large checks is if a client can write very large checks, obviously the attorneys are gonna do more work on every matter.
And the quality of the work that's produced is going to be better. And the attorneys that are trained to do extra work and lots of detail are gonna have a different set of skills than attorneys that have to get things out the door quickly, cuz the clients will pay. And that, that this little introduction piece of discussing that is really the crux of this.
Again, this is a very Complex topic, and I'm gonna talk today a lot about it, but it's important to understand if you're a candidate, the type of firms we're typically sending people and the, these are also by the way the types of firms that you should be applying to.
[00:09:00] So all the firms on BCG are ranked and when we send firms to candidates, those firms are ranked. And when you look at our law firms, we have profiles of all the law firms on our website, and they're all ranked. And sometimes our rankings are off, that we have to, obviously make choices. But if you're at a five rank firm, we're typically going to send you jobs and firms.
First, we would send you the five jobs and then the four jobs and the three jobs, and we would display them to you in that order. But those are pretty much what we'd send to someone that's at a five rank firm. They're working for large businesses and have a certain set of skills. And that's pretty much how that works. And someone may go maybe be at, a senior associated five firm. We wanna go to a smaller firm or a firm where they can make partner, which might be a three firm as opposed to a four firm. So that's why we would do it that way. Your four ranked firms, we typically would send people two, three, and four and five firms.
People make career decisions to go to smaller firms, and there's nothing wrong with the four ranked attorney going do a two, two firm, many times they're happier and I'll spend a lot of that. In the future three [00:10:00] ranked firms, we typically will send people two, three and four firms. The reason we wouldn't send a three rank candidate, typically a one firm is because most one firms are almost all consumer facing. There's not really any business work going on there, but sometimes there is, and I'll talk about those practice areas and later presentations, but that's how that works. Then. Two rank firms will typically send one, two and three jobs. Every candidate we work with we try to get them into a higher rank firm than they're coming from.
If that's their goal. Sometimes their goal is to go to a lower rank firm. So two rank if you're coming in from a two rank firm you will go to typically be sent to a one, two or three firm. And sometimes the three firms have cutoffs most of the times. But there's lots of instances where people at one firms are able to go to two firms.
The people at two firms even sometimes get into four firms, but it's very rare. And then if you're at a one rank firm will typically gonna send you one in two rank jobs and firms. So this is also by the way one of the most important characteristics of how a candidate's ranked.
People don't understand [00:11:00] this but this is how the hiring market works, which is extremely important to understand. Your ranking as an attorney is based on your experience.
If you're at a five rank firm as an associate, you could have been in the middle of your class at a top hundred law school or top 200 law school. And if you've been there for three or four years, that's much more important than how you did in law school. The level of firm that you're working at in a titled position, meaning associate council partner, what, whatever that is not, as a contractor or something, but the title the ranking of the firm you're working in is how you are generally ranked.
Now not always, you could be. A very highly ranked candidate, a two firm or something for various reasons. But the ranking is essentially to match your experience up with the type of firm you should be applying to.
If you have experience at a one ranked firm, even if you went to Yale law school and were the, Yale law journal and then clerk for a circuit court if you've been working at a one ranked firm for five years, there's very few four ranked or five ranked firms that would even give you the light a [00:12:00] day.
It doesn't matter. Because your experience in your training is at a one firm. If you're at a five ranked firm and and you were went to a local law school and you were in the middle of your class, but you're an associate there. And you've been there for a couple years and are doing well. You can work in four firms and other five firms all day.
So people think that the law school they went to is important. People think that the, how they did in law school is important. People think their first their summer associate job's important. What's important is you the level of firm and the experience you're getting. So anybody can start at a one rank firm and move to a two rank firm, which is very common.
Once you get experienced a two rank firm doing business related work or whatever, or representing clients, that type of clients at a three rank, you can move to a three rank firm. And once you get a lot of experience working at a three rank firm, you can work at a four rank firm. Now it's very rare for people to move from a four rank firm to a five rank firm, but it happens.
And it happens quite a bit actually, but to move from a one to a five is very difficult to move to a one to a three to a four happens [00:13:00] all the time. People also, it's very common for people to start out at one or two firms and moved to four firms. Eventually all this stuff is possible, and this is the game.
This is why if you lateral from a two rank firm to a three rank firm, you'll get better experience. If you rank from a three rank firm to a four rank firm, you'll get better experience in the type of work. That those firms do and access to money. So this is all very from my standpoint fascinating and and really how the market works.
And it's all about your experience that you're getting at firms of different firms. We always send jobs and firms match their qualifications and ranking ones that are a rank that could be a reach for you. So we'll try to always send you a firm that is really no more than one ranking above what you're trying to do.
If you're at a four firm, we will send you five firms most of the time. We'll send you jobs where your qualifications may be better than the average attorney there. So we may send you firms at all levels.
Now there was one other point I did wanna make to you here.
I've seen people move from two to four for Frank firms. Very often you can do it if you're in a very hot practice [00:14:00] area at the right time. If real estate's taking off and going crazy and you're in a small market or a small firm, you could move to a floor ranked firm, same thing with corporate and other things. So it's a lot of times the choice, it's your experience and the focus of your experience that allows those movements.
This is what we do with candidates and law firms. It's the same thing. We try to send law firms, candidates experience to similar types of clients matters, meaning that they're trained with that access to money. And they do work in the same way candidates who may be experienced with larger clients in matters. Meaning that attorney match should be more qualified than the average attorney there and then candidates experience with smaller clients in matters which should be lower ranking.
What's interesting, by the way, Is a lot of times if someone's at a four or five ranked firm as a litigator, they say, oh, I wanna get more trial experience.
So they move to a one or two ranked firm, sometimes. That puts them into court immediately, cuz those are typically not motion heavy. And a lot of those attorneys will crash and burn. They will [00:15:00] literally get fired from firms where their qualifications are better than everyone there because they don't have that type of experience that you might get in the smaller rank firm.
So I'm just giving you like a taste of what I'm gonna be talking about in the next few minutes.
So these are the law firm ranking topics that I'm gonna try to cover today. I'll also provide everyone before the end of this with a chart that talks about each of these and then we'll go through each of these, but these are the kind of the topics and then there's a bunch of things that come under each of these that I'll talk about, but I just want to set the stage here.
We'll talk about the types of clients, the firms will work for depending on the firm ranking. How clients pay the firms depending on the firm ranking. Meaning, how are they paying and how the firm pays the attorneys depending on the firm ranking and what they pay their attorneys. We'll cover how firms are managed depending on firm ranking.
Firm management is very important. The higher rank firms are managed much differently than the lower rank firms. And that's important to understand. We'll talk about your employment security at different firms, depending on the ranking. So there's different types of employment security that you will have at [00:16:00] different firms depending on the ranking. And that's another choice that you're making when you go to one of these firms that you may not understand.
We'll talk about the support and resources you will get working there depending on the firm ranking. And we'll talk about how to get hired at firms of different rankings.
What are they looking for?
How do you get in the door?
We'll talk about the type of people you'll work with and their personalities that are likely and their egos and all sorts of things, depending on the firm ranking. We'll talking about, we'll talk about your advancement opportunities and your learning opportunities, depending on the firm ranking.
And we'll talk about where the attorneys go after working at those places, how they're treated in the market, based on the firm ranking the relationship they have or their work depending on the firm ranking, meaning how they approach work and so forth. And we'll talk about the type of work the attorneys are likely to do in inside of law firms, based on their firm ranking and seniority level.
We'll talk about the happiness and work life balance of attorneys based on firm rankings. And we'll talk about the chance of a attorney's own ego, which is believe it or not a very big thing [00:17:00] especially at a lot of higher ranked firms, hurting them and creating long term problems for them based on the firm ranking.
We'll talk about where you'll typically find firm of different rankings and where the locations are likely to be. And we'll talk about the types of surroundings and places and cities and things you'll likely work based on firm ranking.
So the first thing is the types of clients the firm's world for dependent and firm ranking.
And essentially we're talking about the ability of clients to open a spigot and payendless legal bills. Meaning, they can get bills of all sorts of things and the client all sorts of amounts and the clients will be happy to pay them. And at rank one firms you can see here how it works.
And I'm not gonna go into a ton of detail, but obviously if you're at a very low rank firm, the clients are paying small amounts of money for services. If anything and the higher up you go the more money clients are willing to pay. And that's when you start getting into your four and five rank firms, that's when you get, your [00:18:00] high market salaries, that's when you get your bonuses for hours, that's when all this stuff that goes along with practicing and the highest firms happens because those clients can open and pay endless legal bills.
This is really what a lot of 'em are after. The problem is, as you move up the, these levels your contact with a client gets more and more remote. The happiness of advising someone directly and so forth, goes away.
These are not all great things. And again some of the most successful attorneys I know are working at rank one firms.
Obviously anybody that starts at McDonald's is doing very well or has, or McDonald's is a very which would be a one a very successful company. Amazon is extremely successful company appeals to everybody.
It doesn't, it's not Luxury goods, retailer. It appeals to everyone. So it does, it just depends on the type of place. The sophistication of clients is again, is important. So the clients the more sophisticated of the client is obviously the more sophisticated the attorney work in there has to be.
So at your highest [00:19:00] level there's going to be all sorts of people reviewing your work. They're gonna wanna see they're gonna wanna know that the law firm has the very best people working there with the very best qualifications. The clients are going to have, make, be making lots and lots of money and and expect their attorneys to be topnotch.
And at the lowest of the the ranked firms the, most of the clients probably wouldn't, they may have heard of Harvard law school, but they're not gonna really know anything about the quality of your schools, or they're not gonna. They're not gonna care. It's all about your money. How much charge and whether or not the works free for them and all sorts of things. So the sophistication of clients is really what's happening obviously at your four and five firms. You start getting recruiting departments and all sorts of things that are making sure that the clients are well serviced, which is all part of that.
The middle market companies are the typically your mid-size companies, which is really in a lot of respects the meat and potatoes of the, what the mid-size to larger firms work on. So you can see here [00:20:00] that when you get up into the five most of the clients are gonna be the largest companies the most money to spend. And that's really the point of this, same thing major institutional clients means that these clients will trust them with everything. And they're large clients that are just writing checks. You could have a file from if you're working for a big company, a major law firm, that's a four or five, you could just basically pick up the file and start billing things to them six months after completing one matter. Just the major institutional clients are what keep the biggest firms in business. They have all sorts of issues that go along with them, because then you start getting all sorts of bureaucracy and so forth that that matches them. But it's a whole separate discussion.
If you are ranking for a one or two, two rank firm then you typically, the clients are gonna be leaving reviews on different websites and so forth.
If you're ranking for working for a four or five rank firm it's very low same thing with threes for the most part, but this is because of their how close they are to consumers. And so that's why it's just something to understand the close [00:21:00] you get to consumers, the more the consumer has a voice at a rank five firm. The clients don't really have time for that. And this is another thing here. The rank one, there's the very little chance that anything's gonna be reviewed by an outside attorney or general counsel. And then when you get into rank four and five, this should say highest or high rank for rank four. It becomes very high odds that the work's gonna be reviewed by an outside general counsel. And that just means that the quality of work has to be much higher as if the work is being reviewed by an outside general council.
If they see typos, they're gonna hit the roof. If they see mistakes, they're gonna hit the roof, they're gonna wanna know who worked on their matters. Outside general council is just a kind of a note to show you that other people that are reviewing the firm's work, that the client knows what's going on.
And so as you move up the chain, it gets much higher. This is the likelihood that the clients will not pay or negotiate bills rank one firm's attorneys and rank one firms and even rank two firms. A lot of times will say, they'll send the [00:22:00] bill and they're happy if they collect, 60%.
And if they're getting 80% are doing really well as you go up the ladder in terms of or down the LA up the ladder in terms of the prestige level or down, however you view it they, you get a lot of negotiation and and so forth. And the bills. Now it's not to say that rank four firms won't reduce their bills and so forth.
It's not to say that rank five firms don't do that on occasion, but the, for people that are represented by rank five firms typically do not do a lot of negotiation compared to rank two firms or even ranked three firms. Those firms are getting a lot of pushback on their bills. They have to be very careful.
They're writing off a lot more time. And so what you get and what the benefit of moving up, if you're a law firm of kind of moving up this chain is more respect for the firm, less negotiation more likelihood that the bills will be paid. Now, that's not to say that they're not but because you're working for deep pocket of people that are paying you very high rates and so forth they're more likely to do that.
So this has a lot of implications [00:23:00] for employment security of all sorts of things. And it's something obviously to keep in minding. And this is another one here. They, this is caring more about attorney quality than cost. Then you can see here something that we've already covered but it, the rank five firms, the firms are much more likely to care about the quality of the work than they are cost.
I've seen instances I was talking to I dunno, it's an attorney I dunno, solving Crowell not too long ago, which I would consider a five firm and they were upset that as a ninth year, the client was insisting that they do document review to look for a privilege documents or something.
And in a matter and really was happy to pay that rate. And it was something where they had to review the documents every day for, and report them or something I don't to, to some government agency. But the point is that. The at the highest level the law firm or the clients care more about the quality than the cost, and they become much more cost sensitive as you move up the line.
And here again is the educational pedigree. So the clients are gonna be very start getting [00:24:00] concerned about your educational pedigree when you're at a rank three firm that at the rank firm four firms it's very high. They, they do for the most part care about it. And the clients are smart enough to know the differences between schools and so forth.
Most of the rank four and five firms have in-house well, probably for the most part, all of them, but they have in-house general counsel and so forth, same thing with rank three, a lot of 'em do so they start being very concerned about the educational pedigree and the backgrounds and so forth with the attorneys.
And so in order to protect those relationships you start getting very rigid grade cutoffs and concerned about quality of law school and how you did and so forth, the higher you move up this food chain. Then same thing with law schools like that the clients would be concerned about how well he did in law school.
There's been instances where Gibson dun, which I would consider a five firm has had people that were, high up in may have been secretary of state or so I think there was an instance where someone was secretary of state, this is decades ago and trying to get into Gibson Dunn.
And they didn't like the fact [00:25:00] that the, this person that had been secretary of state had gotten a C or something when they were, Harvard law school or something, some great law school like that. So didn't hire them because of that. So the point is these large, and I don't know if that's how that firm operates today still, but they, these firms the highest ranked firms are gonna be very concerned about how you did in law school.
And their clients will often ask about it because they're paying higher high, hourly rates. And then again, the former prestige levels of your clients. So if you do switch firms at some point, and you move from a one to two, the clients, aren't gonna be really concerned if you move from a two to three.
And the, there might be concern might not, but if you move from a three to a four if you were practicing safe I dunno, family law, and you move to a, for firm, and now you're doing commercial litigation and the client finds out about that. They're not gonna like that. clients are typically, if they, if you have contact with the clients and tell them the firm you worked at before, and it's not a firm with high hiring [00:26:00] criteria as you move up, they may care about that.
This is another thing here. Some of these firms often will have a client more than 5% of their business. So you can see here that as you start getting in and this should be that one, client's more that this is not completely accurate in my opinion, this chart, but but it it should give you the idea that the rank one firms are very spread out.
They have lots and lots of clients maybe sometimes tens of thousands and very little business comes from one person or one client. And as you get into, as you move up the role here many times they do have clients that can be more than 5% of their business. And and this could be institutional clients are going a lot to, so that has its own set of risk.
And then this is another thing too, that's interesting. The clients can be bullied and ripped off by the firm. Rank one firms because the client doesn't really know what's going on. They can be they can tell their clients that they did all sorts of things and the client can be bulled and ripped off.
I was reading an article about a personal injury attorney in Los Angeles that for decades [00:27:00] wasn't paying his clients, their settlements and was considered one of the top attorneys in California. And I would say he was probably, his personal injury was so ranked one firm and and the clients at smaller law firms typically have the ability to the clients of that are working at smaller firms.
The clients can be bullied a lot of times by the firm and ripped off by the firm. And when I say ripped off the means the clients can be told that different type of work is necessary or they can they can be taken advantage of. And and unfortunately the less sophisticated the client many times the more that can happen.
And you certainly if you're a for firm representing a giant company, they're typically not gonna be bullied. They may get extra work, but usually there's some need for it that can be justified based on the client's ability to pay. And but as you go down the thing there you get a sense of that.
And then this is firms advertising online. So most of your one firms because [00:28:00] they're con getting work from consumers they're advertising pretty much anywhere they can. And as you go down to the five firms, it almost becomes the very not a good thing and very unrespected to even do any type of advertisement.
It's very rare that your four and five firms will hardly do any advertise. Now, your four firms may put ads, magazines occasionally, and do other things they may sponsor or events. But you don't see your five firms really do any advertise. Often, I there was a, it just doesn't happen.
But you're one and two firms, most of their leads and clients come from advertising. That's where you start seeing ads on buses and radio ads for tax resolution, all those sorts of things. So these are your lower rank firms need to attract consumers. And your higher rank firms typically have lots of institutional clients and do not do a lot of advertising.
And they get most of their business from referrals to the extent that even at your five rank firms and a lot of your four ranked firms, there's almost a predominant ethos [00:29:00] that you know, business and this doesn't always help the attorneys working there, but the business should come from the quality of your work and the quality of your firm and people referring things to you which is not necessarily the case that a lot of times, even with the four and five rank firms, the people that bring in the most business and so forth are out there, but they're certainly not advertising that line.
And then this is again no advertising. You can see here your one and two almost always do advertising your four and five hardly, very likely none. Your three firms will do advertising occasionally, but again not that often. So that's understanding of the types of clients.
Now, the next thing is how the firms pay the clients which I've covered a lot so far, but you could see here that work done in billable hours. So the highest at the highest ranked firms, they typically almost all the work is done on a billable hour. They certainly will do an occasional class action or something, but and same thing with four firms, but almost all the work in those firms is done by the billable hour because they can make a lot more money doing things that way.
And and [00:30:00] then when you get into your one and two firms, a lot of those firms are doing fixed prices for different types of work they're doing they're doing contingency work and that sort thing. And then flat fee, same thing here. You can you can see here that It's very rare that your three, four and five firms will do things on a flat fee basis.
You rank two firms also if they're doing billable hour work, prefer to do things that way. And then they certainly rank five firms will certainly do and four firms occasionally flat fee work, but it's just the, the likelihood. And then this is the same thing with your contingency work.
You can see here that your one firms are that most of the litigation they do is contingency and then same thing with two firms and then and that as well. So that's another factor. And then this is, of course the billable hourly rate. The billable hour rates at the five firms are often just completely ludicrous, and they seem like a unbelievable how high they are many times.
I'm gonna share a chart. This is really what this webinar is based on.
We're talking now about how law firms bill the [00:31:00]firm.
These are the rankings for the different types of work.
So you have the the highest for plaintiffs. And then the lowest obviously is for plaintiff's work the highest rank firms are doing plaintiff's work. You have the hour detailed, hourly bills. So meaning that the firms are sending very detailed bills in terms of the type of work that they're doing.
So you can see here, another rank, five firms will often just send statements of work meaning they'll ask the, for the billing that's been done. And that's how that works.
And then the next one is how the firm pays attorneys and its benefits. So the first one is a salary, the entry level attorneys so you can see here, and this is the most important information, I think for a lot of attorneys when they're considering the prestige level of the firm that they wanna work at.
The lowest ranked attorneys, which are your entry level attorneys are typically at your one firms are gonna be the lowest. So it wouldn't be uncommon for a law firm in Los Angeles to, or a big market to pay its entry level attorneys very little money, meaning 50,000 or 40,000 or less than you would even expect.
[00:32:00] Now, they typically will pay more than that, but that's what they can do. They have consumer facing firms do not have a lot of money coming in most of the time. And when they do have money, it's often in spurts. And so they often will pay the lowest salaries just as some someone who's working in McDonald's obviously is gonna make, and this a general rule, less some money than someone who's working in a very fancy restaurant.
You ranked four and five firms will typically pay their entry level attorneys a similar amount, meaning they will, they're all on the same pay scale. You have some rank four firms that may pay a little bit less. If they start paying less, they almost start going down to a rank three firm.
They're all very competitive with each other, with their salaries and with the information with how they're charging for their services. That's what happens at your rank four firms in your five firms. You rank three firms are typically gonna be more moderate, so they will often pay less.
Some of them will pay the same salaries as the four and five firms, but they will definitely not always pay the same [00:33:00] amount. So you need to understand how that works as well. But you rank four and five firms, which are the major firms that pay the highest salaries. That everyone's trying to work at typically pay the highest salaries, which is important.
And then you rank three firms are often regional firms. They typically do not have as large clients, their clients are paying lower hourly rates. And so they typically the salaries are gonna be moderate. The next thing is the salaries of the three to 10 year attorneys. Typically what happens at a lot of the firms is they try to be competitive when they hire new people. They may publish very high starting salaries, but then what happens is the salaries are much lower later on. So typically what'll happen is the rank one to two attorneys that the salaries will stay low pretty much for the third to 10 year associate attorneys, but your rank three firms will often keep the salaries low. By the time someone is a third or fourth year at a regional rank three firm, they may be making what a starting salary person would make it a four or five firm.
Some of the four firms that [00:34:00] are very good firms will pay higher salaries to initial people, but then they will pay a lower band a salary as people get more senior.
And then it's the same thing with your rank five firms, they will typically always pay very high salaries and by far the highest. So it's that sometimes the rank five firms people that are with 10 years would make more than than the average partner at many rank three.
The income partner attorneys is typically the likely income is going to be the lowest at the one firms. Your two and three firms, it's going to be moderate, high and highest. It, the amount of that income doesn't necessarily matter. It's always Going to be the salary of people is always going to be increasing as you move up the scale, but the rank five firms will always have much higher salaries typically than the average much higher partner salaries and income then people ranked three or four.
Here's another thing what you can see here and I use this $1 million figure in a way that to help you, but you can see here in terms of, and that's just in today's money. It would probably [00:35:00] be changed in the future, but you're it's very low at the one rank firms.
As you get into the three rank firms, there are some firms where most of the partners make over a million, or even more than that. And your rank four firms most of the partners will be making over a million dollars. And at the five it's almost a certainty for the most part. And sometimes they have income things, but no, and then same thing here with 2 million you can see here how that works that it's the rank three firms it's typically going to be low rank four and five is moderate.
So this is that. And the reason this income is important is it shows you how much is left over. That's one of the reasons that the billing rates are so high, that the sophistication of work is so high, that the type of work that people should is doing is so high. And the same thing there, and then and then you have individual partners in the firm making over $5 million a year.
So I use this figure because As you get up in the and this is some individual partners this number is not common but at your rank five firms it's almost a certainty that you're gonna have people doing that [00:36:00] in your rank four firms. It's pretty much almost guaranteed, but not completely.
And then in your rank three firms, it's that the chances are lower. There may be some moderation there, but it's definitely much lower and sometimes there's firm founders or things that owners that one and two firms that certainly make that kind of money, but not often then you have people with $30 million books.
So when you go into big markets like New York and Los Angeles, there are people, and a lot of the larger firms that have books like this, and this is one of the ways to recognize firms that have a lot of business and a lot of money coming in. And and so I it's, again, it's, it sounds ludicrous to say $30 million books, but as you get into much larger firms you typically will see people with those types of books in major cities and and certainly in your largest firms you're going to see people in them.
Sometimes those books are maybe inherited meaning some other partner spent their career [00:37:00] building up a bunch of relationships, and then other people ended up taking over that book later. But for the most part as you get into that, you start seeing that. And then summer associates is another thing to understand the best firms will typically want to train the people that are gonna work there and hope that they stay there, the whole career, that they train them in their culture and everything go going forward.
And the highest ranked firms your fives all have summer associates for the most part your four firms for the most part, all have them as well. As you start getting into three firms it becomes sometimes, but not always but a lot of them do. And the summer associates are really a sign of the maturing of the firm.
The firm wanting to have a certain culture the firm wanting to do things a certain way. And and so you need to make sure that's just something to be thinking about you're one and two firms will hire people sometimes they're to work there in the summer, but they certainly aren't gonna be paying them high salaries and so forth, like other firms do clerkship bonuses same thing.
Some of your rank three firms will pay [00:38:00]clerkship bonuses, your one and two firms. Not only typically don't have the money, but it's not really that important to them if you clerk or not. And your rank four and five firms almost always will pay clerkship bonuses. Again, it's a sign that they're trying to attract a certain type of person to work in the firm that has stability and relationships.
And and it's less transactional motivated. And then it's the same thing with your annual bonuses. Most four firms and five firms will pay them some rank, three firms will pay them, but not always. And your rank two and one firms often will not. And then this is another one for exceeding hourly requirements.
I would say that you might even reverse the rank four you would have highest is probably, and then the rank five would be high. But if you are able to beat certain hourly billing requirements, which are really start only being important and really tracked when you get into three, four and five firms, it's very important for that as well.
And then benefits, same thing. Your five firms will typically be over the top in terms of their benefits, your rank four firms will also have often very good [00:39:00] benefits as well. So that's another thing you consider and then paying different amounts to people in different class years.
So sometimes a law firm may not have a certain schedule for how they pay people with one year versus five years. And so the it'll almost be the, they won't be professionally run. And that they typically at the rank one firms that could happen and they may pay people on different things and different ways.
And but as you get into the rank four and buy firms it's very rare for them to be paying different amounts. The reason it's not lowest to rank for is they sometimes rank five firms will often not pay certain bonuses for if you build 25 versus 3000 hours or 3000 versus 1800 or whatever.
They may not even make those. They may just have mandatory clash or bonuses.
The next one that's important to cover is how the law firm is managed. Law firms that are ranked differently typically we will make decisions in a different way.
As you get into rank one firms, they're often run by individuals that are trying to make ends meet same [00:40:00] thing with rank two. And then when you get into rank three firms they start getting more to be more highly developed businesses. And as more highly developed businesses, they're able to more often than not start having executive committees.
So decisions aren't just random. They're made by groups of individuals and that's a sign of a maturing business. And typically there's benefits of that as well. And then professional managers that only manage typically what happens a lot of your one and two firms. And your three firms is the attorneys inside the firm are doing all the managing and making all the decisions.
Now, what that means is that means that a lot of risk are happening. So decisions may not be the best attorneys are not always the best business people. And. Maturing business typically will involve people coming in that help make very good management decisions. When you get into your rank five firms, they may have professional CFOs.
They may have professional operations people. They may have all sorts of [00:41:00] people that are helping them make decisions the same thing with rank four firms. But in your rank, one for three firms, it's almost the attorneys are still doing it. And and many times it's their decisions that maybe holding the firm back.
These again, there's a performance and evaluation systems. Many, one firms and two firms are so busy that they don't want even evaluate you and give you evaluations, or they don't know how to do them. When you start getting to rank three firms, things get more a little bit more advanced.
And so what starts happening is there will often be some sort of evaluation system that they realize is necessary to keep the quality of the attorneys up. And then in your rank four and your rank five firms typically it's very important for for the people to be to, to for formal evaluation systems.
So in the rank five firms, there will almost always be some sort of check in that's happening with attorneys and things constantly that a at a at some sort of you'll be evaluat. And when you get into rank one through five firms, the decisions that the firm makes [00:42:00] can often seem to people working there, irrational and unpredictable that means things like layoffs decisions to go into new lines of business decisions, to go into office space or move offices or close offices.
And just things that make it very stressful for people working there. So in the rank one firms, because they're individuals making them, you don't know what they're doing in the two firms the there's a high likelihood that the people working there will feel like that. As you start getting into rank three and rank four in rank five firms people start to have a lot of confidence in more confidence in the business and that's something that helps it grow.
The decisions that you're ranked five firms typically are not would not be irrational. And then is again the port, the management quality of the firm.
,Meaning how are things managed?
How are what is the perception of outside clients?
What is the perception of people working there?
What is the perception of the marketplace. As you move up again and you rank four firms, you're typically going to believe that the management is very good and and they will have very good [00:43:00] responses and things to issues. And there's probably pretty good management there as well, which can benefit the people working there.
And this is again you can see here as you move up the rankings the rank one firms are typically going to be owned by one are just a few people, same thing with rank two firms you rank three firms as they break out of this two. typically start bringing in lots of, they have more partners and they have lots of people that the firm's accountable to, not just a few people.
And then as you get into the four it's typically lots and lots of partners and other people that are honoring it and rank five it's lots and lots of people as well. Lots and lots of partners, and that will result in a different style of management. And again, these are the firm going out of business.
You rank one firms go out of business all the time. They change names all the time, same thing with, they rank two firms because they're that they don't have the management strength. Typically the same thing with their rank three firms. They are, much less likely to go out of business, but they still can make mistakes.
And they're often regional and they may be concentrated too much in one practice area. [00:44:00] So that can also affect them negatively. And the same thing with the rank four firms and five, they're very unlikely to go out of business. It's very rare for rank five firms to ever go out of business. Because they have such strong institutional clients and and they're just, they're run by a lot of people and a lot of people making decisions.
And the same thing. When you look at the owners of the firm where do the profits go typically in your one and two firms, they may go to one or a few people which can influence a lot of things. Someone could wanna buy a boat, someone can get sued and have to pay a judgment.
You just never know, and you're one and two firms, but in your rank three and four firms you're typically the money that's coming in this flowing to a lot of different people and the profits are. And and that's how that works. Now. This is also something to consider. If you are working in a one or two firm the benefit is that you could potentially be one of the people that all that money is flowing to if you do a good job.
That's something that, to consider as well.
Okay. So the employment security working at the firm, depending on the ranking. These are just some things here to understand how that works. So your rank one [00:45:00]firms are typically hiring and firing as business slows down as they make financial mistakes.
They typically do have a lot of financial training. They're not run by professional managers. Your employment security can be very weak at your one firms. Most people that work at one and two firms are always very nervous about their employment security. I would say the ranked three firms is more moderate than high but but if the business slows down, they may many times be concentrated in one practice area which is less likely to happen in your rank four firms.
And then in your rank four and five firms the four firms do let people go meaning they have corporate departments slow down and things, but the rank in the rank, four, four firms certainly lay people off, but they're also very aware of their brand in the market.
So I've seen some firms that were, I would consider rank five firms in the past. Even as recently as 2001 lay people off and their brand is permanently tainted in the market. It would be unheard of for most rank five firms to lay attorneys off. Now they mainly stay staff off, but it's almost [00:46:00] unheard of for rank five for to do that.
Now you rank four firms. Do and when things slow down a lot of them do, I would probably say rank four is more moderate, but you're that's one of the benefits of working in a rank five firm is you do have a lot more employment security than you would. And then again, it's the same thing with cash reserves and line of credit.
You rank four one and two firms are often just working with very little money and they don't have as much access to cash. You rank three firms and four firms and five firms typically we'll have a lot more money sitting around or access to giant lines of credit rank. Four firms certainly do get in trouble with that as do rank three firms, but you rank five firms typically are in a position where regardless of what happens, they could probably weather most serious issues in the markets.
That's a good thing for them. And also for the people working there so they can afford to have you sitting around without work in the middle of a recession, they can they're just in much better situation. So if you work in a one or two or three firm you have less [00:47:00] security. And that's one of the reasons that a lot of times, it's, it is for many people considered much better to work at your higher rank firms for your lower ones.
And then this is just some other stuff here about financial issues different firms experience, financial issues but your one or two firms often do go through a lot of financial cycles and and that can be very difficult for the people working there, delay your paycheck almost unheard of and and your.
Four and five firms very low chances of that happening and your, even your three firms but in your one, two firms, that sort of stuff is often very frequent. As, and it's, again, it's not it's the likelihood compared to other rank firms, so it's not necessarily your firm but it's other firms as well.
And then here, again, going out of business very rare for your four and five firms to go outta business. And you're one, two firms often do. And then this is another kind of thing here. Sometimes if you're working in a one or two firm and you're and you managed to negotiate a raise get a good raise.
If they see [00:48:00] someone cheaper come along they will often let you go save money because it's money in the owner's pocket this, but if you work in a three or four firm that, that starts to become much less probable and especially in your five firms, it's just not something that they wouldn't even consider even at your four firms.
They, that's just not how that works. Now. I've seen four firms do things like this, and they immediately become. Three firms in my book because of that behavior. And so these are all clues that I look for when I'm working with people because, and working with firms and how they're ranked.
And a lot of times they will not know why they've been ranked a certain way. And then here's other ones firms push you out if you're not gonna be a partner. So in your one or two firms, they're just hiring people to do the work. They don't necessarily care as much if you're gonna be a partner, they don't, they're not taking into account trying to create a upper out thing where everyone's very hungry and doing the best work.
And same thing. We do two firms in the three and four firms. They start definitely you're much more likely to get pushed out a rank three firm may keep [00:49:00] you around to do the work they're much more likely to do so than a four firm your four firms. Most of them do have that whole system in place where you bring in junior associates and another associates and expect them to advance.
And and if they don't then that then they, at some point are asked to leave and your five firms it's almost certain regardless of how good of an attorney you are that if you're not partner, that they're going to have you leave and that's just how they operate. This is the younger hungrier version which is just something to think about when you're working. And then these are the difficulty that the firm's going to have of replacing you.
In a one firm, they, because they're just hiring anybody many times. Not as concerned about your qualifications, they're not gonna have as much difficulty replacing you. Four and five firms will often get a lot of applications, but they're looking for a certain type of person. So they may have a little bit of difficulty replacing you but not always I would say in the rank five firms, it is difficult because they're looking for a certain caliber person.
I would actually say that's probably highest. And this is about [00:50:00] support and trained secretary. You're almost always gonna have that in a buy firm and a for firm. You may not always have a most of the time. You are that's important to a lot of people the love of support they get.
That means that you're there's someone to help you with everything you're doing dedicated things like librarian it staff and so forth. You're much more likely to get that in your rank one firms but less likely to get it than in your rank buy firms. Your things like, perks like dinner and cars, home, a few work light that's also very important for some people.
And the clients of the five firms really do not care. Same thing with four. They will they expect you if you're working late they will reimburse the firm for that sort of thing. Client development budget you're much more likely to see that in the four, five firm sometimes five firms people won't even ask for it, but in a four or five firm typically that's almost expected and something that people will get.
And so that, there's that. And then again cutting of resources, I don't know that, how important that is, but I would say rank one is highest and rank two is moderate and see here and credit for pro bono [00:51:00] work. You can see that it's almost very high year rank four and five firms Same thing here reimburse for different things.
You can see here, cell phone, laptop, and so forth pay for different services. And then there you go. So this is how to get hired firms of different rankings, which I think most people are likely to be very concerned about. So your law school and academics you rank one firms that's often going to be the lowest so the that's not important to them.
What's important is how much you're willing to work for. And if you can do the work you rank two firms, same thing. You rank three firms that starts to become important as in you rank four and five firms and you rank five firms, it becomes very important. You do need to really look at that very carefully when you're depending on the type of firm you're applying to, if you go to a local law school most of the rank one firms are hiring from local law schools.
And they will hire certainly from outta state, but most of their hires are from local law schools. And then as you get into your rank four firms it, this is not high to highest. This is low for rank four. I don't know why, who, [00:52:00] how this got mixed up, but this is low for your rank.
And then lowest of course, is your rank five. And then great cutoffs from certain schools is definitely happening in your rank four firms you rank one firms and two firms and three firms it's typically not considered as important. So you need to that is also important.
So if you go to, even if you go to a very good law school and you're trying to apply to a rank four firm many of them will have even for top five law schools, certain grade point offs, grade cutoffs the same thing goes for many of your most of your rank buy firms are all gonna have different types of grade cutoffs and expectations for the type of law school you go to.
And then this is national searches. You rank one and two firms will typically be hiring locally for the most part. That's what your rank three firms do. You rank four firms will often search nationally to fill jobs. So they will if it's a firm in New York and they get an application from someone they really like in Chicago that I think is best suited for the job that person will typically more often than not be the one that gets an offer.
And then you rank [00:53:00] five firms will almost always hire the highest quality person that they can get. And they don't always care where that person is coming. And this is again the competitive to getting the job. So your rank one firms for the most part, the is going to be the lowest and the rank five firms the highest.
And then the importance of your experience. So the, this is important from the perspective. Of what is on your resume. So if you're applying for someone from a, for a firm laterally what's going to happen is if you're at a rank one firm they're not gonna, they're gonna pay attention to, will this person sit down and work for us and do those type of work.
If you're at a rank two firm, that's for the most part, what they're thinking now, if you're at a rank three firm and you're trying to get a job, one of those, or a rank four firm, they're gonna pay a lot of attention to your recent experience. They're gonna pay a lot of attention to things like your whether the focus of your experience and the rank five firms almost always will care a lot about that.
And then your rank five firms are extremely concerned for that. They will go over your [00:54:00] experience with a fine too come. They want to hire people that are doing the exact type of work that the job's advertising for now and that the work that they have now, the reason this is so important is because if you're doing wo