The NCAA’s amateurism model got obliterated 9-0 by the Supreme Court, with a concurrence inviting more lawsuits to tear the whole thing down. Meanwhile raises continue throughout the legal world and we grapple with whether or not we’re contributing to a culture of greed. Finally, the Kraken lawyers face a reckoning not seen since Perseus pulled out Medusa’s head.
Special thanks to our sponsors, Lexicon and Nota.
Kathryn Rubino: Hello!
Jose Patrice: How are you?
Kathryn Rubino: I’m good, how about you?
Jose Patrice: That was Kathryn Rubino, who jumped the gun yet again on the greetings to this program.
Kathryn Rubino: Hello!
Jose Patrice: Yeah, now it’s just gratuitous, and I’m —
Kathryn Rubino: It is definitely gratuitous.
Jose Patrice: We are editors at Above the Law and we are here to talk about some of the news of the week, not that there was much to do news-wise that we didn’t cover last week, but we’ll find a few new angles on it. We also have some other interesting topics from outside the world of big law finances that might be more interesting to a general audience. And with that said, let’s —
Kathryn Rubino: Yeah, I mean it is true from the Above the Law perspective, raises has just dominated our coverage.
Jose Patrice: It really has.
Kathryn Rubino: It’s exhausting.
Jose Patrice: It is an exhausting grind for our part. Now that said, I mean we are a really important part of that ecosystem more so than any of our peer publications which all do great work too on a lot of different things, more so than any of them we stay on top of where the market is and who’s paying what and to whom, and at what level, which is important because that way you know as an aspiring lawyer where you can well, a, what you can get paid at certain places but also what your competitors are paying, which is important to find out if you’re getting the right deal whether you want to move or you want to push your bosses to give you more money. But no, more so than anybody else we cover these things which are very important and we got — it’s come to our attention that like and now the legal recruiters folks made — you know the head now made a comment about how Above the Law is as usual keeping on top of these things and then refused to cite us for anything.
Kathryn Rubino: Yeah. So, in kind of a weekly email wrap-up noted that Above the Law is the best location for up to the minute raise information, and then later in the email had a list of oh, you can also read these publications for whatever and didn’t —
Jose Patrice: Not even read these publications, read like these stories about it.
Kathryn Rubino: Story, right, right, right. I’m sorry.
Jose Patrice: And none of them being ours which whatever an organization that seems like it constantly exists to vex us.
Kathryn Rubino: I’m sure they feel similarly about us.
Jose Patrice: Well, yeah, to the extent that what we do largely makes them irrelevant, but I mean, you know, they get to hold a big conference and pat each other on the back but still. Anyway, so, that catches us up to where we were there. I guess let’s get into things. We can do that but first, let’s hear from Lexicon about their product and then we’ll get into this.
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Jose Patrice: Okay. So, where do you want to start? Inside the world of raises or outside the world raises?
Kathryn Rubino: I mean we already started at raises, let’s just finish that up, put a little bow on it.
Jose Patrice: Fair enough. All right. So, there were two aspects of raises I was interested in talking about today given that we talked about a lot of it last week is one was the Cravath aspect that they did not go over the top, what does that mean. The other is kind of a philosophical question that I dealt with in an article last week but like we’ve all talked about behind the scenes, which is to what extent are we contributing to kind of a runaway culture of greed when we cover these raises the way that we do. So, let’s start with talking about Cravath.
Kathryn Rubino: Yeah. So, as I said they decided to just match the Davis Polk Scale. I had hoped that at least for mid and senior level associates that they would come over the top which is sort of the move that they did in 2018. I think that what we can take away from that is either they don’t feel as much fear about losing some of their more senior folks or their handling folks who may leave or maybe put in notice on a one-off basis, you know. They don’t want to necessarily change the grid across the board especially when we hear things like litigation isn’t quite as hot as the corporate side and they may not feel a need to kind of raise the bar across the board, but if somebody puts in their papers, they may have something to say about that, but who knows. That’s pure speculation.
Jose Patrice: Yeah, it did seem like Cravath — the reason why Cravath went over the top in 2018, we all kind of figured was that Cravath is unique among firms and that it doesn’t really participate actively in the lateral hiring market. They are very much into their little cult of we start here and you learn the Cravath method and that’s what you do, and we don’t bring in people from the outside other than at the very bottom levels. We recruit out of law school and then that’s it, then you’re a Cravath person till the end. That said, that means that they are victims of poaching and unable to refresh their ranks on the backend and that means that sometimes they will want to pay a little bit more for those senior jobs to keep them. I think there’s also an aspect of them not going over the top that was that ploy didn’t work in 2018.
Kathryn Rubino: Interesting.
Jose Patrice: They did this, came late, decided all right, we’re going to pay these people more, and rapidly the firms all lined up and matched that. They put up the extra money for the mid and seniors to stay at the same level, which means that evaporated. And I think there’s some concern I think if you’re a Cravath that there isn’t a place for market differentiation yet among the elite law firms. You do have to pay what everyone else is paying, and if you attempt to pay more, everyone else will raise their salaries to match it. So, there’s no real incentive to be the one who’s paying a sixth year slightly more.
Kathryn Rubino: Yeah, I think that’s very fair. I think that as much as we very much are proponents of transparency and lockstep compensation, I think you’re right that we are seeing firms. It’s good to appoint to get folks in the door but in the sort of nitty gritty battles for these group of folks versus that one. It’s kind of done on an individualized basis.
Jose Patrice: Yeah, well, and then that’s the big concern for me also as far as the health of the market is if we move towards a world that accepts more individualized compensation, which some law firms have. We call this black box compensation where nobody knows what anyone else is making, which is a shady move usually designed to minimize the amount of power individual employees have because they don’t know what anyone else is making. Sort of thing that we used to have labor unions to fight against, but whatever. Point is if we move towards a system like that, it gives firms a lot more flexibility to make these one-off decisions to maintain people as well as to recruit superstars, but I’ve always been very concerned about a world that operates in a black box because I feel that it reduces the — it makes it harder for the firm to function. I feel like, yeah.
Kathryn Rubino: I think that’s true, and the other thing that has the potential to do is change the specialization incentives the way kind of big law works right now. There is no distinction between what an M&A second year makes and what a litigation second year makes, right. So, everyone kind of finds their niche for a variety of different reasons but salary at least in the initial stages and, you know, people tend to be a little bit short-sighted about this. They don’t really think about oh, long-term earning potential because for the next eight years I know I’ll be making the same no matter what. But if it kind of changes and one group is valued more, that also has potential to mess up their ability to recruit because in five years and eight years, that may not be the specialty that’s in-demand anymore, right. But if you don’t have people sort of just kind of naturally selecting into a variety of specialties, that could have some negative impacts in terms of long-term planning.
Jose Patrice: Yeah, because the market is cyclical. You can find yourself with a glut of capital markets people and bankruptcy turns around. Yeah, and this is a problem. As you said, short-sighted, obviously, if you were thinking strategically, you would say even though I’m going to be paid the same, I’m going to become an M&A associate so I can be M&A partner someday because that will make me more than if I’m a 40-act person or something like that. That said, that brings me to why — and I know that this is dying and I know it’s dying for some good reasons. It allows for more fluctuating market — like a free-flowing market but, I grew up in a firm that was adamant that partners were paid on a lockstep as well. The whole pool came in and it was divvied up and there were stages based on seniority as a partner but everybody got their share, and it was done that way to be more collegial so that nobody felt like they were more important to the firm than somebody else in yada yada and I thought that actually trickled down and made for a better firm environment.
Kathryn Rubino: Sure, but it’s very rapidly falling out of favor.
Jose Patrice: And for good, some good reasons. It does mean that you end up with a more efficient market over the long haul because people flow to where they’re more in demand but now it’s sad.
Kathryn Rubino: And the truth is sort of the lateral partner market is very volatile and can swing wildly. And if a firm wants the ability to get new rainmakers, a lockstep partnership compensation is not going to have a tremendous pull for those big rainmakers, so.
Jose Patrice: And we are seeing, in my consulting side world, some demand for some partners. So, if you are partners who think you’re in demand out there, let me know and I’ll see if I can put up together a match for you. But nom seriously though. Moving on, we got some news from the Supreme Court today.
Kathryn Rubino: Yeah, the NCAA is not Above the Law.
Jose Patrice: That is a direct quote from concurring opinion by Justice Keggy McGrapenstein. But yes, Kavanaugh wrote that in a concurring opinion, but the majority opinion written by Gorsuch, it was a 9-0 unanimous opinion that the NCAA falls a foul of every possible antitrust law.
Kathryn Rubino: Yes. I think that a lot of people probably expected the NCAA play to lose. I don’t think that is really a big shock. Maybe, you know, kind of around the margins, but I did not expect 9-0.
Jose Patrice: I did. The oral argument was pretty damning. At best, the more liberal justices were more kind to the attorneys at the oral argument, and that they hedged their bets and asked hard questions of everybody.
Kathryn Rubino: Which one would argue is what you should do regardless.
Jose Patrice: Right, but it seemed very clear that the conservative justices were openly hostile to the NCAA. Now, that actually gets us to a point of the opinion is not a complete opening up of the NCAA to do anything. The opinion is limited. the Austin opinion that this was appealed from is limited to the NCAA’s ability to block like —
Kathryn Rubino: Compensation.
Jose Patrice: No, not even that. Post-grad basically will let you go to get a free master’s degree if you play for us, stuff like that, to give post-eligibility educational credits basically is what this case was about. And that was what was a 9-0. Now, that’s where Kavanaugh’s concurrence came in because Kavanaugh’s concurrence is just to say I agree in full but I just want a flag for everybody that I think all the other things, the NCAA blocks players from being paid are also violations of antitrust law. So, the concurrence more or less existed as the signal to every other lawyer that there will be a friendly audience at the Supreme Court if somebody wanted to challenge more fulsomely, which one assumes that there will be the such challenges. We’ve already got states passing, name image and likeness rules that the NCAA is not particularly happy with, but is like trying to work with as a hope of getting around all this sort of stuff. Certainly, there’s going to be some rule there that either goes far enough that the NCAA tries to shut it down, sparking a lawsuit, or there’s going to be some state that doesn’t have one.
Kathryn Rubino: I wonder though if given the concurrence and the 9-0 ruling if the NCAA will just say it’s not worth it to fight it, it’s a lot of money and lawyer fees, if we’re going to already — pretty sure we’re going to lose. How much is the value of the fight as opposed to kind of being ahead of it and being like here are some rules that we can get behind.
Jose Patrice: Right. Well, I mean I think the issue is that there’s not a clear explanation of what the NCAA can do based on these. Its entire reason for being is basically to prevent people from being paid, which if that’s the thing that is a violation of antitrust laws, I don’t really know what it can keep doing, which means it has a lot of incentive to fight just because there’s no other alternative, but we’ll see. At a certain point, I think we’re definitely going to see major sea changes in how athletics are handled based on this because now we’re going to be kind of set adrift without a functional NCAA to do anything about it, whether they were good or bad or sometimes a mixture of both. We’re now entering new territory.
Kathryn Rubino: Fair. It’s exciting for people who enjoy college athletics. I think that watching college football without feeling like you’re watching exploitation is probably a good thing.
Jose Patrice: Yeah. So, very interesting Supreme Court decision today. So, well, I mean because today we’re recording this, not the day you’re hearing it, this week. I’ll just say this week. Very interesting Supreme Court decision.
Kathryn Rubino: Oh, no! You’ve given it away. We record on a Monday.
Jose Patrice: Yeah, anyway. You know, speaking the NCAA, they have that commercial where they were like trying to humanize themselves. I’m just now completely off topic.
Kathryn Rubino: It’s okay, it’s okay.
Jose Patrice: Where they were trying to humanize themselves for a while with like the oh, we have so many athletes and most of them go pro. It’s something other in sports like to prove that they were school, you know. Sort of like how you would go to a law school to be a lawyer.
Kathryn Rubino: Oh, there you are. There you are. I see where you’re going.
Jose Patrice: You would go to law school to be a lawyer but not an accountant.
Kathryn Rubino: Yeah, interesting.
Jose Patrice: Yeah. It’s like our own kind of NCAA commercial. You went to law school to be a lawyer not an accountant, take advantage of Nota, a no-cost IOLTA management tool that helps solo and small law firms track client funds down to the penny. Enjoy peace of mind with one-click reconciliation, automated transaction alerts and real-time bank data, visit trustnota.com/legal to learn more terms and conditions may apply. You had something else to talk about?
Kathryn Rubino: Well, it looks like the Kraken team of lawyers is going to be feeling some wrath soon, at least that’s a lot of speculation. Last week, U.S, District Judge Linda Parker, she’s in charge of the case that was filed in Michigan, challenging the results of the 2020 election, and Sydney Powell in her entire — there’s a bunch of other lawyers who signed on to it, filed it, and it was dismissed, and the Michigan Secretary of State had filed Motions for Sanctions against all the lawyers. And Judge Parker said that every attorney needs to appear in her court on July 6th to answer. So, you know, you never want to be on the receiving end of that kind of an order. Everyone needs to be in my courtroom the day after a holiday weekend to answer why you shouldn’t be sanctioned. Right, that’s a thing. That’s real life.
Jose Patrice: Yeah. So, this I think is something that folks more or less saw coming. It seemed as though this was a group of people that were cruising for sanctions.
Kathryn Rubino: You sound like some parent from like the 1930s. They’re cruising for a bruising.
Jose Patrice: Yeah. Child abuse is funny. Yeah, that was a thing we did for decades. Go on.
Kathryn Rubino: No, but I do think it’s interesting. There was certainly a lot of Schadenfreude and I think when people saw the order come out telling everyone to appear in court, and it’s every attorney who has ever signed anything or name appeared on any document on behalf of the plaintiffs in that case. So, it’s pretty expansive in that way. It’s not just kind of the headline names of Sydney Powell’s name will be forever synonymous with this Kraken team with the 2020 election, but it’s not just her, you know. There was a whole list of folks, I think four or five of folks who’d signed or appeared on various matters and they’re all being asked to defend themselves. It’ll brighten up the day after a holiday weekend for some of us.
Jose Patrice: Yeah, I mean there were some — mistakes were made. I think it’s a better way of putting those filings. There were people who got affidavits put in that seemed to have no connection to any sense of reality. There were attempts to conceal the identities of people who they were putting in as evident. It’s bad and one would think that there would be some sort of fault.
Kathryn Rubino: Yeah, I mean I don’t think that the Motion for Sanctions was surprising. I think that sanctions — I think judges often are hesitant to hand out sanctions. It’s like one more time and then there’ll be sanctions. I think it’s kind of a lot of judges defaults kind of — they’re always hesitant to kind of levy the boom.
Jose Patrice: Lower.
Kathryn Rubino: Lower the boom, okay. Oh, whatever. Anyway, they always seem pretty hesitant to do it. One more time and then you’ll see my wrath. But it feels certainly like this case has crossed the line in some pretty big ways, and not just because we had an insurrection, because that also happened.
Jose Patrice: Right. That was it?
Kathryn Rubino: I mean it was a thing that happened. I think it’s pretty big.
Jose Patrice: Yeah, okay. Cool. That had been hyped up to me, so that was going to be a lot more.
Kathryn Rubino: I’m not sure I hyped it. I said did you see that they’re all about to get sanctioned, I think in my opinion.
Jose Patrice: When I said what’s the main topic of conversation for the show going to be, you said that and I was like, oh, well then that must be the main –
Kathryn Rubino: No, that’s not true. This is wildly inaccurate. What I said was there’s only one thing we covered all week, it was associate raises, which is boring at this point.
Jose Patrice: Yeah.
Kathryn Rubino: But that is the main story as far as I can tell.
Jose Patrice: It appears though, I will say, to add some interest to it, that while we’ve been sitting here, most of the West Coast is coming in, which had been a bit of a holdup which was that while we were seeing these raises trickle through big law firms based on the West Coast were by and large absent.
Kathryn Rubino: Wilson Sonsini had come in already, I think.
Jose Patrice: They had although a little bit later, but we’ve now got the MoFo Latham —
Kathryn Rubino: Yeah, that was in the last week, yeah, for sure. But, you know, we say a little bit later but the truth is it’s only been like 10 days.
Jose Patrice: Right.
Kathryn Rubino: That is actually – I think that is actually something worth noting that we don’t really get a chance to talk about in our kind of churning of the news of the day is, it’s noteworthy how these large organizations, these large partnerships are able to move so quickly, right. As far as we can tell, no one really, no one knew that Milbank was going to announce raises. No one knew that Davis Polk was going to come over the top of those numbers. But within a matter of sometimes hours, sometimes days, even a week and a couple of days is pretty fast for these kinds of very large organizations and I think that big law probably deserves some props for being able to turn so quickly their entire projections for profits and whatnot.
Jose Patrice: Yeah, I also think that — and I did put this in a story that I wrote about. I think it was the one I wrote on SNC’s raises. But we are getting to the point where people are starting to get a little antsy and frantic about whether or not certain firms have moved and it’s okay. Whether somebody moves today, it moves on day 1 or on day 10 is not a huge deal. It is not yet the date that everybody is going to get these raises. They’re all keyed off of like July 1st, we’re not there yet. So, there’s plenty of time.
Kathryn Rubino: But I do think that that’s also kind of noteworthy oftentimes when we have raises or bonus announcements. They’re keyed to dates significantly in the future, not a matter of weeks, right. When the first raises came out, it was mid-June and they were keyed to July 1st. So that’s a pretty short turnaround in terms of just getting your payroll numbers in order. That’s pretty quick. That’s a pretty quick turnaround and I don’t think that’s always true, and I think as we get closer and closer to July 1st, people are getting concerned because that is the effective date. Now, can things be retroactive, of course, they can. Does it make much difference to associates if it’s effective July 15th versus July 1st? In the course of a year, that’s not that much money, right. But it is worth noting that I think that that is also umping up the sort of frantic set of emails we get to the tips at abovethelaw.com number because it is. We’re kind of coming close to the point where they’re going to get this raise.
Jose Patrice: Right.
Kathryn Rubino: You know sometimes it’s like a month in the future or something or two months or, you know. There’s a difference.
Jose Patrice: No, no, definitely. All right. We’re done. We’re ready to go back to writing about more raises.
Kathryn Rubino: I mean in the course of recording this, I think four firms have announced.
Jose Patrice: Yeah. So, let’s go back to writing about some more raises then. With that said, thanks for listening. You should be subscribed to the show, that way you get them when the new episodes come out. You should give reviews, stars, write some stuff, shows engagement, helps people, hear it. You should also listen to the 24:30 or other podcast. You can listen to me on the Legal Tech Week, Journalists Roundtable. If you want to hear about some Legal Tech stuff, you can check out the rest of the offerings of the Legal Talk Network. You can read all of us at Above the Law, of course, and you should follow on social media. I’m at josephpatrice, she’s at Kathryn1.
Kathryn Rubino: Numeral 1.
Jose Patrice: Yeah, that’s right. You should do all that. Let us know if your firm raises because we need to know. A lot of times people think, well, I’m sure they’ve heard it from somewhere else. It’s like don’t assume that. We would rather have 20 emails telling us what the new raise is than find out a week later that nobody bothered to email us.
Kathryn Rubino: Yes. Please, please, please, email. You can text us, you can drop us a thing on wherever.
Jose Patrice: And just do that generally, we’re around. Obviously, we get a lot of emails so we don’t necessarily answer everyone, but we love to hear from folks and it could be useful for future topics too. We do mailbag shows whenever we have mailbags to talk about. We often don’t accept around the period when boss and potential law students are trying to side on law schools, but we can deal with some of these questions.
Kathryn Rubino: And again, the text only line is 646-820-8477. That’s 646-820-8477. Text us, send us a screenshot of your firm memo.
Jose Patrice: Sure. All right. Well, then let’s go back to — God, I don’t want to go back to writing these. All right, well, let’s go back to writing these.
Kathryn Rubino: Peace.
Podcast transcription by Tech-Synergy.com