What to make of those astronomical Supreme Court signing bonuses?

The law, lawyers, and the court.
March 10 2007 7:48 AM

Bonus Round

What to make of those astronomical Supreme Court signing bonuses?

OK, my friends who are struggling to pay your mortgage, put away money for your kids' college fund, wondering why the day-care lady earns more per hour than you do, and hoping duct tape and copper wire will hold the boiler together until spring, consider this (calmly, please): Later 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 will be $200,000 on top of a starting salary of $145,000 to $160,000. Which adds up to an awful lot of Pottery Barn sectional furniture for someone who is, on average, 26 years old and just two years out of school. As Chief Justice John Roberts 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.

Dahlia Lithwick Dahlia Lithwick

Dahlia Lithwick writes about the courts and the law for Slate. Follow her on Twitter.

Advertisement

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 seemingly it does so exponentially. When it hit $ 150,000 two years ago, it was hard to pick myself off the floor. Thomas Goldstein, who recently started the Supreme Court litigation section at Akin Gump Strauss Hauer Feld, confirms that in the major markets, no large firm can expect to pay less than $200,000. "The only question," he says, "is whether it will be more."

With so many powerful firms competing for only 36 clerks, it's no surprise that the high court's graduating law clerks will soon be staring down the barrel of 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 while 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.

Sidley Austin Brown & Wood's managing partner, Carter Phillips, agrees that the Supreme Court's selection system does single 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 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 their justice, Supreme Court clerks have been exposed to a much broader set of federal issues even than their colleagues from the federal appeals courts. As a consequence, they don't have nearly the learning curve of other new associates.

But even Phillips acknowledges that the rates in this bidding war have his partners back 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 of wooing some particularly fabulous Supreme Court clerks, the dollar amount in question was closer to $5,000 or $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 Congress still refuses to pass legislation to provide a 16 percent increase in federal judges' salaries. 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 some young associates are now being paid around $145,000 and many partners bring in a cool million and 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, 37 percent of associates leave large firms within the first three years, and 77 percent depart within five years. Lawyers no longer stay at a single firm for decades. Young lawyers demand more lifestyle accommodation and want to bill fewer hours. It's taking them longer to make partner than it once did, and they resent that. And as demand for attorneys increases, the number of graduates from the nation's top 25 law schools has remained constant. In short, the demand for lawyers is increasing, and the supply wants their weekends back. The solution has been to throw more money at them—and raise rates for clients. Top partners can now bill $800 an hour or more for their time.

But even that doesn't fully account for the amount of money being thrown at Supreme Court clerks. There must be noneconomic factors pushing these numbers up.

The sheer bling factor is a part of it. On his legal gossip blog, Abovethelaw.com, David Lat tracks lawyer salaries with the glee 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. Lat notes that these new associates just don't bill extraordinary hours; that boutique appellate practice isn't that lucrative; and a good 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 their sales pitches for the academic market.