Jones Day continues to be a black box — let’s break that open. Morgan Stanley is urging its outside counsel to get back to the office. To what extent do clients get to dictate how law firms run their business? And we talk about cruise lines suing Florida and a Catholic school suing Michigan claiming that making schoolchildren wear masks is sacrilegious, which seems like a stretch.
Special thanks to our sponsors, Lexicon and Nota.
Joe Patrice: Hello, welcome to another edition of Thinking Like a Lawyer. I’m Joe Patrice from Above the Law. That was Kathryn Rubino. She is not recording in New York so I didn’t know. Did they have technology out in the hinterlands wherever you are?
Kathryn Rubino: In Houston like the fourth largest city in in America, yes. Yes, they do.
Joe Patrice: Okay, all right. Well anyway we’re here yet again catching you up on some of the more interesting legal stories of the last week. It’s been an interesting one.
Kathryn Rubino: Well before we get into that, we always kind of start with a little update. How was your weekend, how have you been, what’s gone on in the last week or so?
Joe Patrice: Well, I was actually doing small talk but whatever if you’re going to cut it off.
Kathryn Rubino: You were like jumping right. No, you stop it. Stop it.
Joe Patrice: Raises is not one of our stories today. I was just going to use that as a segue into it talking about how busy things have been. But yeah, no it’s been very busy. How about you?
Kathryn Rubino: Yeah. Well I mean as you mentioned in the intro, I’m traveling, visiting some family down in Texas and for most of the state, it appears as if masking and they certainly believe that COVID is over regardless of the Delta variant.
Joe Patrice: Yeah. Well I mean it depends. I mean I don’t know. Different areas of Texas are like if you look at the maps, it’s very concentrated in different areas. I don’t know if where you are might well be one of the areas that is more vaccinated.
Kathryn Rubino: Yeah. I mean I think the vaccination numbers are fine but even in indoor spaces, no one has it. Even children who obviously can’t be vaccinated aren’t wearing them inside. That was the big shock to me. That’s one of the things I noticed sort of in the airport was like, “Oh, all these poor have to have” — I mean I wore my mask obviously in the airport. You have to and on airplanes, you have to but people who have younger children, the children can’t be vaccinated quite yet.
Joe Patrice: Speaking of children being vaccinated, are you following the story I believe out of Wisconsin about masks?
Kathryn Rubino: No, what is it? Tell me. Tell me about it. I’m dying to know.
Joe Patrice: No. There’s a school somewhere and I can’t remember where it is but is challenging.
Kathryn Rubino: I think it is Wisconsin.
Joe Patrice: Yeah.
Kathryn Rubino: No, it’s Detroit. It’s Detroit.
Joe Patrice: Detroit, okay.
Kathryn Rubino: Yeah.
Joe Patrice: Yeah, challenging the rule that children have to wear masks because it’s a religious school and says that because we’re all made in god’s image, a mask would be covering that up and therefore would be a sin which as a lot of people on twitter immediately pointed out would actually be an argument against clothes. So unless this is a nudist school which if it is, raises further issues I think.
Kathryn Rubino: I have some follow-up questions. Yeah. Do you have any information — do you know what denomination it is like what religion?
Joe Patrice: It’s catholic.
Kathryn Rubino: So I mean I think that the pope —
Joe Patrice: Raising the making children naked is an even bit worse problem again.
Kathryn Rubino: Fair. But I was going to say I mean there’s a guy who’s in charge right for the Catholic Church? Like we know who it is who makes the rules.
Joe Patrice: Yeah.
Kathryn Rubino: You know, I’m catholic. We believe that he is a direct line to the big guy. He’s cool with masks so I’m pretty sure you are wrong about what your religion says.
Joe Patrice: Yeah. In fairness, so far anyway, a federal judge also has a direct line and has determined that the preliminary injunction is stupid but unfortunately, this now goes to an appeals court and I am unaware exactly of what the panel is but you know, it’s one of those circuits where crazy things could happen.
Kathryn Rubino: Yeah but I mean, there was even the Indiana University case that happened that a trump judge said, “Of course they can mandate COVID vaccines.” Right? So no matter how conservative the circuit, I think that there’s at least hope that common sense will prevail.
Joe Patrice: Yeah. I mean even we learned this week also that Fox News has vaccine passports despite everything they say when they’re actually on air. So yeah, maybe there is something like that.
Kathryn Rubino: Yeah. Listen, that also is utterly unsurprising right? I think that particularly for Fox News, it is very much — it’s a show right that is a product so that they know how to market and they market towards people who are based in fear.
It’s not necessarily that they’re true believers. Occasionally I think they do get people who are attracted to it, who become true believers, whatever but I think that on a corporate level, it is a business first. It’s only true belief is in money and in monetizing what they’re able to do and this is utterly unsurprising to me that they say one thing to their audience and do another behind closed doors. This seems entirely unbrand.
Joe Patrice: Well I guess if we’re going to talk about things being behind closed doors, do you want to talk about Jones Day?
Kathryn Rubino: Oh sure.
Joe Patrice: All right.
Kathryn Rubino: So we kind of talked a little bit and you mentioned that there are raises going on and faithful listeners of Thinking Like a Lawyer and readers of the blah, blah, blah, well know that associate raises are all the talk of the spring and summer. They do things a little differently at Jones Day. They have what’s known as a black box compensation system which means that no one knows what anybody else makes. They publish their first year starting salary and then after that, you’re not supposed to talk about what you make, you’re not supposed have conversations about it, et cetera, et cetera and they say it’s to encourage congeniality amongst your colleagues and such. But the truth is, —
Joe Patrice: Or collegiality either one. Although I think congeniality is actually almost a funnier concept.
Kathryn Rubino: Fair. Anyway, so they’re a black box system. Also what they do which is different than most firms is, they don’t give out bonuses. So they say that their compensation is above market base rate compensation in order to accommodate for the fact that they don’t also give out bonuses. So they published their new first year number which is the only information that they publish which is $210,000 which if you’ll remember, the base salary on the Davis Polk scale is $205,000 for first year associates.
And so, I got a bunch of emails about Jones Day compensation from folks being like, “Oh, look at this they’ve moved to 210. Does this mean that we should expect raises across the board who will match this 210 number?” And I was like no one, no one because they’re still ahead. If $210,000 is also supposed to account for the bonuses, 210 is well behind market compensation. There are special bonuses that happen this year that have already been announced that are more than $5,000 for, I think they’re 12 for first year associates plus there are year-end bonuses which at most firms are either explicitly said will be at least as large as last year’s or at least anticipated to be at least as largest last years which I think is in the $15 000 range for first year associates. So you can — simple math makes it very clear that the sort of market DPW scale is significantly ahead of that $210,000 number.
But that kind of brings up a secondary point which is what is behind, what’s going on for everyone beyond first year associates at Jones Day? This has sort of been a hobby horse at Above the Law for many, many years now and we’ve made calls to try to break the black box. We did this in 2016 when there was a previous round of raises that went on as well and we kind of anonymously collect the data, we want to know what your class year is, if you have low meaning, less than 1800 hours of billables, average between 1800 and 2000 or high over 2000, hours, your city and your class year. And if you’re not comfortable giving the exact dollar amount of your new salary, your range about how much you make so that we can kind of get some sense of how well Jones Day associates compare to the market. We know the first years are behind and my strong sense is that everyone will be behind the market and so, we kind of like to collect this data to find out what’s behind the black box.
Joe Patrice: Yeah. No, that’s important work especially because, I mean for everybody. There’s certainly those of us who work with people who are trying to find jobs and stuff like that. It’s very important for not just the firms themselves to know what a specific firm makes but to know what all the firms make. It gets the whole market transparent and is very useful. So the more we can help with that, the better so please let us know.
Kathryn Rubino: And the truth is, I mean I know that sometimes folks get a little annoyed about lockstep compensation because there’s a sort of weird puritanical work ethic that my work isn’t being rewarded if I just make what everyone else makes just by virtue of the year that I’m in. But the truth is that it is significantly better because a lockstep compensation and more importantly, transparent lockstep compensation means that there’s no unconscious or conscious biases that go into making these compensation decisions.
It also means that no one goes into life at a law firm thinking that they’re going to be the bottom of their class. But somebody inevitably is at the bottom but everyone thinks they’re going to be at the top and maybe it’s because you have some personal stuff especially coming out of the year plus of COVID. Maybe people had some personal stuff going on and they couldn’t hit their billable, the same kinds of billable, numbers that they would have wanted. Or maybe their group was just slow. Maybe it turns out the partner they were working for was lateraling somewhere else and they just didn’t get the amount of work that they felt that they would get.
And so, this kind of lockstep compensation protects young associates who don’t have a ton of control over the kinds of cases they get assigned or the kind of work they really do, it gives them a little measure of security to know where their comp numbers will be and it also makes sure that any sort of these unconscious biases are eliminated from the compensation conversation.
Joe Patrice: So get on that everybody.
Kathryn Rubino: Yes, and again, it’s [email protected]. You can send us, you can make the subject line be something like Jones Day Intel or whatever and give us whatever data you have. And as always, all sources to Above the Law are kept strictly confidential.
Joe Patrice: Great. Let’s hear from our friends at Lexicon right now.
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Joe Patrice: All right. Well the other story that broke late in the week last week and became a topic of conversation is Morgan Stanley which is not a law firm but is a —
Kathryn Rubino: Which yeah okay, it’s not a law firm at all. Why is that something that Above the Law cares about?
Joe Patrice: Well they have lawyers Kathryn. Anyway, they are a, I mean internally but they are a bank and a major client for a lot of the top-tier law firms. And Morgan Stanley has made a bit of media attention for itself lately with its CEO going out of his way to claim that everybody needs to be back in the office, we’ve been doing this long enough, everyone come back in September just saying this over and over, doubled down on it in a recent call. It was interesting especially considering that Morgan Stanley is enjoying record profitability right now and just blew it out of the water based on last year’s numbers when everyone was locked down but demanding everyone come back.
This shifted into more of a legal story when the chief legal officer issued a memo to the law firms, the outside counsel that they work with, basically saying that they all need to come back into the office too.
Kathryn Rubino: You don’t get to tell me how I run my business is my gut reaction right there.
Joe Patrice: Well I mean, the customer’s always right. But no, it was framed not as a demand though that certainly is the implication of how it was written. It was framed as I just am really worried about the future of the profession and mentorship and we need people in person is the only way to learn and become the next great generation of lawyers and blah, blah, blah, blah, blah.
Kathryn Rubino: Says a non-lawyer talking to lawyers.
Joe Patrice: No, this is a lawyer talking to lawyers. Anyway, the memo gets out and there were some stories about it mainly pointing out that the law firms involved, no one’s certainly seeking to fire them from their representation so the work they must be doing seems to be good. These law firms are all heavily profitable themselves and have been throughout the pandemic and obviously part of that was not having to travel for a year but revenue was also in line. And so, what’s the real complaint and my point to this is I mean I don’t want to be one of those follow the money sort of people but it seems to me as though —
Kathryn Rubino: Follow the money?
Joe Patrice: Seems to me as though the senior leadership of One Bank is really, really concerned about the commercial real estate market which makes me wonder what their portfolio looks like. No one else no one else is doing this, none of the other banks on the street. I mean and everybody’s in commercial real estate, that’s not really nefarious. I mean it’s a sector of the economy that everyone’s in but the insistence and the doth protest too much of one particular bank has got me wondering if someone’s in over their head. But it’s also just a really dumb plea to base this around mentorship and stuff like that because no one’s talking about going remote forever.
That’s not totally true. There are virtual law firms in this world and the work they do is actually very interesting and different and also tends to be much more senior based partners with very leanly staffed.
But the big firms, these folks aren’t talking about going remote forever. They’re talking about coming back to a four-day in the office work week in a way that might allow them to cut back on some office space. If you think that mentorship was living or dying based on whether or not someone was there on a Monday then we got a bigger problems with mentorship because the four other days of the week that everyone’s in person seems to more than accomplish the goals that everyone’s talking about.
Kathryn Rubino: Yeah. I mean this this whole how we come back whether we come back, what does back even look like I think is an ongoing conversation in the legal market as well as others. I also wrote a story this past week about a partner at Troutman Pepper in the Atlanta office, the Atlanta managing partner, basically sending a series of emails basically begging folks to come back to the office saying the future is in the office, we need you back, please come back and tying it both to the passing of a partner to the Memorial Day holiday also trying to incentivize it at various turns.
We’ll feed you, come back to the office, we’ll give you food, please come back and kind of doing a guilt trip on the other emails. We obviously heard about it because tipsters at the firm were like what is going on with this, what is going on here? And I think generationally, the sense of whether or not we should come back is very different. But I think you’re right that no one’s saying we need to be back. No one’s saying that everyone needs to be always remote except for the virtual firms. Everyone’s going to have some presence although they may have give up a couple of floors which obviously impacts that commercial real estate market that you’re talking about.
Joe Patrice: And that’s the thing. Once you start recognizing that the mentorship thing at best is based on the marginal value of one extra day in person which doesn’t — and maybe two. I guess there are some firms that have talked about three-day weeks but maybe two. But it’s also a big law meaning that Saturdays and Sundays are also days people may be in the office quite frankly and whenever some important meeting comes up the Monday, Tuesday or whatever they’re taking off are also going to be in the office. So there’s just not really —
Kathryn Rubino: And it’s not taking off, it’s just working from home.
Joe Patrice: Yeah, exactly. In a lot of ways, this is going to involve more contact and work than regular weekends even though lawyers tend to work through those too. What was weird, we talked about this a little bit on the Legaltech Week Journalists’ Roundtable last week. There are so many potentially good arguments that could have been made about cyber-attacks and privacy and they’re not really good arguments because there’s a good deal — because law firms are just as vulnerable whether you’re in person or not. Because news flash, often times, even when you’re in person, the partner isn’t walking down to your office to talk, they are sending you an email. So it’s all the same whether you’re in the office or at home. But as far as the security situation goes.
But even assuming security was somehow compromised which it’s, that’s not my point. Even with the fact that in the office is no real different, there’s at least the sense with cyber stuff that it’s just confusing to people and people just like, it just seems scary and nobody really bothers to poke and see how plausible the threats are, they just like are scared of threats. If the client had written something like that, you have to come back to the office. Our work is very secure where we represent and we move so much important money that like it would be problematic and we would view it as a security threat for you to be working remotely which is nuts. But at least that’s the sort of thing that they could have gotten away with possibly but trying to hinge it on mentorship and work product especially after what happened last year where everyone was yeah. It was just lazy and strikes me again as though if you’re out there trying to make financial decisions, it seems like maybe somebody’s very worried about commercial real estate.
Kathryn Rubino: But okay, look, to kind of play devil’s advocate for a moment, let’s assume you’re right and that it is because they’re heavily invested in the commercial market. So even if they said that and you’re their lawyer, isn’t that just more of a compelling reason to actually do what your client asks? But I guess if our client does well, if our client does poorly, our business will suffer. So if our client needs people back in the office that we have a commercial footprint, okay that’s as valid a reason as any.
Joe Patrice: Yeah. I don’t know. I mean I don’t think you’re responsible for every bad financial decision your client makes.
Kathryn Rubino: Of course not but if you can help, I don’t know.
Joe Patrice: I mean you’re going to spend millions of dollars to just make sure your client stays, has billions of dollars, nah. I think your job is to provide them quality service and if they don’t like it, they can fire you but if they like it, then they need to stick with it and keep their nose out of your business model.
Kathryn Rubino: Yeah, that’s a fair point.
Joe Patrice: All this real estate stuff and investment, it’s a little weird because obviously, we are more law firm but I mean it intersected a little bit but it’s a little —
Kathryn Rubino: I mean they’re telling law firms what to do so I think it definitely intersects with what we talk about.
Joe Patrice: Yeah, I mean it’s just a little a field because people went to law school to be lawyers not accountants.
Kathryn Rubino: Oh, I see what you did there.
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What else is going on?
Kathryn Rubino: Well I guess the other story I know, you at least had a headline that I quite enjoyed this past week. That’s the ‘Quinn Emanuel Delivers the Find Out to Ron DeSantis’ Fuck Around.’ I mean we’re talking about COVIC before, it makes some sense.
Joe Patrice: Yeah, okay. It certainly wasn’t on our agenda or anything but we can pivot like that.
Kathryn Rubino: I know but it’s such a good title. Joe, it’s such a good title.
Joe Patrice: See. You think that buttering me up is going to make me happier that you switched the whole schedule around on me for one second.
Kathryn Rubino: I know but I really thought it’s a really good title and also, I don’t compliment you particularly often and yeah, let’s go with it.
Joe Patrice: Now lord knows that’s true. So Ron DeSantis is thinking that he might be president. Well more accurately, he thinks he might be a republican nominee which is a weird thing because of course that would depend on Trump not running again. Moreover, Trump not running his son in his place. With that said, DeSantis thinks that he needs to do whatever he can to build a profile and he’s doubling down on the idea that COVID is all kind of made up and that we don’t need any sorts of protections. And part of that is he’s challenged the CDC’s recommended guidance for cruise ships and passed a law that says every ship that basically asks for proof of vaccination that they’ll be criminally liable for $5,000 for every incident. This obviously is something of a constitutional crisis to the extent that while these ships —
Kathryn Rubino: They’re just going around, aren’t they?
Joe Patrice: While these ships port in Florida, they are obviously traveling in international waters and the regulation of them seems to fit very much in the occupy the space sort of discussion within the federal government’s realm and be something that CDC can regulate. We also just had another judicial opinion saying that the CDC is well within its rights to issue these sorts of regulations when it comes to cruise lines. But he’s going to try and enforce state claims against cruises that leave from Florida. This puts cruise ships in an awkward position and Norwegian cruise lines decided to do something about it and hired Quinn Emanuel and they have sued the state on all these claims about how they don’t actually have any authority to do this.
I don’t think that this is anything that the governor expected to happen. I think when he did this largely symbolic law that the cruise lines would just go ahead with it and just keep running and keep doing what they’re doing. But as Norwegian puts it, despite all of DeSantis’ talk that he’s doing this to like help out the industry that brings so much to Florida, the cruise lines feel that if they aren’t allowed to enforce their vaccine protocols then you’re basically jeopardizing their business which is a very strong argument. So that’s been that’s been going on so now we have a showdown in federal court where a guy who decided to take his performative shot is probably going to end up looking like a loser which is not the sort of thing that engenders you to Trump’s mindset of who could be a successor.
Kathryn Rubino: Yeah. Although Trump has also suffered his fair amount of legal losses.
Joe Patrice: I just love — yeah true.
I just love that this complaint includes a dormant commerce clause issue. I mean —
Kathryn Rubino: Bravo.
Joe Patrice: I’m just like there’s something that I haven’t thought about in —
Kathryn Rubino: The bar exam?
Joe Patrice: No, I don’t even think the bar exam. I think it was long gone even before that. I think this was con like three weeks into con law and that’s about it. But yeah dormant commerce laws and then I got I got some random anonymous person like emailing all annoyed like I don’t see what the dormant commerce clause issue is here. Explain to me why you think there is and I’m like I don’t work for Quinn Emanuel. Like go talk to them.
Kathryn Rubino: It’s not my argument, yeah. So that is definitely I think about writing on the internet. Oftentimes, you’ll be explaining what has happened not necessarily making the argument yourself but saying so and so has made an argument and they’re like you’re wrong about this argument. I was like, no I am correct in that. This person is making the argument.
Joe Patrice: Yes, yeah.
Kathryn Rubino: That is what I am telling you.
Joe Patrice: Yeah. And that was a large part of what I dealt with for three weeks as that tweeb kept coming at me on twitter just like do 90% of what you’re mad at is the guy who’s beating you like a drum in federal court. It’s not I’m just reporting that it’s happening.
Kathryn Rubino: Yeah, I’m just the facts ma’am, nothing but the facts.
Joe Patrice: Yeah. Well, enjoy your little trip.
Kathryn Rubino: Thank you, thank you. It is significantly hotter than New York even though New York I know is backed up to summer, even though July 4th weekend was in the 60s. In New York, it is actually summer there but it is even hotter in Texas.
Joe Patrice: Not now. It’s breaking today It’s going to be pretty cool the rest of the week. Yeah.
Kathryn Rubino: Well, enjoy that I suppose.
Joe Patrice: Yes, I will try to. So thank you all for listening. You should be subscribed to the show, give it reviews, stars, write something just like any kind of thing. It shows engagement and that’s valuable to the algorithm overlords. You should be reading Above the Law as always. You should also check out some of the other shows like Kathryn hosts the Jabot. As I already mentioned, I’m on the Legaltech Week Journalists’ Roundtable. You should be checking out other programs that don’t involve us on the Legal Talk Network. Follow us on social media. I’m at @josephpatrice. She’s @kathryn1 which is that numeral one. And then you should, oh wow I am totally blanking on my usual boilerplate.
Kathryn Rubino: I mean it’s only we took a week off man.
Joe Patrice: That was it right? There’s nothing else.
Kathryn Rubino: I think that’s it. I’m just going to say peace then.
Joe Patrice: No, no. I mean that’s not totally it. No, also thanks again to Lexicon and NODA powered by M&T Bank of course.
Kathryn Rubino: Of course.
Joe Patrice: I really feel like there was one other.
Kathryn Rubino: You’re just like out of sorts here, aren’t you?
Joe Patrice: It’s really a disaster. Anyway.
Kathryn Rubino: All right.
Joe Patrice: We’ll just assume that’s done now.
Podcast transcription by Tech-Synergy.com