No Justice In These Pay Scales

Okay, my friends who are struggling to pay the mortgage, put away money for the kids' college fund, and hoping that duct tape and copper wire will hold the boiler together until spring, consider this (calmly, please): This spring, elite law firms will again be offering Supreme Court law clerks signing bonuses of $200,000 (last year's rate) or even more for their first jobs as practicing lawyers.

That is on top of a starting salary of $145,000 to $160,000. Which adds up to an awful lot of Pottery Barn furniture for someone who is, on average, 26 years old, two years out of school and has never practiced law. As Chief Justice John G. Roberts Jr. pointed out recently, that $360,000 beats the heck out of the $212,100 he's taking home for, well, chief justice-ing the entire nation.

The so-called law clerk bonus is a one-way ratchet, it seems. In a bidding war between boutique appellate practices at the nation's fanciest firms, the bonus not only rises each year, but does so exponentially. When it hit $150,000 two years ago, I had a hard time picking myself up off the floor. And with so many powerful firms competing for only 36 individuals, it's no surprise that the high court's graduating law clerks will soon be staring at NBA-grade salaries. At which point the already puzzling economics of elite law firm cachet will have become truly incomprehensible.

What is it about three-dozen legal rock stars that justifies paying them so much? Former acting solicitor general Walter Dellinger, who heads the appellate practice at O'Melveny and Myers in Washington, says that although not all Supreme Court clerks make brilliant lawyers, and not all of his best associates were trained at the high court, "there's a very strong overlap with extraordinary talent." He adds: "One of the least appreciated things in the practice of law is lawyering that rates even above truly excellent lawyering." And if you're working on billion-dollar cases, he says, the client is willing to pay more for truly excellent work. Dellinger, it should be noted, is a former Supreme Court clerk himself, from the pre-bonus era.

Carter Phillips, managing partner at Sidley Austin, agrees that the Supreme Court's selection system singles out extraordinary young lawyers. Moreover, "they're used to working hard," Phillips says. "They can't get through their clerkships without putting in significant hours, so you know they can put in 2,200 hours at a firm." (Billable hours are the six-minute increments by which lawyers account for their time. If the studies are right, and you must spend three hours at work for every two hours you can bill, working 10-hour days, five days a week, you'd bill between 1,500 and 1,600 hours a year. Way low. Hence the weekends and takeout and no life to get you up to 2,200.)

Phillips also notes that because of their work considering possible future cases for a justice, Supreme Court clerks have been exposed to a much broader set of federal issues than even their colleagues from the federal appeals courts. So they don't have nearly the learning curve of other new associates.

But Phillips acknowledges that the rates in this bidding war have his partners in Chicago swallowing hard. "I think I'm the person who came up with this cockamamie idea in the first place," he confesses, noting that in 1986, when he had the clever idea to woo some particularly fabulous Supreme Court clerks, the bonus was closer to $10,000. "I'll take the heat for creating this system. But I was never the market leader for driving it up."

Clerkship bonuses have apparently increased 3,000 percent in the past 20 years, while federal judicial salaries have declined, when adjusted for inflation. No wonder the justices are bitter.

Part of what's happening here is the extraordinary rise in lawyers' salaries in general. It's hard to understand why young associates are being paid around $145,000 and many partners bring in a cool $1 million or more. The firms acknowledge that times have changed. Attrition rates are soaring. According to the most recent figures from the National Association of Law Placement (now known as NALP), 37 percent of associates leave large firms within the first three years and 77 percent depart within five years. Lawyers no longer stay at one firm for decades. Young lawyers demand more lifestyle accommodations and want to bill fewer hours. It's taking them longer to make partner, and they resent that. And as the demand for lawyers has increased, the number of graduates from the nation's top 25 law schools has remained constant. In short, the demand for lawyers is rising and the supply wants their weekends back. The solution has been to throw more money at them -- and raise rates for clients. Top partners now bill $800 an hour or more for their time.

But even that doesn't fully account for the amount of money that Supreme Court clerks are receiving. There must be non-economic factors pushing these numbers up.

The sheer bling factor is a big part of it. On his legal gossip blog, Abovethelaw.com, David Lat tracks lawyer salaries with the glee that most of us reserve for "American Idol." And according to him, the hefty law clerk bonus stopped making any real economic sense several decimal points ago. He notes that these new associates don't bill extraordinary hours; that boutique appellate practice isn't that lucrative; and many former clerks have academic aspirations. "They're billing 1,800 hours, not 2,500, and a lot of them are probably already working on their job talks," he says, referring to sales pitches for the academic market.

The real allure of Supreme Court clerks, says Lat, is that of pure trophy purchases, "something for a firm to crow about in their recruiting materials." Ouch. If Lat is correct, the boutique firms are buying former Supreme Court clerks when they may be better off investing in something more enduring, such as leather sofas for their lobbies.