If you’re a frustrated M&A associate watching your bonus slip away because the economic downturn robbed you of precious billable hours, take heart that’s all you’re losing!
Out in North Dakota, the law firm of Larson Latham Huettl sent bills to two former associates alleging “overpayment” when the associates didn’t bill enough. The firm took both to court and won — both cases are on appeal (which you can check out here and here).
The key language from the firm’s employment agreement reads:
Hours Billed Discrepancy. In the event that Associate bills out less than the base quota for a three month [sic] period, the Associate’s salary will be reduced appropriately at the discretion of LLH in order to make up for any discrepancy. Any discrepancy where the actual hours billed is less than the base hours required will be considered to be a debt owed by Associate to LLH at the end of the calendar year or at the termination of employment.
There are factual and legal disputes — which is why these are on appeal! — not the least of which is the fact that this agreement was slapped in front of the lawyers in March 2020. I don’t know if you all remember March 2020, but some stuff went down. Stuff that (a) made associates terrified of losing their jobs, and (b) made partners eager to find new revenue streams to deal in the face of a drastic drop in work.
But that’s all for the courts to work out. For our purposes, let’s just take this language in a vacuum.
And… what in the actual fuck? This is some real “owe my soul to the company store” nonsense. In a functional society, the remedy for not keeping your hours up is getting fired. If folks aren’t bringing money into the firm, the job of a boss is to cut them loose or accept it. But under the terms of this agreement, the firm is actually best off keeping people on the payroll, knowing that the partners get paid either way.
During a pandemic slowdown, hiring associates to not work and then billing them for their “debt” later would be a reasonably lucrative business model!
But, wow, it’s an objectively awful one.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
