Tuesday, February 6, 2007

If Only Big Law Firm Associates Understood Marx

Norma_rae_union A very interesting commentary by David Luban (Georgetown) over at Balkinization explaining in great detail why big law firm associates are classic exploited workers that Karl Marx wrote about way back when.  Here are some excerpts from David's analysis:

With overhead, an associate costs a law firm about double her salary. So, a first-year associate at a blue-chip law firm who makes $150,000 costs the firm $300,000. On average, first-year associates’ billing rate is in the $200/hour vicinity (higher in the major law firms). Thus the associate must bill 1,500 hours simply to pay for herself. Because not every hour can be billed, that is about 1,800 hours of actual work, or 36 hours per week over a 50-week work-year – six hours a day, six days a week. This is what, in volume 1 of Capital, Marx called the paid part of the laborer’s day: the part of the day in which the worker recoups the price of her labor-power or, in Marx’s terms, reproduces her labor-power.

The rest of the day is the "unpaid labor" generating the surplus-value that the partners appropriate. Remember, each additional billable hour over and above the paid part of the day nets $200 to the partners. An associate billing 2,200 hours a year is billing 44 hours a week (and working 53), yielding 8 hours a week of surplus labor, or $1,600 to the partners each week: $80,000 each year. If the associate goes up to 2,500 billable hours a year, she is billing 50 hours a week (and working 60), yielding fourteen hours of surplus labor, or $2,800 to the partners. Each year, that’s $140,000 of profits to the partner per associate, as compared to $80,000 if the associate works "only" 53 hours a week. So, the partner stands to profit an extra $60,000 annually by inducing the associate to up her hours from 8.8 hours a day, six days a week, to 10 hours a day, six days a week.

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The easiest way for associates to compete with each other is by lengthening their work-day, in an arms race that challenges what the human body and soul can bear. Ten hours a day, six days a week? Why not twelve hours, seven days a week? Why not fourteen? This is great for the partners, who (remember) net $200 for each additional hour an associate bills. Furthermore, if the associate is doing more demanding work, for wealthier clients, the firm can bill the associate’s time at a higher rate than the baseline of $200 per hour.

However, the quality of the associate’s work will not necessarily enhance her chances to make partner, because regardless of the absolute quality of the work, the partnership needs to winnow out associates in order to maintain the leverage on which per-partner profits depend. In a law firm leveraged four-to-one, three out of every four associates must fail to make partner, regardless of their lawyerly excellence in absolute terms. (All of this was explained years ago in Marc Galanter’s and Thomas Palay’s path-breaking Tournament of Lawyers.)

The result is just what Karl Marx predicts: the "capitalist" (here, the law partner) has an overwhelming incentive to intensify and lengthen the associate’s work day, and put more competitive stress on the associate.

David's conclusion: no wonder law firm associates bail out as quickly as they do. But as David's title to his post suggest, "Associates of the World, Unite!," maybe the true solution to this horrid state of affairs is for law firm associates to follow the path of their high-paid brethren in sports and entertainment and unionize (only half kidding here, folks).

I can just see it now as an associate in an Armani suit holds up a sign reading Union in the middle of the law firm cafeteria  . . . and is carried away screaming by security thugs.

Hat Tip:  Mike Zimmer

PS

http://lawprofessors.typepad.com/laborprof_blog/2007/02/if_only_big_law.html

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Posted by Alan Childress Fitting with Jeff's post on young associates and their place as labor or proletariat in large law firms -- as well as David Luban's original marxist musings, John Steele's view here from inside the institution, and [Read More]

Tracked on Feb 8, 2007 6:50:58 AM

Comments

Today seems to be the day for blogging about the plight of poor exploited BigLaw associates:

http://blogs.wsj.com/law/2007/02/06/pay-gap-top-firm-associates-fall-behind-partners/

Posted by: The Continental Op | Feb 6, 2007 10:46:10 AM

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