Playing the Odds of Making Partner
In a recent column for The Am Law Daily, Northwestern University law professor and retired Kirkland & Ellis partner Steven Harper compares the odds of today’s law students making partner at a big law firm to that of playing the lottery. Harper bases his comparison off of a recent New York Times Magazine article written by Adam Douglas, which maintains today’s graduates seeking work in many professions are facing an employment lottery, one where the prospects of achieving a dream is much more glamorous than the lifestyle and odds it takes to get there.
Douglas targets the entertainment and legal industries as two such fields, where young employees and associates with big dreams of reaching the top often find themselves left wanting. Or as Douglas puts it, working in mailrooms and back offices. Harper keenly compares this thinking to that described in Stephen Dubner’s and Steven Levitt’s well-known book, Freakonomics, where they take a closer look at the “otherwise irrational behavior” of drug-dealing gangs where “legions of foot soldiers work the streets as they seek to one day become kingpins”.
What is interesting is that these odds have not deterred thousands from trying their luck. Though numbers of law school applicants and LSAT test takers have declined slightly over the past year, the number of today’s law graduates still far outpaces the number of jobs available.
As Harper explains, “The National Law Journal just released its annual list of the NLJ 250’s ‘Go-to law schools’ from which the nation’s biggest firms draw the most new associates. In 2007, the top 20 law schools sent 55% of graduates to big firms; in 2011, only 36%. As the job market for new attorneys languishes, most of last year’s 50,000 law school graduates would count those new associates as already having won a lottery. But the real story is that they have actually acquired a ticket to one or two more lotteries.”
The one or two more lotteries Harper refers to are the one or two more decisions made on whether or not that associate makes income partner, and then equity partner. As Harper notes, “the big law lottery has become a two-step ordeal. Merit still matters, but attaining even the highest skill level is only a minimum requirement and not sufficient for advancement. “
The statistics tell the story. As Harper illustrates, “In 2011, 47 Harvard Law graduates went from associate to big firm partner. That sounds like a lot, except that five years earlier (2006) Harvard sent 338 graduates into large firms. Although that 15 percent rate isn’t as bad as the lottery’s odds, winnowing the number down to only those who will become equity partners comes pretty close. (A time lag of five years isn’t quite long enough for the groups of new and promoted associates to match exactly, especially given that partner tracks have become longer. But it’s adequate to illustrate the point.)
Other top schools’ graduates face even worse odds. Columbia Law sent 313 graduates to big firms in 2006; just 31 of its grads went from associate to partner in 2011. In 2006, 143 Northwestern Law grads got big firm jobs; in 2011, 14 NU graduates advanced from associate to partners. The University of Pennsylvania’s 2006 class sent 187 into big firms; those firms promoted 15 Penn associates to partner last year.”
Thus, today’s law grads are playing the odds, hoping their lottery ball is picked. Much like the legions of foot soldiers on the streets, hoping to become kingpin. Economically, this behavior is irrational and hard to explain. Is it the kingpins’ resistance that is to blame, who themselves were once were foot soldiers? Or is the cultural allure of getting to the top and achieving the glamorous life? Perhaps it’s both.