Where does big law go from here? What’s in store for the next generation of lawyers as they enter the industry? In this episode, Julian Sarafian represents his peers as he speaks about his hopes for positive change for the future of the legal profession. The new breed of young lawyers brings with them new ideas and strong views on issues. As an advocate for mental health, Julian touches on the neglect the industry has for the psychological wellbeing of lawyers and how this negatively impacts clients, businesses, and the profession as a whole. In his talk with Dr. Kevin Sansberry, Julian also addresses the counterproductive structures in the industry and the many ways we can remedy that to promote efficient and productive models. There’s a lot to discuss when talking about the future of law.
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Where Does Big Law Go From Here? Toxicity In The Legal Industry With Julian Sarafian
One of the things that I wanted to dive into as we think about the future. We talked about your story of how you got into Big Law. We talked about what’s going on in the present day. I wanted to use this conversation to center on what is next as we think about moving towards something greater than what’s now. What does big, long do you think about as it relates to billable hours, the organizational culture as a whole, and as it relates to how we attract the new generation of lawyers to center their wellness and wellbeing.
There is a lot that we could touch on there because Big Law in the legal industry is undergoing a lot of structural and infrastructural change, and demand for people going into Big Law, whether students are interested in it, whether lawyers are staying in it. All of that paradigm is shifting. There is a lot we can unpack from in-house companies, tech companies and the smaller firms to the culture itself. I’m happy to start we are having a great discussion.
Let’s talk about the billable hours concept first because maybe not a lot of people know about that. Can you walk us through what that is in that industry and how it works?
The premise of the billable hour is law firms charge clients by literally six-minute increments of time that we spend on your matter. We have spoken for three minutes. If this were a client call and I were to charge you, I’d round up, say, six minutes, my rates $600 an hour. $100 right there.
If I drafted an email summarizing things on our call, that counts. If I’m thinking about a matter while I’m eating lunch and I get worked on in my head, that counts too. This incentive system has a host of problems with it. First of all, what incentive does the lawyer have if you are getting paid more money to spend longer on your work?
Longer, it’s not to take a shorter amount of time. Off the bat, law firms don’t care about being more efficient and innovating simply because it’s not in their financial best interest, and they know that at a deep level. The more efficient they are, the more clients they can take, the faster they can grow. The longer they take on things right now, the more money they make. Clients complain, but clients also, unfortunately, stay with these firms because they have retained this reputation as sophisticated work and whatnot.
A lot of firms are moving away from this model and charging by the hour and are offering fee-based structures where, “Client, we’ll charge you $100,000. We’ll take care of X, Y, Z for you for the next year. Corporation, I will do all of it for $1,000. No matter how long I spend on it, that is the price you pay. That is what the customer can expect to pay.”
Clients are happier with it. I don’t think a lot of lawyers care either way unless they are the ones at the top that are cashing in off the billable hour model. Anyone that I know who are starting their own law firms, they are not charging by the hour. Many law firms that I see are that are growing very quickly have a blend of billable hour type of work and a fee-based structure.
It’s going very slowly, and that’s what the system needs. I don’t want to say that lawyers cannot be trusted, but it’s more that we should be pushing attorneys to be more efficient and more productive with their time. You should be charging people by the minute and letting that incentive structure run away with itself.
With that incentive structure, it’s not the lawyer that’s setting and gets that full amount. Doesn’t that get split somehow?
You are right. At my old firm, for example, as an associate, I was a billing $800 an hour. I don’t see $800 an hour. Even partners, to some extent as well, so yes.Law firms don't care about being more efficient and innovating simply because it's not in their financial best interest, and they know that at a deep level. Click To Tweet
I say that to say because there’s one thing of hourly and salary labor, if we are talking about labor. As it relates to what lawyers are doing, having that be by the hour, you are going to have to push so many hours into it to make your worth or whatever. That’s going to negatively impact the mental health of folks. They are going to be having to push to work more hours to seem competent, busy and things like that. That tends to happen.
I can tell you that psychologically, when going by the number of hours that you work, and a lot of these law firms, especially in Big Law, you have a target to get your bonus. At my old firm, it was around 1,950. You begin every single moment of every single day as an opportunity cost of, “What was my number that I build that I get credit for my bonus?”
Now, if I go to the gym, if I go out with friends, if I go to sleep, I play video games, that doesn’t count as lost time. Every moment now it infiltrates your mind as, “Should I spend this time working because I’m going to get credit for it because that’s how the system works?” That has nothing to do with how efficient I am. It has everything to do with how much time I’m spending.
Time is a resource. Your resource is being gamified like the game right there, but you are depleting your psychological resources. You are not going to the gym now. What types of firms? You said smaller firms tend to not have that billable hour concept to do more project-based or average frames. Are there any big firms doing it at all?
Big firms are moving towards it primarily because clients are pushing for it. I have not been a single corporate client, even the ones that are paying millions, that prefer the charging by the hour. Why would they? Lawyers have clout and Big Law has this staying power. There are on the fringes of some clients. This fee-based model is infiltrating some of the deals in Big Law, but by and large, this is totally my own guess here, but 80% to 90% of the work is still based on the billable hour and not on a fee-based, but it’s happening slowly.
Our lawyers that are in that structure, are they speaking up about that fee-based system or are people like you speaking up that are out of the system? Do our people in the system speak up about it yet?
Lawyers tend to be pretty risk-averse. I don’t see a lot of people speaking up about it specifically, honestly. It doesn’t make a difference to them because as associates, they come in, they do their job and they get paid a paycheck. They walk away whether or not the top, the partner has negotiated with the client to say, “We are going to charge you based on a fee or hour.” It doesn’t even matter to them because they are doing their work, trying to stay healthy and manage their mental, etc.
It matters to them if they are on that hamster wheel or that treadmill or whatnot. It matters to them in that way, but they are going to see their salary regardless of the structure behind the scenes. It sounds like the structure behind the scenes is built to privilege those who were making the most money in the system.
It’s by design. It’s not just Big Law. It’s banking, finance, consulting, or accounting. It’s the structure.
I will say it’s consulting. I’m a consultant.
Any official business that has the top-down leadership with the payouts annually.
As we think about these smaller firms that are more nimble and smaller firms that are more likely going to be able to make these changes faster, what are some of the things you are seeing in how they structure? You mentioned having a combination or a hybrid. What does that look like?
There are a couple of things that I have seen that are cool. First of all, there are subscription models now that I see law firms doing. Where they say charge you $100 a month and you have access to all these resources and will help you with X, Y, Z. That way, on the client-side, the cost is controlled. On the attorney side, it’s reliable what they can provide and they will provide X, Y, Z. That’s awesome.
Fee-based is the most common new trajectory that I see where, “You want to incorporate a company?” “Sure.” “I will incorporate a company for you. It will be a $500 flat fee. I will take care of all of it for you.” I would say those two are the most popular in terms of rising through the ranks, but make no mistake, lawyers are self-interested.
If you are a lawyer and you are saying, “80% of my competition is charging by the hour. I could charge by the hour of $500 an hour or whatever versus doing a fee-based model.” Many lawyers, if they don’t intend to scale a business and an enterprise to provide legal services but instead, they want to practice law themselves are still opting for the billable hour system because it suits them. We need to feed our family. No shame. God bless, but there’s a mix out there.
Let me pivot and talk more about that regulatory stuff that we touched on last time. We had talked about disclosure as it relates to the legal industry. Can you give us an overview related to that disclosure? We were talking more so about disclosure requirements related to health, mental health and wellness.
The background here is to become a licensed attorney, you need to pass both the bar exam and you need to pass what is called moral character and fitness, which is more of a process than an exam. You essentially fill out a questionnaire and a criminal background check, etc. One of the questions that many states still require is, “Have you received and do you have any mental health conditions?”
Historically, this has done a lot of things. First of all, it scares lawyers into seeking mental health treatment off the bat because, time after time, there are stories of folks who have disclosed that they have received mental health treatment who have faced delays in their certification process who have grappled with stress that they shouldn’t have had to.
Many have realized that this is stupid. We don’t need this. Why should mental health be part of moral character and fitness at all? It’s silly and it’s ridiculous because I read a statistic that 70% of lawyers have reported having anxiety in 2021. What are we going to do, disbar 70% of people? It’s ridiculous. It’s not technically legal to refuse a license and licensure for an applicant based on the fact that they received mental health treatment.
Unfortunately, defacto and dejure are different. What happens is not necessarily what the Federal law states. A lot of states have away from this disclosure requirement, California and New York, amongst others, removed it entirely. That’s the direction we need to go because the stigma in the legal profession for mental health is very deep. The conversations are basically nonexistent and these barriers and gatekeeping mechanisms like asking for disclosure in a way that scares people is the last thing we need when our entire profession is sinking, miserable and underwater with mental health issues.
Do you see that becoming a Federal change or do you see that being more state by state?
I wish I had faith in Federal Congress to do something constructive, but I do not. I’m thinking this is mainly going to be the distinction. I’m not even sure the Federal supremacy clause can reign supreme here, but the state bar associations are the ones that are in charge of this. I’m sure there might be some pushback if the Federal government tries to get involved here. It’s going to have to be state-by-state distinction.The stigma in the legal profession for mental health is very deep. Click To Tweet
I imagine, based on what I saw after our last call, there are states that are ahead of the game right now. What is the direction look like if the state bar association is thinking about what to do next? What is that next step? What are they doing?
There are some bar associations that are doing a good job with mental health. Massachusetts has a psych disclosure requirement. State bar associations need to start talking about mental health and need to start addressing it and paying attention to it. We can’t have a bar and a legal guild profession when everyone is miserable and lawyers cannot take care of themselves. It’s not sustainable.
Massachusetts, I have a friend of mine who works with them directly on creating mental health resources. Their state bar association seems very involved with pushing the issue and getting out into the open and pushing the conversation. We need more resources and conversations, and we need the state bar associations to take care and pay attention. What are we if we don’t have our mental as a profession? It’s not a good place to be.
The last thing as it relates to this piece is that there is a new crop of lawyers graduating every year. We have new individuals entering the marketplace for these roles and the lawyers. What are you seeing as these new generations of lawyers get into the space about what they are talking about of how they are speaking up? Is it more or is it less? What are their thoughts on the mental health piece?
Our generation is very much aligned that leadership is out of touch. I could say, at least for Big Law, we are voting with our feet and leaving and doing other things. I have personally not seen the level of brain drain out of this industry historically ever to the extent that I’m seeing right now. I can count on one hand the number of my friends who were still in Big Law and they are not happy. They are going to leave very soon.
As far as mental health, our generation is taking it more seriously. The problem is that when we leave Big Law and, in general, when we are junior in this profession, we don’t have a lot of power. We don’t have a lot of the resources. We can’t go into the C-Suite office of a law firm and say, “Let’s change this. Let’s innovate that.” They don’t listen.
The reality is we ended up leaving, going in-house. We ended up starting our own law firms like what I’m doing. We ended up going into other industries and being innovators, which is all great, but it creates a self-selection problem. The folks that remain in this industry and in a lot of these spheres that need mental health help are not getting the leadership and the folks who were in the younger ranks that we need, they are pushing for it because we eventually leave.
It’s like a pipeline issue now because they are not going to be able to make partner because you don’t have enough people to make partner. People are leaving for that. Are they talking about this retention piece?
Big Law has raised salaries probably five times since the pandemic began, which is unprecedented to have raised it that many times, and it’s because they are losing people and they need bodies. My friend was telling me that this is a leading, top ten ranked law firm are hiring foreign graduates of law at a higher rate than they ever have before because they need bodies. They cannot find an American JD talent, at least up to their standards, whatever that means, to fill that void.
United States’ way to do something, going to throw money at problems and not address the problem.
Unfortunately, it’s not an efficient system because the industry has this reputational stranglehold on high-end technical, sophisticated, legal work. The growth of the industry is slow for sure, but it’s going to be a death by 1,000 cuts scenario or it’s a go down. There’s not going to be a break and it’s going to take time.
What are the universities doing? What’s their role in this systemic change that’s necessary?
Universities and law schools should be doing more to raise awareness and push resources about mental health in general. The more that law schools can teach students that the profession is not going to do a good job, giving them the tools, teaching them what they need for mental health, the better. Beyond that, unfortunately, law school’s incentives are to get their students jobs.
Ideally, jobs that are desirable, that are technical, that are good. Law schools want folks to go into Big Law because it’s good training. It’s good money. It’s prestigious. In my opinion, you are not going to see any pushback from the law schools in this way on the industry, but you could have some infrastructural change on the law school side by having them provide more resources and take this more seriously mental health-wise.
When we think about resources that could be provided, what do you think of as it relates to? If I’m a lawyer, to get into this space, what are the resources?
Off the bat, I would have conversations about it and open up the space. Accept that we have a problem, to begin with. One thing that I felt when I was in law school was the mental health, and I felt this in a lot of other places too. Mental health is brushed under the rug. It doesn’t want to be discussed, even though our profession has a lot of issues and law students face anxiety rates up to 50% and depression up to 30%. It’s not something that we even want to discuss. We need first to open the space conversationally.
On top of that, you can add resources like therapists, emotional coaching, career coaching, mentorship, mental health days. There are a lot of different things that law schools can do at their disposal that they are not to at least tell people that it’s a thing and that mental health exists. They don’t even acknowledge that it exists, and a lot of law schools don’t understand how to manage it and so they don’t.
I’m not trying to downplay, but that’s what we need in every industry, to be honest. It’s not rocket science. People choose to ignore these things and it’s like you have to name it to tame it. For the industry to wake up, it will take some industry leaders with that social capital to recognize it because then you can have that bigger impact. Otherwise, the ones that can throw money at their problem, we’ll do that and that’ll be the norm until we get to that death by 1,000 cuts.
It’s going to be a slow-moving process that we are probably not even going to be able to see unfold. I can give you one data point. Big Law firms right now, the top ten, brag about having growth rates of 10% to 20%, but smaller firms are entrepreneurial, growing at rates that are 100%, 200%, 300%, 400%, 500%. I have friends who are leading these firms that are growing at those rates, but that’s also small. It takes time for them to be at a level of sophistication and complexity that these clients sometimes require, and certainly that the reputation of Big Law provides.
Part of it is a commentary on our societal connection to mental health. If you think about it, this conversation needs to be had in high school before I go to college. I’m a lawyer. From middle school to high school, it needs to become that because you don’t turn eighteen and all of a sudden, you know all the mental health tricks and meditation. You have emotional resiliency. That’s not how it works.
It gets worse because now you got to pay bills and stuff. This is a grander problem and the onus is not on the lawyers. The onus gets puts on a lawyer is like, “Just relax. I saw some you were talking about. You are two weeks for the profession.” That’s BS. The onus is not on the individual. The onus systems to be able to listen, and a group of individuals need to be able to do that because we make up the systems too.
Leadership in the law, as much as I love the legal profession and think it’s an honor to be part of. Leadership is out of touch in a lot of ways. It costs us not with mental health, but it costs clients, the whole system, the judiciary and the criminal justice system a lot. Everything and everyone like you were saying.What are we if we don't have our mental as a profession? It's not a good place to be. Click To Tweet
If you had to give us words of wisdom for the legal profession so that we can walk away and do something different, what would your advice be to the bigger law firms?
I saw an article about a very high-powered attorney in Pennsylvania who took his own life. He was the co-founder of this law firm, his own law firm. He was working on a lot of high-pressure cases. I see the same lip service in the legal press about the partnership is very sad. We all should be taking a break, and this is such a good reminder. I want to get every lawyer in the United States and whoever else globally in a room, look at everyone in the eye, and say, “What are we doing? Have we lost sight of reality?”
As a lawyer that’s with other lawyers, I don’t give a crap what your client needs. This is not how we are supposed to be living, progressing, and pushing ourselves to this end, and it’s everywhere. It’s a matter of urgency that we need to start paying attention and taking the process seriously, taking mental health seriously, and talking about it.
Creating change for all attorneys so that we don’t feel this competitive and intrinsic self-motivated impetus to go and be the best lawyer and out-compete the other lawyer. We need to band together and realize we can all make some change here as a group that betters all of us, and by extension, the rest of the world because clients don’t want to see their attorney taking their own life. Communities don’t like that. Fellow citizens don’t want to see that. No one wants to see that.
You are speaking towards how we can be more collective instead of that individualistic competitive. That’s what we are trying to counteract anyway, as we talk about trying to build community. In the legal profession, that’s important. We know it’s impossible for you to grab every lawyer in America and say that. You come back and say, “You can keep doing what you are doing.”
That’s a step in the right direction. Those that need to hear the most sometimes are the ones who are even reading. We have to be able to make it make sense to them and typically, it’s money. One of the things I’m thinking about is how can we start costing out turnover? If I’m at my low mental health, the outcomes would be lesser.
How can we start talking dollars and cents at the same time? I totally agree. Anytime you try to take the empathy route, they do the thoughts and prayers thing and then move on and do what they have been doing. For people who are not ready to listen, what they will listen to is the financial implications, more so because that’s all they care about in the first place. I wonder, in legal associations and different things like that, how can they start being conversations at the talking to the top like, “This is costing you money.” Having people quit and all that stuff. Talk there. That was the sense.
I wish they were rational enough to listen to that. In their defense, it’s the short-term model by which they are paid. They really care. They are making $2 million. If they make $2 million, $2.2 million, but then I’d rather keep things the way they were last time because it’s less risky, and lawyers tend to be risk-averse. Easier, that’s fine. That’s the mentality you have to battle, which is not that simple.
We have to counteract it at all angles and get as many as we can on the train of caring about mental health and not putting on a face to act like you care about mental health. That’s what I see a lot in a lot of industries and that’s not fortunate. The legal profession’s in the top five in the suicide rate. I don’t know how it is globally, but at least in the United States. That is serious. That’s not a new figure. The platforms are burning. We need change.
We do and it’s for our own good. We want to be an attorney and advocate for others when we can’t advocate for ourselves.
My last question is, do you have hope?
I have a lot of hope. I have seen more change with folks leaving these firms because of mental health with people speaking out in the profession like myself about how the unit isn’t listening to other law firms and other smaller competitors rising through the ranks and treating their people well and taking mental health more seriously.
In-house companies, Google, Amazon, and Apple, hire people who are more junior to give them this better lifestyle. Bar associations are slowly, but they are moving slowly in the direction of understanding mental health and taking it seriously, talking to people like me who have had personal experiences with it. The press and the media and the legal profession are also taking note because you can only do so many press releases on a merger and acquisition by Davis Polk before it gets boring to your readers.
When so many people are affected in the legal profession, implicitly families and friends, by mental health issues that attorneys face, at a certain point, the attention is going to go because people do not like to see their fellow friends, family, etc. or colleagues suffering. I am hopeful. It’s going to take time, a lot of work and fighting. It’s going to take a lot of people like you being very generous with your time and platform to have people like me on, but we will get there.
Julian, this has been wonderful as always. We will look for more ways to collaborate because, like I said, there’s more work to do and we have to keep going. I appreciate you.
A pleasure to be on. Thank you so much for your time.
About Julian Sarafian
Julian Sarafian is a lawyer, mental health advocate, writer, content creator, and entrepreneur. After graduating from Harvard Law School Sarafian worked at law firm Wilson Sonsini practicing corporate law before quitting to focus and advocate for mental health. He has advocated for mental health on digital platforms including Tiktok, Twitch, Instagram, and LinkedIn, where his content focuses on the importance of mental health in the workplace and academic world. His advocacy has been covered by the New York Times, NewsWeek, and Bloomberg.
As of February 2022 his cumulative following across digital media is nearly 250,000. In addition to his advocacy work Sarafian is a co-founder and CEO of Nest.Mode, a startup focused on revolutionizing shower storage. The Nest Wall – Nest.Mode’s first flagship product – has been designed to upgrade shower storage everywhere with a proprietary design that includes magnetic-based refillable bottles, two storage holsters, and hooks for all of one’s shower accessories. His written work has been published in Bloomberg Law and The American Lawyer.
Show notes: You can reach Julian directly at firstname.lastname@example.org. His Discord community is a safe space to talk about mental health and get career advice, and he also creates content related to the legal profession and mental health on Tiktok and Instagram. All of the various links can be found in beacons.ai/juliansarafian.