Case

# Recruitment of Junior Attorneys

Solved 600+ times

## Problem Definition

We are a reputed law firm. We are thinking of hiring associates right out of college at \$120,000 per year. Do you think it is a good idea?

The case is designed to be presented to the candidate by an interviewer, who plays the role of a representative of a reputed law firm.

## Short Solution

Hiring associates at \$120,000 per year is a bad idea as a basic profit analysis shows a loss of \$10,000 per associate.

## Detailed Solution

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case.

### I. Background

Wait for the interviewee to ask questions regarding the background of the case. A few sample questions are shown below. You could use them to help the interviewee with information, if he's stuck.

This is a basic profit = revenue - cost analysis case.

### II. Revenue

#### Does the firm have work for new associates? If yes, could you please provide the hourly/daily billing rate and the number of hours/days billed?

• Hourly billing rate: \$50
• Number of hours billed per day: 8 hours
• Number of days worked per year: 300 days approximately

### III. Costs

#### Should I consider any other cost apart from salary, taxes, overhead, training and recruitment costs?

Please consider only salary, training and recruitment costs. We expect an associate to stay with us for a year.

• Training: \$5,000
• Recruitment: \$5,000

### IV. Solution

Let us first calculate the marginal revenue associated with adding a new lawyer.

Revenue for one year = Hourly bill rate * Daily billed hours * Days worked per year = 50*8*300 = \$120,000

Costs: Total cost = Salary + training costs + recruitment costs = 120,000 + 5,000 + 5,000 = \$130,000

A basic profit analysis tells us we will incur a loss of \$10,000 per associate per year.

### V. Concluding Observations

Hiring associates at \$120,000 per year is not a good idea as a basic profit analysis shows a loss of \$10,000 per associate per year. In case the salary figure is above market, we could consider offering a lower salary.

## Difficult Questions

If the interviewee solves the case very quickly, you could discuss factors such as:

• Quality of lawyers
• Raises to be given in subsequent years
• Change in the associate's average tenure with the firm
• Option of hiring experienced lawyers or cheaper legal assistant, etc
Related consulting question(s)

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