“The vast majority of hiring practices today are based on ‘the way it has always been done’ . . . based upon gut feelings, intuition, emotions, subjective beliefs, and common misconceptions about what actually works.”  This criticism rings true as well for the hiring practices of large law firms in the U.S., which have shown little industry-wide change since the advent of the Cravath System, what Cravath, Swaine & Moore LLP calls their “model for developing talent, incentivizing collaboration and client service, and building long-term relationships of trust.”  The Cravath System is widely emulated by a category of law firms (“Biglaw”) that typically are the largest—in both attorney headcount and geographic reach—and compensate competitively amongst each other. The Cravath System seeks to derive partners “from the ranks of [associates]” and to recruit “the most promising students from a diverse array of excellent law schools” while providing “associates with rigorous and expansive training.”  Such a model for attracting and developing talent has grown to dominate Biglaw and retains an impressive amount of inertia.  “Doing something else than the norm requires effort.  But it’s easy to say that hiring is important.  And it’s easy to use the same hiring process and screening questions as everyone else.”  For many decades now, Biglaw has comfortably settled on the Cravath System’s hiring philosophy as a sufficient and preferred talent acquisition model. 

The Cravath System is not just a talent acquisition model, it is also a talent development model intended to be applied to the same individuals it attracts.  “However, the strategy of developing your own talent requires enormous discipline and bold bets in building the infrastructure needed to succeed in deploying this strategy.”  The Cravath System has acted as the backbone of Biglaw for many years now and law firms have generally not been perceived to tout incompetent professionals.  While the enormous discipline practiced and bold bets currently placed by Biglaw can be argued as more or less effective, improvement is always possible, especially in a business world with ever-evolving goals and competition.  Biglaw risks growing complacent, weathering undesirable turnover rates in hopes of producing enough star talent to maintain profit margins and competitive edges.  However, “traditional strategies are no longer enough.  In today’s era, your team’s talent and passion should be your competitive advantage.”  How can Biglaw gain the courage to evolve out of the cautious approach to attain new competitive advantages when the industry as a whole is reluctant to innovate?  “The cautious approach is a ‘recipe for mediocrity,’” but mediocrity is not what drives the success of law firms.  Law firms want rainmakers—profitable partners who have survived unfavorable turnover rates—but little has been done to identify who will or will not become a rainmaker.  “If your talent acquisition playbook is the same as most other [firms], you’re in trouble.  Chances are that another firm is going to run the same plays with more resources and superior talent—and win.” 

Sadly, this is exactly what has been occurring, except that no firm is truly winning.  Biglaw has found itself in a perpetual arms race for talent through compensation.  But, even market-leading firms find that “their competitors have followed suit and, in effect, will merely have raised the compensation bar for their industry.”  The ineffectiveness of salary-raising races can be evidenced by the tech industry’s growing capture of graduates from top-ten MBA programs, where “despite lower salaries, tech has been able to extract more talent from these elite programs” like the traditional MBA routes of financial services and consulting firms (two firm types that acquire talent using a similar process as Biglaw).  While law firms have not yet faced such threats to as significant of a degree, the future is far from secure.  The Big Four accounting firms, despite currently paying less than half of Biglaw’s starting salaries, have been perceived for over a decade now as a looming competitor for law school graduates.  The accounting firms are primarily prevented from encroaching on Biglaw’s business (for now) by the inability to practice law rather than an inability to compensate.  Nevertheless, accounting firms have increasingly employed law school graduates in past years.  And, in a scenario in which accounting firms begin hiring practicing lawyers, law firms will suddenly have to compete for talent, beyond compensation.  Later described in this Note, such a scenario could prove problematic to Biglaw because firms do not screen for associates that openly desire high compensation; they instead interview for the exact opposite—intrinsically motivated employees.  Law firms offer competitive compensation, but do not default to selecting compensation-motivated employees. Further, these compensation-motivated employees may drift to firms able to offer a larger variety of non-compensation reasons to work.  As it becomes clearer that law firms are mirroring each other’s hiring practices with no real hiring threat around, it also becomes clearer that few law firms have any unique competitive advantage in terms of talent, which is the very prized possession of any professional service firm.  In Biglaw’s tight contest for talent, slightly tipping the scales by finding marginally better candidates can make an impressive difference.

Although a law firm may employ hundreds or even thousands of revenue-generating employees, law firms operate under a Pareto or power-law distribution, where it quickly becomes apparent that having one rainmaking partner is many times more valuable than an army of entry-level associates.  This is especially true in a profession where “the dollar value produced by each person can be precisely tracked”—the billable hour for associates and fees collected for partners conveniently serving as the dominant measures of productivity in law firms.  Power-law distribution is not unique to law firms, since research of over 600,000 professionals and 198 samples showed that “[r]esults are remarkably consistent across industries, types of jobs, types of performance measures, and time frames and indicate that individual performance . . . follows a [Pareto] distribution.”  Thus, it is advantageous for law firms to improve at recognizing and acquiring talent with the highest productive potential.

While the efficacy of existing hiring practices in Biglaw is certainly debatable, moving a mountain is not accomplished by finding the biggest shovel possible.  A complete overhaul will take decades, bring chaos and costs, and be subject to great resistance in an already resistant-to-change industry. Blatant first-movers will be punished by clients and competition alike and will risk the disease of over-uniqueness.  There is also no obvious argument that Biglaw needs a complete transformation either because law firms are already successful as is in developing rainmakers and pleasing clients with competent legal services.  Change must be slow and deliberate using tools that are certain to work and will bring meaningful impact.  Here, the task is not to upend what law firms are looking for; we can put faith into the fact that law firms have been and are continuing to be profitable while using the Cravath System.  Instead, the task is to approach select imperfections and improve Biglaw’s hiring process rather than its hiring criteria.  This Note combines a number of perspectives and disciplines to proffer a unique suggestion toward recognizing better talent and acquiring a new intra-industry competitive edge.