Help with college debts is the latest attempt to stem the brain drain
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After LeeAnn Black, an executive at Latham & Watkins in New York, talked to an incoming class of associates in 2014 about the business of running the firm, she received a visit from one of the junior lawyers.
“She said: ‘I enjoyed your presentation, I just wanted to make sure you’re aware of the stress level that’s on many of the associates at the firm because of their debt level’,” Ms Black recalls.
The junior lawyer told Ms Black about her own situation, and explained that most of the first-year associates at the firm owed between $100,000 and $200,000, plus interest of between 6 per cent and 8 per cent. Ms Black has since heard from an associate at another law firm who owed more than $300,000.
She decided to see what Latham could do to help alleviate the burden — and added stress — of its young lawyers’ debt.
Ms Black first approached some of the biggest US banks. “It was very challenging, particularly with the big banks,” she says. “It’s like trying to steer the Titanic in another direction — they couldn’t do anything that would be significant enough to make a difference.”
Ultimately, she opted for a partnership with one of the firm’s clients, First Republic Bank, which was looking to establish relationships with employees at law firms such as Latham. First Republic agreed to refinance the student loans for Latham associates who fitted its criteria and who agreed to open an account with a minimum balance. As of July, 153 of Latham’s associates had refinanced nearly $22m in student debt with First Republic, saving $4.75m between them, representing an average of $31,000 per associate over the life of the loans.
“Their offering was incredible, under 2 per cent for a four-year loan,” Ms Black says. “The difference was quite material. Some associates have said their monthly payments dropped by as much as $1,000 a month.”
The top law firms are making fewer and fewer partners, making it trickier for young lawyers to make it to the top. At the same time, there has been a big shift in the legal profession over the past decade, in which associates no longer see partnership at the firm where they started as the ultimate goal. Many plan to spend only a few years working for their first law firm, before switching to another, moving in-house, or finding a different career path. The result is that law firms are being forced to innovate in order to keep their associates happier for longer and to entice them to stay at the firm.
Perks such as longer maternity leave, and programmes at firms including Kirkland & Ellis and Weil, Gotshal & Manges that provide career advice to alumni, are already helping law firms to engender loyalty from a generation that does not see partnership or a single-firm track as their career goal.
Kirkland’s scheme to boost its alumni network through life-long career advice is one of the more groundbreaking examples. Since its creation last year, the programme has hired two full-time career coaches to help alumni with job searches and career workshops. It has also created an online toolkit that helps lawyers and alumni with resumes, covering letters and online profiles and with interview preparation, plus career workshops and a database of jobs in company legal departments. It will be a way for Kirkland to maintain connections to its alumni.
Student debt refinancing is another form of assistance, which leaders at several law firms hope will help reduce their associates’ stress levels outside the office.
Orrick, Herrington & Sutcliffe is taking it a step further. The firm announced this year that it would help by paying $100 a month towards each new associate’s law school loans until they receive their first bonus. That is in addition to a programme it already had in place to help junior lawyers refinance their loans.
Samantha Hope Scheller, a litigation associate who started at Orrick in the New York office in September last year, knew the firm had a generous maternity policy and other perks when she joined. The addition of $100 a month towards her school loans, if only for a few months, strengthened her feeling that she had chosen the right firm.
While annual pay for some first-year associates at New York firms reached $180,000 this year — potentially limiting any sympathy over the money they owe — the average student loan debt from a private law school is an average $122,158, according to the American Bar Association. For new associates adjusting to life trying to hit billable hour targets and working round the clock, it produces an extra level of stress.
The cost is “a close second after rent” for many associates, Ms Scheller says. “A lot of my friends graduate with loans in the tens of thousands, even hundreds of thousands,” she adds. “Coming out of law school with that heavy burden of debt, it’s enough to make anyone freak out a little bit.”
Back to the classroom at Harvard Law School
It is every lawyer’s dream: a paid week off work with no access to a smartphone, learning from top professors at Harvard Law School. While the vast majority of big North American law firms would not dare give up that many billable hours, New York-based Milbank, Tweed, Hadley & McCloy decided the move would pay dividends in other ways.
The programme — which graduated its first class this year — enables all mid-level and senior associates at Milbank to spend a week a year for four years taking a full-time programme it has created at Harvard.
The curriculum focuses on business and finance training to help its legal students better understand their clients, as well as leadership skills, communication and team building.
Best of all — client work is not allowed to get in the way, says Professor Scott Westfahl, the director of executive education at Harvard Law School, who runs the programme.
Other firms have enacted MBA-style boot camps for incoming associates before they begin at the firm. However, Milbank and Harvard believe their partnership is the first of its kind where practising lawyers across the firm’s global offices can spend such time learning about business and leadership.
“It’s just an extraordinary investment, the idea that you’re taking associates offline, letting them come together for a week of learning every year for four years — and putting them together with their peers from other offices lets them build relationships that will last for many years,” says Professor Westfahl.
For Milbank, the collaboration has helped build contacts for lawyers throughout the firm. Each class mixes up lawyers from different practice areas and cities in the same year, who stay together throughout the four years. The programme also helps them prepare to take on a greater client-facing role and to familiarise themselves with how their clients’ business works.
“We try to find the professors who are particularly gifted in the classroom and are open about trailblazing,” Prof Westfahl says. Harvard works with Milbank partners to ensure the modules it teaches are relevant to their practice and update them to stay current, he adds. “At times there’ll be some scepticism that the corporate types will get a lot of benefit from the evaluation exercises but that they won’t be relevant to the litigators, but what participants find is that it’s relevant across all practice areas.”
The partnership has been so successful they have begun offering a shorter programme for the in-house teams at several of the firm’s clients.