By Dahlia Lithwick
Sunday, March 11, 2007
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.
The enormous signing bonuses have caused a bizarre collision of two ethical rules. The Supreme Court's Rule 7 bars any former clerk from participating "in any professional capacity in any case" before it for two years after they leave. That includes helping or advising their firms on upcoming cases before the court. So the specific expertise they were hired for is on ice for two years.
On the other hand, two years seems to have become the unofficial number for the young associates themselves, many of whom agree informally that if they stick around the law firm for that period of time, they can't be accused of having taken the money and run. They'll have fulfilled an ethical obligation.
The big bonuses create a huge incentive for young Supreme Court clerks to, well, take the money and run. After two years in private practice, they can pay down or even pay off their law school debts, and leave the firm holding the bag. Phillips concedes that the bonuses have undermined a "natural sorting process," wherein some former clerks once gravitated to government service, and others left the court for academia.
"I'm sort of glad we didn't have that kind of bonus in my day," says Tim Wu, who clerked for Justice Stephen G. Breyer in 1999 and now teaches at Columbia Law School. "Money like that leaves you no option. In my case, it would have ruined my career."
Now law firm recruiters have to worry about finding the clerks who really want to stick around, and they may have to settle, as Phillips says, for using those years "as a chance to persuade the others that private practice is the place to be." Other firms hope that if the clerks stay for a few years and bill their 2,000 hours, the firms will still break even on the proposition.
Some firms, notes Lat, have stopped pursuing the Supreme Court clerks and now spend their recruiting dollars on what he calls the near-misses. "For every one of the 36 smartest law kids," he says, "there is another equally smart law kid who just had a bad interview" for a court clerkship. And if law firms give them bonuses, "they get all the benefits of a knockoff Prada purse: They perform the same function, they look great and you know they'll do a great job."
Maybe there really isn't anything wrong with these massive bonuses. They aren't necessarily dragging young lawyers out of government or public service. Several former clerks who have signed up with firms suggest precisely the opposite: It gives them the freedom to pay off their loans and then teach or work at the Justice Department after a few years. If the clerks are happy, their firms are satisfied and the clients are okay with it, who's really harmed?
Well, Justice Anthony M. Kennedy, for one. Last month he told the Senate Judiciary Committee: "Something is wrong when a judge's law clerk, just one or two years out of law school, has a salary greater than that of the judge or justice he or she served the year before."
The fact is that if the market is working to drive associate salaries higher and higher, the lack of a market is now ensuring that a first-year associate at a law firm who clerked on the court will earn more next year than Justice Antonin Scalia ($203,000), Special Prosecutor Patrick J. Fitzgerald ($140,300) or a well-paid public defender ($75,000).
And whether or not those salaries make you weep in sympathy, it's hard to dispute the justices' claim that the opportunity cost of staying on the bench has become almost unmanageable. It's one thing to insist that serving one's country should be its own reward. But as college costs loom and boilers break down, one has to wonder whether it makes perfect sense to pay astronomical sums to young lawyers to argue and influence (or in some cases not argue and not influence) Supreme Court justices who have moved past envy and into resentment.
Dahlia Lithwick covers legal affairs for Slate, the online magazine at www.slate.com.
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