Monday, December 14, 2009

Tough Times for Big Law

Wall Street Journal opinion editorial by Elizabeth Wurtzel, author of Prozac Nation "Tough Times for Big Law" (December 14th, 2009) concerns itself with a number of recruits for the law firm Cravath, Swaine & Moore.  Last year, every single one of those recruits turned down an offer of $80,000 plus student loan and benefits, not to work and be put on a furlough of sorts until the economy recovered.  Wurtzel is particularly concerned by this development:'s something weirder: I've been told that none of the graduates of Yale Law School who were headed for Cravath accepted their offer of $80,000 to surf and sunbathe, or go forth and save the world. Since no one at either institution is willing to discuss this—and I don't blame them, because I would be embarrassed too—I don't know this for certain. But here's what I'm sure of: Not everybody took Cravath up on this peachy keen opportunity to do anything for a year with pay and benefits. And that by itself is disturbing enough.

If even one person said no to $80,000 for bubkes, I'd question the sanity and intelligence of that sole holdout. Cravath recruits the best and the brightest kids from the most highly ranked law schools—and given $80,000 and a dream, all many of them could do was report to work on Monday.

Yet Wurtzel, in her acidulous censure of youth's follies, overlooks the possibility that human capital depreciates. If knowledge concerning Miss Wurtzel's jejune Uniform Commercial Code and the Rule Against Perpetuities is a function of use of that knowledge in the period previous to this, as well as a costly means to re-obtain it (presumably studying) then individuals may want to keep that capital from depreciating in the cheapest way possible. This may include paying to work, if their human capital is valuable enough and reconstructing it from non-use (i.e. from studying) is costly enough.

We may add, more trivially, that the lion's share of payment for entry-level individuals at Cravath, Swaine & Moore is in all likelihood not their benefits, nor their salary, but instead the future expected value of a path that brings them to be a partner in the firm, or signal their value to other firms and clients.

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