Today’s Australian Financial Review Legal Affairs section has an interested article – ‘Junior lawyers bring in the money‘ – reporting what we all already essentially know: that law firms make their money from their junior lawyers.
What spiked my interest in the article was despite reporting the fact that “the conventional profit-driven pyramid model is still the dominant method adopted by most of Australia’s top-tier law firms” the percentages where the work is done has changed over time.
Early in my career we followed what was known as the 10-20-30-40 Rule, whereby [roughly]:
- 10% of a matter’s work was done at partner level,
- 20% of a matter’s work was done at senior associate level (there was no special counsel level in those days, but they would be included today),
- 30% of a matter’s work was done at associate and senior lawyer level (in times when there was a difference between an ‘associate’ and ‘lawyer’), and
- 40% of a matter’s work was done by the junior lawyers / trainees / graduates / paralegals (i.e., everyone else).
The problem with the metrics in this Rule is that not many clients are willing to pay for the 40% these days.
Which makes the AFR article’s mention that:
…16.6 and 17.7 per cent of lawyers working on matters for clients are partners.
interesting and raises a question in my mind:
are law firms recalibrating the leveraging model at the request of clients, or are there other reasons why this change might be taking place?
As always, welcome feedback from readers.