Paragon Legal - A New Model (A)

CASE: OB81A
DATE: 03/21/12
PARAGON LEGAL:
A NEW MODEL (A)
INTRODUCTION
When Mae O’Malley started the law firm Paragon Legal in 2006, she knew she was creating
something new in the industry. Paragon Legal was a law firm where attorneys could find
meaningful, high-paying work while maintaining a balanced lifestyle. Eighty-five percent of
attorneys at Paragon Legal were women with children, but the firm also attracted women without
children and men who wanted to find a work/life balance. A career in law typically meant very
long hours, inflexible schedules, and serious penalties for stepping out of the field for any length
of time to focus on children or for other reasons. Paragon Legal was designed specifically to
meet the needs of high-level attorneys who wanted to have a flexible schedule and work 40 hours
or fewer a week.
Paragon Legal contracted with clients that needed attorneys to fill in on projects ranging in
duration from a month to multiple years. O’Malley wanted Paragon Legal to be the “gold
standard” of the industry, and she set the bar for its attorneys quite high. They needed at least
eight years of experience, including in-house experience (working for a company directly, rather
than for a firm servicing that company), and stellar academic credentials. Even with contracting
out these very experienced lawyers, Paragon charged a much lower rate than traditional large
firms.
By the summer of 2010, Paragon Legal had become quite successful, with big name clients such
as Google, Apple, Cisco, and Netflix. The firm had over 35 attorneys deployed on projects at any
given time, and annually had 75 attorneys total on projects or ready for projects. Nevertheless, it
received much more work than it had the capacity to handle. Even though Paragon Legal did not
Debra Schifrin, Professor Sarah A. Soule and Professor Shelley J. Correll prepared this case as the basis for class
discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
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to Feb 2024.
Paragon Legal: A New Model (A) OB81A p. 2
market itself, the work just kept pouring in. Given this success and growth, O’Malley had to
decide whether to scale the company, and if so, how much to scale and how quickly to do it.
LANDSCAPE OF THE LEGAL INDUSTRY
The landscape of the U.S. legal profession was very well established in 2010. Most private
sector, for-profit civil lawyers either worked at law firms as associates, partners or staff attorneys
or they worked in legal departments at companies as in-house attorneys. A final option was to
work as a contract attorney either for a law firm or for a company, a type of job which some
referred to as “lawyers for hire.”
Law Firms
Corporate law was a $100 billion global industry,1 and most firms operated in quite a formalized
way. Normally firms hired law school students for the summer between students’ second and
third years of school, and if the firms were happy with the students’ performance, they were
hired full-time after they graduated. First-year attorneys at large law firms had a base salary of
$160,000 a year, and the median for U.S. firms of all sizes was $115,000. (See Exhibit 1 for a
chart of law firm salaries.) As associates, attorneys moved in lock step, receiving the same pay
based on the number of years they had served the firm. An eighth-year attorney at large firms
had a base salary of $225,000, and the median for an eighth-year attorney at U.S. firms of all
sizes was $162,000. Bonuses varied widely, but could be quite substantial. In 2010, bonuses for
associates at top Wall Street firms went as high as $35,000, which was actually a substantial drop
from about $65,000 in 2007.2
Despite these high salaries and bonuses, in 2008 law firms’ attrition rates averaged 20 percent a
year.3 Almost 80 percent of associates4 (male and female) left their firms by the fifth year of
practice,5 with that number rising to 85 percent for minorities. (See Exhibit 2 for attrition rates at
U.S. Law Firms.) A 2007 MIT study showed that the lack of work/life balance was the number
one reason women left law firms and one of the top three reasons men left law firms. For women
leaving law firm jobs, 37 percent went in-house, 9 percent went to government jobs, 8 percent
went to nonprofits, 24 percent worked as non-lawyers, and 22 percent were unemployed.6
1
Nathan Koppel and Vanessa O’Connell, “Pay Gap Widens at Big Law Firms as Partners Chase Star Attorneys,”
The Wall Street Journal, February 8, 2011,
http://online.wsj.com/article/SB10001424052748704570104576124232780067002.html
2
Vanessa O’Connell and Nathan Koppel, “Law Firms Hold Line in Setting Bonuses,” The Wall Street Journal,
December 27, 2010.
http://online.wsj.com/article/SB10001424052748704610904576031693004253276.html
3
Caroline Elefant, “Law Firm Layoffs Are the New Attrition,” Law.com, February 6, 2009.
4
“Associate Attrition skyrockets by Year 5,” Redwood Analytics, June 18, 2008.
Http://www.lexisnexis.com/community/redwoodanalytics/blogs/morepartnerincome/archive/2008/06/18/associate-
attrition-skyrockets-by-year-5.aspx
5
Paula A. Patton and Cynthia L. Spanhel, “Toward Effective Management of Associate Mobility, a Status Report
on Attrition,” National Association for Law Placement, Inc., Foundation for Law Career Research and Education.
6
Deborah Epstein Henry, “Law and ReOrder: Legal Industry Solutions for Restructure, Retention, Promotion &
Work/Life Balance,” American Bar Association, 2010, p. 94.
to Feb 2024.
Usually attorneys were on the “partner track,” working toward becoming a partner at the firm.
After approximately eight or nine years, the firm made a decision whether to make an attorney a
partner―a very lucrative position. Per partner profits could be more than $2 million a year at top
firms.7 The average amount that partners at U.S. firms earned was $640,000 a year, but top
rainmakers (partners who brought in a large number of new clients and revenue for the firm)
could earn $10 million or more.8 Most firms also had an “up or out” policy: if an attorney did not
make partner, s/he would often need to move to another firm or find an alternate position
elsewhere.
Most firms operated through the mechanism of billable hours; attorneys accounted for their time
in six-minute increments so they could tell clients exactly how much time they had spent on a
project. Most firms required attorneys to bill at least 2,000 hours a year, and billing 2,000 to
3,000 hours was not unusual.9 As large firms trended toward leaner staffing, billable hours were
again on the rise, while the number of associates declined.10 The average number of hours
attorneys worked per week was 55 to 60, as attorneys also worked non-billable hours.
First-year associates were billed out at between $20011 and $450 an hour, and the client had to
use its own resources to train the associates to work on the relevant project. Senior attorneys
could be billed out at $900 an hour, and a few leading attorneys were charging as much as
$1,250 an hour.12 Firms charged the clients four or five times what the firms paid the
attorneys―a concept called leverage. The difference went to partners’ salaries, overhead and
support staff.
Staff Attorneys
Staff attorneys worked within firms but were hired with the understanding that they were not on
the partner track and had very few prospects for promotion to partner.13 They were also paid less
than associates with the same amount of experience.14 Typical firms hired nine staff attorneys15
and over 60 percent of staff attorneys were women,16 which was the highest percentage of female
lawyers in any category of practice.17
7
Koppel and O’Connell, “Law Firms Hold Line in Setting Bonuses,” op. cit.
8
Koppel and O’Connell, “Pay Gap Widens at Big Law Firms as Partners Chase Star Attorneys,” op. cit.
9
Henry, op. cit., p.141.
10
Koppel and O’Connell, “Law Firms Hold Line in Setting Bonuses,” op. cit.
11
Ashby Jones and Joseph Palazzolo, “What’s a First Year Lawyer Worth? Not Much, Say a Growing Number of
Corporate Clients Who Refuse to Pay,” The Wall Street Journal, October 17, 2011.
September 2011 survey for The Wall Street Journal by the Association of Corporate Counsel, a bar association for
in-house lawyers.
12
Vanessa O’Connell, “Big Law’s $1000-Plus-an-Hour Club,” The Wall Street Journal, February 23, 2011.
13
Report of the Fifth Annual National Survey on Retention and Promotion of Women in Law Firms. The National
Association of Women Lawyers and the NAWL Foundations, October 2010. The survey tracked the professional
progress of women in the nation’s 200 largest firms.
14
Ibid.
15
Ibid.
16
Ibid.
17
Ibid.
to Feb 2024.
In-House Counsel
Attorneys could also work at a company directly as an in-house attorney. In-house attorneys
were paid less than law firm attorneys, but these jobs were attractive for several reasons.
Traditionally, in-house positions required fewer hours and provided more flexibility than firm
jobs, although that was changing (discussed later in the case). Also, companies’ legal
departments did not use the billable hours system, and some attorneys found it less stressful to
serve internal clients than external clients that were paying by the hour and expected extremely
high levels of responsiveness. A 2003 study by the magazine Corporate Counsel showed that in-
house lawyers reported higher levels of job satisfaction than law firm lawyers.
Contract Workers
The majority of the large U.S. firms hired contract attorneys. These attorneys were not employed
by the firm, but by legal staffing companies who contracted them out to the firm, usually for a
one-time engagement.18 Contract workers could also work directly for the legal department at a
company. The number of contract attorneys jumping from job to job had increased significantly
in the last few years as firms and legal departments tried to lower costs.
WOMEN IN THE LEGAL PROFESSION
For the previous 20 years, women made up almost half of law school graduates, but only
represented a third of practicing lawyers.19 In law firms, 45 percent of attorneys were women,
but only 15 percent were equity partners. That number dropped to 6 percent of equity partners
for the 200 largest firms.20 The numbers for female lawyers of color were even lower: they made
up 11 percent of law firm associates and 1.4 percent of law firm equity partners. Women also
made up only 27 percent of non-equity partners, and 36 percent of counsel positions.21 Only one
or two women were on the average firm’s highest governing committee, and for the nation’s
largest firms, 10 percent had no women on their governing committees.22 Almost half of the
nation’s 200 largest firms reported having no women among their top 10 rainmakers. For in-
house attorneys, 101 of the Fortune 500 General Counsels were women, and 15 percent of those
were minorities.23
CHALLENGES FOR WOMEN IN THE LEGAL PROFESSION
For women, the rigidity of the legal profession, the time demands, and the inflexibility of
schedules were barriers to pursuing a meaningful career and raising children, or having work
flexibility for other reasons. A 2008 study showed that about 42 percent of female lawyers
18
Ibid.
19
“The Glass Ceiling,” The New York Times, October 9, 2011.
20
Ibid.
21
Report of the Fifth Annual National Survey on Retention and Promotion of Women in Law Firms, op.cit.
22
Ibid.
23
Cathleen Flahardy, “Women GCs at Fortune 500 Companies on the Rise: MCCA’s annual survey reveals
promising news for women in law,” InsideCounsel, October 5, 2011. Survey of Fortune 500 and Fortune 1000
Women and Minority General Counsel.
to Feb 2024.
nationwide took time off from their careers, not including maternity leaves. On the average, they
stayed off the job for a little under three years.24
Part-Time Work and Flexible Hours
One option for women (and men) at law firms was to work part time and/or have flexible
schedules, but this was not a popular route. About 6 percent of lawyers in large firms worked
part time, and 75 percent of those were women.25 That 6 percent figure was in contrast to
industries such as medicine and engineering, where the usage rate of part-time programs was
closer to 14 percent.26 In addition, more than 80 percent of women working part time did so
during the first 20 years of practice, when they were building their careers. This was in
comparison with men working part time, 70 percent of whom did so after being in practice more
than 20 years and often while winding down their practices.27 In 2009-2010, the substantial
majority of part-time lawyers who were cut were women.28
In general, part-time work and flexible hours were frowned upon in the industry, and women
discovered that if they found part-time work, it was often much less high-profile or rewarding
than the full-time work they were doing previously.29 The “up or out” mechanism also made it
difficult for women who did not want to pursue a partner path. In a survey conducted by The
National Association of Women Lawyers and the NAWL Foundation,30 many female part-time
and flexible schedule attorneys said their hours and schedules were unpredictable, and they
reported feeling isolated, marginalized and resented by colleagues. They were concerned about
appearing less committed to their jobs, and were losing opportunities for advancement. They also
reported a lack of support from the leadership level.
Paragon Legal founder Mae O’Malley said compounding the lack of support at the leadership
level was the absence of women in high-level legal positions, leaving few advocates for the type
of changes or support structures that would benefit younger women who wanted to balance
raising a family with being an attorney.
You’ve got a situation where no women go through the partner track so there are
no women up there. So even if you wanted to go the partner track you couldn’t
because you have nobody to advocate for you up there, no models as to how to
actually get it done, and nobody who is even going to sympathize with some of
the particular issues that you as a mom are going to deal with. So it’s a really
24
Joyce Gannon, “Programs Help Female Lawyers Return to Work Force,” Pittsburgh Post Gazette, April 3, 2008,
http://www.post-gazette.com/pg/08094/870061-28.stm.
Case writer interview with Debra Epstein Henry, author of “Law and ReOrder: Legal Industry Solutions for
Restructure, Retention, Promotion & Work/Life Balance,” American Bar Association, 2010.
25
Report of the Fifth Annual National Survey on Retention and Promotion of Women in Law Firms, The National
Association of Women Lawyers and the NAWL Foundations, October 2010.
26
Case writer interview with Debra Epstein Henry, author of “Law and ReOrder: Legal Industry Solutions for
Restructure, Retention, Promotion & Work/Life Balance,” American Bar Association, 2010.
27
28
Ibid.
29
Deborah Epstein Henry, op. cit., p.154.
30
to Feb 2024.
hostile environment. Firms are trying to do some different things to change that,
but in the end as long as firms have billable hours, the whole structure exists, and
partners are so wrapped up in per partner profits, there is really little incentive for
that to change.31
O’Malley said the main form of pressure to change that firms were facing came from outside
groups teaming up with large corporations to push firms to diversify. For example, California
Minority Counsel Program teamed up with Walmart and Microsoft, which threatened to take
business away from law firms that did not hit diversity benchmarks. Other pressure points related
to competition among firms to attract women from the best law schools through better work/life
balance arrangements; and the fact that more women were working in-house and wanted the
lawyers they hired through firms to have more diversity.
It was also very challenging for women (and men) to return to a legal career after taking a few
years off. The industry moved very quickly so taking even a modest amount of time away put an
attorney behind the curve. The longer an attorney was out, the more daunting a return to work
could be. This was especially true in areas like intellectual property, where the regulations and
rules changed especially quickly.
Another option was working in-house with a company. These positions were not only
prestigious, but had previously been a good fit for working mothers. Employees had a little more
flexibility, and without billable hours, they did not have to keep track of every minute they
worked. But O’Malley said when the economy started to boom, many of those benefits went by
the wayside:
In-house life became equally bad; the same hours and lack of flexibility as a firm,
but for less money. And that didn’t change when the economy turned south
because now everyone across the board is being forced to work two people’s jobs.
It’s the only way companies can make money and be competitive with companies
overseas that pay their people a lot less. So the in-house escape hatch for women
with children kind of closed and now you’ve just got law firms and you’ve got in-
house jobs, both of which require you to be effectively on call. Of course for
anyone who wants to raise kids and actually spend time with them, that’s a really,
really difficult proposition.
There was also a compensation gap between men and women in firms. Looking at median
incomes, women earned 74 percent of what men earned, and that disparity increased as women
moved higher up the ladder.32 In 2009, female equity partners earned about $66,000 less than
their male counterparts at the 200 largest firms.33 Much of this disparity was related to bonuses.
According to the National Association of Women Lawyers (NAWL), women received less credit
31
All quotes are from case writer interviews unless otherwise noted.
32
“The Glass Ceiling,” The New York Times, October 9, 2011.
33
Stephanie A. Scharf and Barbara M. Flom, “Report of the Fifth Annual National Survey on Retention and
Promotion of Women in Law Firms,” The National Association of Women Lawyers and the NAWL Foundation,
October 2010, http://www.aauw.org/learn/research/upload/NewVoicesPayEquity_NAWL.pdf.
Deborah Epstein Henry, op. cit., p.106.
to Feb 2024.
than men for being rainmakers, for business development, and for developing new business from
existing clients.34 A December 2010 survey of attorneys asked the question: “Do you believe the
glass ceiling still exists?” and 80 percent of women responded “yes.”35 Reasons given across the
board were: pay inequality, lack of leadership opportunities, and the inequity of family and
household responsibilities between male and female attorneys.36
MAE O’MALLEY BACKGROUND
After graduating from Stanford University with a degree in political science in 1994 and from
Boalt Hall, U.C. Berkeley’s law school, in 1998, O’Malley worked for two years at a large law
firm called Morrison & Foerster. She worked mostly in San Francisco, with some time in Tokyo.
She realized that litigation did not suit her personality, and in 2000, during the dot-com boom, an
opportunity came up for her to move in-house as corporate counsel for a Morrison & Foerster
client, Evolve Software five days before its IPO. A month later, after tripling in value, the
company went the way of many other dot-com companies that collapsed or seriously contracted
during the crash, and Evolve Software began laying off employees. O’Malley was in charge of
the lay-offs in the legal department, and eventually she had to lay herself off.
However, her boss asked her to come right back as a contractor―working by the hour for more
compensation than she received as an employee. The company still had work it needed done, but
it wanted to keep headcount down, even if it meant hiring more expensive contractors. This was
a trend among companies that would help Paragon Legal’s later success.
Over the next four years O’Malley continued to do contract work for Evolve and other
companies, including the e-commerce start-up Escalate. During that time she also got married
and had two children. After that she moved to the security software start-up Sygate part time.
Sygate was acquired by Symantec in late 2005, and Symantec told O’Malley they only had full-
time work. She was let go in early 2006 after helping with the post M&A transition, coinciding
with the birth of her third child. She then returned to contract work, mostly with Google. In the
fall of 2006 she started Paragon Legal so that she could focus on the Google work while other
attorneys took over the start-up work she had accumulated over the years. In 2007 she was
offered a full-time position at Google. After weighing the pros and cons, O’Malley turned down
the Google offer to focus solely on Paragon Legal.
COMPANY HISTORY
Once O’Malley started Paragon Legal she wanted to hire some high-level attorneys, and thought
a good pool would be women with children who had solid legal experience, but who had been
unable to find meaningful work with a schedule that would accommodate their family
responsibilities. To that end she posted positions with various San Francisco Bay Area “mom’s
34
“National Association of Women Lawyers Releases Sixth Annual Survey,” NAWL press release,
http://www.marketwatch.com/story/national-association-of-women-lawyers-releases-sixth-annual-survey-2011-11-
10.
35
Nick Gaffney, “Women Say They’re Still Banging Their Heads on the Legal Industry’s Glass Ceiling,” Law
Practice Today, January 2011. Law Practice Today is part of the American Bar Association.
36
Ibid.
to Feb 2024.
groups,” through Yahoo! Groups and other lists, but at first got no response. Her first hire ended
up being a single man, Fred Johnson,37 who liked to take summers off to go SCUBA diving in
Asia. Johnson stayed for two years and then moved in-house with a company offering him
upside potential. O’Malley did eventually find a woman with children to hire, and by the end of
2006, O’Malley and three other attorneys were working at the firm, then located in Burlingame,
just outside of San Francisco.
Growing the Company
In 2007, Paragon Legal landed Cisco as a client, and to meet the demand generated by this new
account, the firm grew to 10 attorneys. Paragon Legal also moved to a new office in San
Francisco. Paragon Legal then gained some other well-know clients such as VMware, Autodesk
and Yahoo!. In 2008, there were 15 active attorneys, growing to 20 in 2009, and 35 in 2010.
Paragon Legal was also seeing a 75 percent increase in revenue each year.
Originally Paragon Legal worked with many emerging growth companies, but over time it found
that those companies did not have enough consistent, predictable work. Paragon Legal started
requiring clients to have 10 hours of work a week for attorneys. The firm focused mostly on
technology companies, but it was beginning to branch out to other industries.
PARAGON LEGAL: A NEW MODEL
O’Malley called Paragon Legal a new model, and said there were many ways in which that was
true. For example, 85 percent of its attorneys were women with children. This pool of attorneys
was also highly qualified. Paragon Legal required eight years of experience, but the average was
over 12 years. The firm also required in-house experience, and over time it attracted high-level
in-house attorneys, such as former general counsels of large public companies.
O’Malley described Paragon Legal as very attorney-centric. The attorneys would tell the firm
how many hours they wanted to work, as long as they pledged a minimum of 10 hours a week.
The attorneys also determined which days of the week they wanted to work and how many hours
per day. In addition, they could determine the geographical regions within the San Francisco Bay
Area where they were willing to travel. O’Malley said Paragon Legal then paired them up with a
project and company that fit those parameters:
It all sounds crazy but in the end it works because we pick the best attorneys that
are out there. And so when we present them to clients, the clients say, ‘I want that
attorney and if it means they have to leave by 3:30 p.m. every day, make it
happen.’ I think it’s a model that many people doubt could work. Sometimes
when we talk to companies, they don’t understand the model or how someone can
cut out at 3:30 p.m. every day or say that they only want to work 20 hours. But
then clients try it out and it works great.
37
This name has been changed.
to Feb 2024.
Making It Work Financially

Despite charging clients much less than traditional firms, an average of $170 an hour, Paragon
Legal was able to offer its attorneys competitive compensation: $200,000 a year for a 40-hour
work week, plus a 401K and a full benefits package. It also offered its attorneys interesting work
with premier clients. That meant if Paragon Legal attorneys decided to return to a large firm or
go in-house, they had prominent company names on their resumes. It was a way for Paragon
Legal attorneys to preserve and build their careers while they stepped outside the traditional legal
industry structure to raise children or for other reasons.
CLIENT BENEFITS
Staffing Challenges
When companies required extra legal staff, it was common for them to bring in attorneys to work
on a temporary basis. Hiring full-time attorneys was not always an option because of budget and
headcount issues. But the need was there: full-time attorneys left or went on medical or maternity
leave; there was overflow work, such as a temporary uptick in deal flow; or else there was a
consistent amount of work in excess of what their team could handle. But it was often difficult
for companies to find qualified, cost-efficient temporary attorneys.
O’Malley said to solve these temporary staffing needs, companies had few choices. One option
was to turn to a large law firm for coverage. However, the lawyers assigned by the firms were
very expensive and often very junior. She said these attorneys often lacked experience with the
needs of sales teams and working with corporate policies. Many of these attorneys had not
worked in-house at a company, only in firm offices, creating the “ivory tower” problem.
Companies could also turn to independent contractors or solo practitioners, but O’Malley said
they could be difficult and time consuming to source, and the quality was inconsistent. Also,
companies might suddenly lose these attorneys if a more lucrative opportunity was offered to
them. Lastly, if a company needed 10 temporary attorneys, for example, they would need
someone to manage the hiring and retention of those attorneys.
O’Malley said that temp firms were another option, but most were not focused on legal services
specifically, and their attorneys were usually junior and lacked relevant experience. They also
had conversion fees: if a company wanted to permanently hire an attorney who came through a
temp firm, it had to pay that firm the equivalent of up to 50 percent of the attorney’s first-year
salary.
Paragon Legal Solutions
For clients, Paragon Legal was very cost effective; as mentioned above, attorneys with
significant experience were contracted out for an average of $170 an hour. Paragon Legal was
able to charge so much less than large firms because it had no significant overhead. Its
headquarters had just a few offices in it, and its staff consisted of two or three people.
Because O’Malley insisted that Paragon Legal’s attorneys met the “gold standard,” she said
clients could be assured of consistent quality. Paragon Legal’s attorneys were also integrated
to Feb 2024.
with clients’ teams, mostly on-site, so they were what O’Malley called embedded attorneys. The
attorneys were committed to a client for the duration of a project, with some small exceptions.
Having worked in the legal department of a few companies herself, O’Malley had experienced
the frustration of not getting enough attention from firm attorneys―sometimes not even being
able to reach them on the phone.
O’Malley said one of the benefits for companies not hiring full-time is that they did not have to
lay people off when a limited-time project was completed.
If a company knows that it’s got ups and downs―and maybe it’s starting up some
new group but it knows it only needs X number of bodies to start up that new
group, and then once they settle in they’re not going to need those attorneys―I
think it’s really irresponsible to hire for that, knowing that you're only going to
need them for a year and then lay them off again. Whereas if you can bring in a
temporary resource you can be really up front and say, ‘This is a one-year project.
Come on in, get your experience, you're going to get paid very well and then after
that we probably won't need you anymore.’
O’Malley said another Paragon Legal benefit to clients was that the firm did not charge
conversion fees. She believed that not charging those fees was a much better way to operate:
That is definitely one of our big differentiators and it’s worked really well for us
because clients are very grateful. They’ve had some really bad experiences with
conversion fees. It leaves a bad taste in your mouth when you’ve had a resource
on a project for six months to whom you are paying all this money, and all of a
sudden you decide to hire them and now you have to pay $100,000. What has also
worked for us is that once we have attorneys on the inside, in the vast majority of
cases the work comes back to us because they’re in now and they had a good
experience. It’s not even so much loyalty, they just say, ‘You guys have great
resources, and why not go back to you versus going somewhere else?’
Finding Clients
Paragon Legal did no advertising or marketing to find clients. But O’Malley said there was no
shortage of work:
It helps that we have some stellar clients that have given testimonials and will
stand by our services. They keep coming back to us over and over again, and have
given us great quotes for the website. We also let clients talk to other clients. Plus
what’s great about San Francisco is it’s such a small legal community that some
companies say, ‘We’ve heard that Paragon Legal has a good reputation, why not
just try them out?’
RECRUITING AND RETENTION
Since founding Paragon Legal, O’Malley’s biggest challenge was recruiting the top notch talent
she wanted. She said there was a limited supply of attorneys who met all the firm’s criteria and
to Feb 2024.
had the communication skills required to work well with clients. Paragon Legal received about
10 resumes a week from attorneys, and it usually followed up with just one of those.
The firm faced another challenge in that it did not hire nationally, as that did not generally fit the
pool of attorneys who were looking for a place like Paragon Legal; many wanted to stay local or
else had spouses working full-time in the area. In addition, the firm did not have the recruiting
manpower it needed to bring in enough qualified attorneys. O’Malley did not want a lack of
attorneys to jeopardize Paragon Legal’s good reputation:
The only thing that I’m concerned about that could be our downfall is that we’ve
been giving up a lot of projects lately because we just can’t fill them, and I
certainly don’t want to become known as the place that you can’t go to because
we don’t have enough lawyers.
On the flip side, O’Malley did not want to bring in an army of attorneys and not have enough
work for them:
For better or for worse we’ve always hired behind the work, versus ahead of the
work. One of the reasons is that we did not want to create a reputation of hiring
50 attorneys and having them sitting around on a bench not getting work. So
we’ve come up with this slightly tricky formula where we’re trying to hire right in
time so we’ve got people queued up right as we see projects coming up so that
we’re not having people sitting around, and on the other hand we’re not passing
up too much work because we don’t have the resources. But we have been
increasing the number of attorneys we have on the team, and the attorneys are
working many more hours than they used to, which is fine. The average work
week for a Paragon Legal attorney is now 30 hours.
Paragon Legal had very low attrition, meaning attorneys who left for another firm, opted out of
the profession, or moved to an in-house position. In fact, it often went the other way; sometimes
in-house attorneys expressed interest in joining Paragon Legal after working with its attorneys at
their own companies.
Paragon Legal also attracted attorneys who were solo practitioners and wanted to supplement the
numbers of hours they worked. Solo practitioners had to spend a large amount of their time
finding business, which took away from the actual number of hours they could work and bill for.
Also, these practitioners had to collect money from companies, many of whom were moving
from a net 30 payment policy to a net 60 policy, which allowed them 60 days to pay contractors
and suppliers. So, solo practitioners would have to float for 60 days without being paid. Paragon
Legal was large enough that it could absorb that delay of payment.
O’Malley outlined some other obstacles to recruitment. For one, Paragon Legal was a flat
organization. Everyone was paid the same amount and titles did not really change over time;
everyone’s title was “counsel” or “senior counsel.” Many potential Paragon Legal candidates had
trouble with this concept because it was in stark contrast to the overall legal industry, where titles
were very important. If attorneys wanted to move up the ladder, they were concerned that
to Feb 2024.
without titles, they could not show that they were honing their craft. For example they were not
moving up toward a general counsel or partner title. In addition, although Paragon Legal offered
projects of up to 40 hours a week, it could not guarantee this amount of work, which made some
attorneys nervous, given the shakiness of the economy. O’Malley said she found all of these
concerns applied more to men than to women.
COMPETITION
Axiom
Paragon’s main competitor was Axiom, which started in New York City and by 2010 had
expanded to eight locations around the world, including San Francisco. Nationally, Axiom had
almost 500 attorneys, a number of whom were working on projects while others were “on the
bench,”38 that is, on tap for work as it became available. Axiom contracted these attorneys out to
the legal departments of its clients, which included Cisco Systems, Accenture, Amazon, IBM,
Time Warner, Chevron, Citigroup, and Virgin Mobile. In 2010, Axiom had revenues of $80
million,39 with a large percentage of that coming from the financial sector. Nationally, 47 percent
of Axiom attorneys were men and 53 percent were women. In the San Francisco office
specifically, 55 percent were men and 45 percent were women.
Axiom pulled attorneys directly from a firm’s fourth or fifth level, meaning that these lawyers
had the same (or more) experience as lawyers the client would get by contracting with law firms
directly. About two-thirds of Axiom attorneys also had in-house experience.40 However, as
Axiom began to change its model in 2008-2009 by adding consulting services to clients, the
average Axiom attorney’s experience rose to 12 years. Axiom charged clients less than half of
what a large firm charged for similarly experienced lawyers, typically between $150 and $275
per hour.41 Axiom’s acceptance rate for new attorneys was about 2 percent.42
Axiom attorneys worked both from home offices and at client sites, had 401Ks and received full
benefits, which they received even if they were between assignments. About 75 percent of
Axiom attorneys chose to work full time, which generally meant 5 days a week and 10-hour
days. Attorneys could also work part time and decide how many days per week they wanted to
work, although they could not negotiate the numbers of hours per day. In addition, working part
time might mean longer waits between engagements. Assignments averaged six months,
although they started at about three months and could be as long as a year or two. Attorneys were
salaried based on their number of years’ experience, which was pro-rated for the amount they
worked. Those salaries worked out to be less than they would be at law firms, but about the same
38
Sarah Grainger, “Enterprising Models,” Law Business Review, March 2010,
http://www.axiomlaw.com/Docs/LawBusinessReview-April2010.pdf.
According to Axiom, those numbers grew to 11 locations and 600 attorneys by the end of 2011.
39
Catherine Ho, “Nonconventional Practice Makes Inroads in DC Market,” The Washington Post, September 12,
2011, http://www.axiomlaw.com/images/uploads/washington_post_final.pdf.
40
Axiom, http://www.axiomlaw.com/index.php/whoweare/faq.
41
Catherine Ho, op. cit.
42
Axiom, http://www.axiomlaw.com/index.php/whoweare/faq.
to Feb 2024.
as in-house counsels. (Across all levels, U.S. in-house attorneys had an average base pay of
$174,000 in 2010.43) Axiom’s big earners could make up to $250,000 a year.44
The company was founded in 2000 by Mark Harris, who graduated from the University of Texas
Law School in 1996 and went on to clerk on the Ninth Circuit Court of Appeals and then worked
for a large law firm in New York City, David Polk & Wardwell. Harris cofounded Axiom with
Stanford MBA Alec Guettel (a non-lawyer).
O’Malley said that, similar to her firm Paragon, Axiom was providing the client something
cheaper and integrated, and the model had proved successful. O’Malley said Paragon Legal’s
number of attorneys and revenue generation in the San Francisco office were approaching those
of Axiom’s San Francisco office.
But according to O’Malley, there were also differences between Axiom and Paragon Legal.
While Paragon Legal was 85 percent women with children, Axiom nationally had 53 percent
women overall (Axiom did not track the number of women with children). Axiom also ran as a
staffing agency, rather than being incorporated as a law firm as Paragon Legal was, which meant
it could charge conversion fees; “Try and Buy” was part of its revenue model. Lastly, O’Malley
found that in general, attorneys who were interested in Paragon Legal were not as interested in
Axiom, and vice versa. However, Paragon Legal and Axiom were looking for similar types of
attorneys, and Paragon Legal did not have as much recruiting manpower as Axiom did.
Large Firms
Another competitor for Paragon Legal was law firms. Even though their rates were very high, it
was a familiar model for clients, and firms’ names carried a lot of weight. They also had the
manpower to handle very large, billion dollar transactions, such as mergers and acquisitions and
complicated lawsuits. O’Malley was seeing a trend where Paragon Legal was beginning to take
some day-to-day work away from traditional firms; but Paragon could not compete with firms on
very large projects, nor did it want to. In fact, O’Malley encouraged her clients to maintain
relationships with traditional firms, so they would have access to that resource if they needed
those attorneys for a very large project.
Nevertheless, companies were beginning to take a closer look at the amount large firms were
charging per hour. When faced with billable rates of $700 an hour for a mid-level associate, for
example, more and more companies were starting to balk. 45 Companies were also increasingly
unhappy with the price of a first- or second-year attorney, who had to be trained by the
companies themselves. Of the 366 in-house legal departments that responded to a Wall Street
Journal survey, 20 percent said they were refusing to pay for the work of these junior attorneys in
some matters. This was a change in policy from just a few years previously.46
43
Lisa van der Pool, “Alternatives Step Up Competition for Boston’s White-Shoe Law Firms,” Boston Business
Journal, May 27, 2011.
44
Daniel Fisher, “Names You Need to Know: Mark Harris,” Forbes, May 10, 2011.
45
Vanessa O’Connell, op. cit.
46
Jones and Palazzolo, op. cit.
to Feb 2024.
ATTORNEY CASE HISTORIES STUDIES
David Chen47
David Chen took on his first engagement with Paragon Legal in January 2009, working in the
high tech sector. He started his career at a small firm, and then went in-house at several
companies, including semiconductor, internet and wireless companies. He then left to start up his
own company, later returning to an in-house position. In 2008, he found out about Paragon Legal
through a former classmate who had worked at Paragon, and joined the firm at the beginning of
2009. He worked for 15 months with one high tech company, and then transitioned to another
high tech company later in 2010. Both companies were in Silicon Valley.
Chen said Paragon Legal has worked out very well for him, both from a legal and personal
standpoint:
When I made the switch to Paragon Legal, my wife was pregnant with our first
child. So it was a big draw that I would be able to work at different places, see
different environments, learn more, and be able to contribute, but also have the
flexibility to choose interesting projects that worked out schedule-wise. The
particular attraction of my first assignment was that I could work remotely two
days of the week.
Chen said another draw of working for Paragon Legal was that it was an on-the-clock, off-the-
clock job, as opposed to working full time at a company, where hours could be long and
irregular. “With Paragon Legal, my hours are very set. I come in by a certain time, I leave at a
certain time, and that is the expectation from everyone. As long as the work load is managed and
the clients are happy, it works out pretty well.”
In his first engagement with Paragon Legal, Chen worked 40 hours a week. His second
engagement started with 40 hours a week and then dropped to 32 hours a week. While he said he
would prefer 40 hours, working fewer hours meant he had more time to spend with his small
children and focus on other matters.
According to Chen, Paragon Legal presented a good opportunity for attorneys who wanted to do
something different, and have more control over what they did and the projects they worked on.
In terms of career trajectory, Chen said that while he was not advancing his career in the
traditional sense, he was still learning and encountering new challenges, so he was not going
backwards either. “I’m running in place, experiencing different environments and practices, and
content with the way things are going until circumstances change and dictate that it is time to
move forward.”
He noted that for Paragon Legal attorneys, when a project ended, there was some uncertainty
about if and when the next project would come. Although Chen himself was only between
September 2011 survey for The Wall Street Journal by the Association of Corporate Counsel, a bar association for
in-house lawyers.
47
This name has been changed.
to Feb 2024.
Paragon Legal engagements for a couple of weeks, he said anyone joining such a company
should feel secure enough financially, personally and career-wise to be comfortable working
within this model―knowing that the market could take a downturn or the business climate could
change and there might be fewer projects available.
Chen had different experiences with his two engagements through Paragon Legal. The first
company he worked for embedded him into the legal team and he worked in a very tight practice
group of 20 attorneys. Except for the fact that he was maxed out working 40 hours a week, he
was involved in everything: staff meetings, continuing legal education events, luncheons, social
events, etc. He directly supported four different business divisions as their primary legal point of
contact and participated in their staff meetings.
In his second engagement, Chen said there was a strong distinction between contractors and
permanent staff. Contractors sat in a different area, did not attend staff meetings or legal
department events, were not assigned company laptops due to security concerns, and had more
limited interaction with the legal team. As a result, he was often reminded that he was a
contractor and not really a true employee of the company. The work was different as well; he
worked primarily on overflow work that the other attorneys did not have the time to handle,
versus having direct responsibility for business divisions, as he did in his previous engagement.
Chen said he found it interesting that during his time as a Paragon attorney, on several occasions
he had been wished good luck by company employees in getting hired full-time at the company,
not realizing that being a Paragon attorney was a choice that he had made and not simply a fall-
back position as he waited and hoped to become a full-time employee.
Elinora Mantovani
Elinora Mantovani graduated from Boalt Hall, U.C. Berkeley’s law school, in 1980, and began
her career at a relatively small law firm in Los Angeles that focused on the savings and loan area.
She subsequently moved to the Los Angeles office of a large national law firm, then relocated to
Palo Alto and joined a well-known firm; later she went in-house at a local real estate
development company. During her time in private practice she had two children―a son in 1984
and a daughter in 1987. She joined Apple’s in-house legal group in 1991, and began working
with Paragon Legal in May 2011, when she was in her sixties. When she joined Paragon Legal,
she looked back at the challenges she had encountered in her career with balancing the needs of
work and family:
I remember particularly when the kids were little, I swore that even if I was in the
middle of a negotiation or a deal I would always slip out for an hour if they
needed me. But to get there, I worked really hard to establish my credibility. It
was very hard when sometimes I was not able to drop everything and go to them.
The hardest thing was that being on call for both family and business 24/7 was
exhausting, mentally and physically, as well as emotionally.
It never would have occurred to me at the time to say anything at work; I would
have been perceived as “weak,” because it was a very macho environment. The
culture was “Who could stay up all night and still work?” I felt the pressure not to
to Feb 2024.
say anything, because I know how they talked about the women who did speak
up.
Mantovani said the law firm mentality did not line up with what she wanted to be. “I didn’t have
time for the posturing and the kind of hours, simply to get some monetary reward. I was making
enough and I just didn’t feel the need to do it. I am never going to make partner here, so why am
I beating my head on the wall?”
Mantovani moved in-house at Apple in 1991, where she worked for 18 years. She enjoyed her
career but, towards the end of her time at Apple, as she became very senior, the attitude of the
senior management was that “nothing other than [being in the office] full time” was appropriate
for director-level staff. She said there were a few senior attorneys at Apple, generally women,
who negotiated “flexible” work arrangements in the form of reduced hours per day, but not
many.
Throughout her career, Mantovani saw that, in trying to find flexible work arrangements, it was
not just her but her whole family that was involved. “What one person may think is flexible can
be perceived by the rest of the team (that is, the family) as not. It really is interesting to me that
we throw these terms around like we all know what a flexible work environment means or what
work-life balance means, and it’s really different when you hear the other side, from those who
may feel very deeply your absence, while you’re at work or involved at work, even from home.”
Mantovani said she tried to retire after leaving Apple, but found that retirement did not suit her.
But she was in her sixties and was very senior―factors, she said, that made it very tough to find
another full-time job:
People do not want to hire people in their sixties. People do not want to hire
people with 30 years’ experience. It really scares them. The things I heard when I
was looking for jobs were comments like: ‘You will be bored.’ I said, ‘You don’t
think I’m bored just being at home? If I’m bored, but I’m still doing the job you
pay me to do, why do you care if I’m bored?’ I don’t know what I would have
done without a Paragon or another company like that. I think this is a phenomenal
way to go.
Mantovani described a recent engagement she was on for five months with Paragon Legal:
It was a software company and I was in the group charged with licensing the
company’s products out to consumers. I was negotiating, drafting agreements,
advising the sales guys on interpretation and strategy. It was a great engagement.
I loved it. I thought I’d died and gone to heaven.
Sue Krenek
Sue Krenek started her career in journalism, went to law school, clerked first at the district level
and then for the Ninth Circuit, and moved on to a midsize firm in San Francisco called Howard
Rice. Krenek said there were many advantages to working for a large firm, including consistently
to Feb 2024.
being able to practice at a very high level, but she said her practice was not a good fit for the
model. She said with the type of work she did, any downturn would leave her vulnerable.
Her first child was born in 2004, and in 2005 she left Howard Rice to go to PC World
Communications, a subsidiary of International Data Group (IDG), where she worked on media,
licensing and ecommerce issues for PC World and its sister publication Macworld. She had her
second child in 2007. She enjoyed her work but found that in-house work presented a different
challenge in that “there is usually much more work than you can actually do, and you have to
triage and figure out which things don’t need to be addressed right away.” In 2009, the company
laid her off but told her they wanted her to come back as its counsel if she went into private
practice. With that opportunity, Krenek opened a private practice in 2009.
Krenek first spoke with O’Malley about Paragon Legal in 2009 when O’Malley was looking for
an attorney with ecommerce experience. As a result of that conversation, Krenek began working
with Paragon on a part-time basis, including a steady assignment with Apple and periodic
projects for other Paragon clients. In 2010 she transitioned from Apple to another Paragon client,
Autodesk, also on a part-time basis. She said her work at these companies was very interesting
and cutting-edge. She kept her private practice, which brought in more of her income because
her hourly rate was much higher―$350 to $375 an hour, compared to $100 to $125 an hour at
Paragon Legal―but her private practice work was more variable. She split her time 50/50 with
Paragon Legal and worked a total of 25 to 30 hours a week between Paragon Legal and her own
practice.
According to Krenek, unlike many other Paragon Legal attorneys, flexibility was lower down on
the list of reasons that brought her to Paragon. She found the Paragon Legal model was more
aligned with what was realistic for her practice area.
In working inside companies as a contractor for Paragon Legal, she found that the lawyers she
worked with saw the benefits of the Paragon Legal Model and some even approached her on
behalf of friends and spouses who might be interested in working for Paragon. As she explained
it:
In-house jobs are not nice, easy jobs anymore, and it can be eye opening for
lawyers to see that there are some people who are following a different model. It
would also be fair to say that it can be hard for Paragon lawyers to set boundaries
when we’re working side by side with someone who's working 50- or 60-hour
weeks, but it's important to be able to do it, and Paragon can help provide support
with those decisions.
CLIENT CASE STUDY: AUTODESK
Based in San Rafael, California, Autodesk became a client of Paragon Legal in 2007. The
company was a developer of 3D design, engineering and entertainment software, and it worked
with Paragon Legal for ongoing part-time legal support for overflow work across multiple
groups, backfill, bridging hiring gaps, and special projects. In the summer of 2010, there were
four Paragon Legal attorneys on project with Autodesk.
to Feb 2024.
Rich Foehr, vice president of legal at Autodesk, said when he first started practicing law at
Autodesk there were two ways to get legal work done―with internal resources or by hiring a law
firm. But in 2006 he was approached by an individual lawyer who was offering to do overflow
work for Autodesk on a part-time basis. Foehr said he was originally dubious of this model:
I thought, hmm, I’m not sure that is going to work. You normally need to have
somebody who’s either internally dedicated, meaning you’ve got an employee
who will be laser focused on doing the job for you, or we default to the big law
firm model. At the time, I was also concerned with the small firm model, where
individuals who were in staff augmentation roles could overstretch themselves so
I can’t find them when I need them.
But Foehr said this contractor worked out extremely well, and it proved to him that a staff
augmentation model could work. Foehr, along with Ruth Ann Keene, senior director and
assistant general counsel at Autodesk, then turned to O’Malley. Autodesk’s business was
growing rapidly and the legal department was feeling overwhelmed with the workload. Foehr
said that for corporations the process of hiring full time employees could be laborious, and the
gap time between deciding there was a need to hire someone and the time they came on board
could be up to six or nine months. Foehr said Autodesk was looking for new models:
O’Malley came to us with a model with a cost infrastructure that was much lower.
She brought a stable of individuals who had the breadth of experience that would
[match that of] candidates that we would probably otherwise look to hire. In fact,
we have hired some of them.
However, as Keene explained, having lawyers come in from Paragon Legal to do overflow work
was not threatening to the careers of ambitious lawyers at the firm. “Paragon folks aren’t coming
in to seek high-level positions or promotions within Autodesk. It was also a nice pressure release
to have people who were smart and capable but not looking to move up our corporate ladder.”
Keene also said working with Paragon Legal attorneys who might not work on a Wednesday, for
example, pushed the company to increase its level of communication and make that
communication more effective and focused.
Keene noted that Paragon Legal’s model was very successful at Autodesk and credited O’Malley
for that success because of her ability to find the right attorneys for the company and to
communicate effectively with Autodesk through open conversations. Keene noted: “You can’t
underestimate Mae’s personality as a recipe here. I think there are others that could do that, but I
think some of the success would depend on having that sort of a match-making skill, and Mae is
really, really, really good at it.”
Foehr added that Paragon Legal was a model for the future. “At some point the hourly billing
model of the law firm is going to fail. For managing a budget for the legal department, it
becomes almost indefensible to say, ‘This particular person is worth X dollars per hour.’ There
will always be the amount you’re willing to pay to help you get out of a big problem, but that
hourly rate model is becoming more and more difficult to stomach inside a company.”
to Feb 2024.
SCALING QUESTION
There were very compelling reasons for Paragon Legal to scale. Not only was there a large and
growing amount of work for the firm in San Francisco, but there were lucrative opportunities in
other cities in the U.S. and internationally. Scaling would also allow Paragon Legal to expand
quickly to areas beyond the technology sector.
In addition, Paragon Legal’s competitors were scaling, and the firm might need to scale to keep
up with them. As mentioned earlier, Axiom already had eight locations, and was scaling rapidly.
While Paragon Legal was very much a for-profit organization, O’Malley said she also had a
mission to help others in the legal profession who wanted a balanced lifestyle. O’Malley said
attorneys were calling every day, asking her to “please open an office in my city.” Not only was
it challenging for attorneys to find a work/life balance through firms or in-house jobs, but for
those who did not live in highly concentrated areas like Silicon Valley, it was also difficult for
them to find independent work.
O’Malley envisioned that Paragon Legal would only require a small footprint in other locations:
as she put it, “Another me, an executive assistant and a recruiter.” She would also need someone
who could sell. O’Malley said in large firms the selling skills were different because clients were
shopping between known large firms. However, Paragon Legal was “something that clients do
not quite trust” if clients had not seen them in action. Nevertheless, O’Malley believed that
Paragon Legal could easily reach over $10 million in revenues with the small footprint model.
However, O’Malley had some reservations about scaling. Most of the firms’ clients came from
her personal contacts, and she was unsure if that could be replicated in other places. Another
concern was whether scaling would take focus away from building a strong brand. Paragon
Legal was still relatively new, and O’Malley wanted to make sure that its reputation for being the
“gold standard” continued to grow in San Francisco. By opening offices in other cities, O’Malley
might lose some control over the quality of the attorneys, and that might lead to brand dilution.
O’Malley had her eye on a few people in other cities with a large number of contacts who had
expressed interest in opening new Paragon Legal branches. However, she was not sure she was
ready to put the reputation of the brand in the hands of people she did not yet know very well.
In San Francisco, Paragon Legal was already growing faster than most firms. But O’Malley was
hesitant about moving away from the traditional law firm growth trajectory, which was to grow
organically, in favor of what she called the “Silicon Valley way,” which was to expand as
quickly as possible.
In addition, O’Malley was not sure how the process of scaling might affect her own work-life
balance and that of her staff. She would have to hire and manage new staff in other cities, which
would increase her work load. O’Malley worked about 40 hours a week for Paragon Legal, and
she was not keen to expand that amount.
New Location Possibilities
Paragon Legal identified a few locations where it might scale, focusing specifically on the
Pacific Northwest, Southern California and select cities in Asia. O’Malley said the Pacific
to Feb 2024.
Northwest was the top choice because of its large tech industry and what she perceived as a lack
of serious competition there. There was some competition in Southern California, but O’Malley
did not consider it very strong.
An advantage of opening an office in certain Asian cities was that the vast majority of female
attorneys worked in-house, and they were now starting to face the issue of work-life balance and
wanted more options. Therefore these cities would be a good market for Paragon Legal in terms
of finding women looking for more flexible hours as well as clients that needed resources to help
fill in the gaps when women went on maternity leave. However, a problem with those cities was
that in-house attorneys received such low pay that O’Malley was not sure how Paragon Legal
could price to compete. For instance, in-house lawyers at big American companies in some
Asian cities might make about $30,000, whereas U.S.-based attorneys at the same company
made $180,000.
CONCLUSION
O’Malley had been dubbed a “Legal Rebel” by the American Bar Association Journal in 2009,48
and indeed she had created something new. With four years of success behind her, she had many
reasons to be proud of what she had built. Now it was time to decide what she wanted the
company to look like five years from now. Would Paragon Legal remain a relatively small firm,
or would it scale in San Francisco or in other cities and countries? O’Malley also had other
options. She had received several offers to buy the firm. In 2007 Paragon Legal received an offer
from a public company in a similar space that wanted to build its legal practice, and in 2010 a
competitor wanted to purchase Paragon Legal. The firm was also approached by a private equity
company in 2008. O’Malley had all these choices to consider as she entered the second half of
2010.
48
Rachel M. Zahorsky, “Mae O’Malley: Mogul Mom,” American Bar Association Journal, September 9, 2009,
http://www.abajournal.com/legalrebels/article/mae_omalley_mogul_mom.
to Feb 2024.
Exhibit 1
Median Base Salaries by Associate Year and Firm Size (as of April 1, 2011)
FIRM SIZE — Number of Lawyers
2-25 26-50 51-100 101-250 251-500 501-700 701+ All Sizes

Associate Year
Median Median Median Median Median Median Median Median
First $73,000 $86,000 $91,000 $110,000 $125,000 $120,000 $160,000 $115,000
Second 77,000 84,500 100,500 108,750 130,850 120,000 165,000 120,825
Third 80,000 91,800 108,000 112,500 134,675 125,000 169,500 125,000
Fourth 85,000 94,025 112,500 115,800 142,000 134,625 178,750 136,650
Fifth 96,000 99,050 116,000 122,400 146,700 138,300 192,500 140,000
Sixth 94,500 113,150 120,000 128,000 150,200 150,000 202,500 145,000
Seventh 104,000 123,000 127,500 130,000 160,000 158,275 218,750 157,950
Eighth 111,250 121,150 117,500 139,525 165,700 165,300 225,000 162,625
Source: National Association for Law Placement (NALP).49
49
“Law Firm Associate Salaries Changes Little from Last Year,” NALP, September 8, 2011,
http://www.nalp.org/2011_associate_salaries.
to Feb 2024.
Exhibit 1 (continued)
Median Starting Salaries by Firm Size — 1994-2008
Year FIRM SIZE (Number of Attorneys)

All Sizes 2-10 11-25 26-50 51-100 101-250 251-500 501+
1994 $50,000 $32,000 $40,000 $48,000 $55,000 $60,080 $70,000 $70,000
1995 50,000 32,500 40,000 48,000 55,000 62,000 72,000 72,000
1996 50,000 34,000 40,000 49,000 55,000 62,000 74,000 77,000
1997 55,000 35,000 42,000 50,000 58,000 67,000 79,000 80,000
1998 60,000 37,000 43,500 52,000 62,000 72,000 85,000 90,000
1999 70,000 40,000 46,000 55,000 70,000 80,000 92,000 97,000
2000 80,000 40,000 50,000 60,000 76,000 99,500 125,000* 125,000*
2001 90,000 43,000 52,000 62,000 80,000 100,000 125,000* 125,000*
2002 90,000 45,000 52,500 65,000 80,000 100,000 125,000* 125,000*
2003 80,000 45,000 55,000 65,000 80,000 95,000 125,000* 125,000*
2004 80,000 48,000 55,000 65,000 76,000 100,000 116,000 125,000*
2005 85,000 50,000 60,000 70,000 80,000 100,000 125,000* 125,000*
2006 95,000 50,000 62,000 73,000 85,000 105,000 125,000* 135,000*
2007 108,500 52,800 65,000 75,000 90,000 115,000 140,000 160,000*
2008 125,000 55,000 65,000 77,000 95,000 120,000 160,000* 160,000*
% Change 150% 72% 63% 60% 73% 100% 129% 129%
1994-2008
*The Median for these categories is as shown. However, because so many salaries were reported at this level, the
concept of a modal, or prevailing, salary is more useful.
Source: National Association for Law Placement (NALP).
Employment Report and Salary Survey reports. 50
50
“What Do New Lawyers Earn? A 15-Year Retrospective 1994-2008,” NALP Bulletin, August 2009.
National Association for Law Placement (NALP), http://www.nalp.org/aug09newlawyersal.
to Feb 2024.
Exhibit 2
Associate Attrition Statistics for U.S. Law Firms in 2008
% leaving % leaving % leaving % leaving % leaving

within 1 within 2 within 3 within 4 within 5
year years years years years
Male 4 25 50 68 78
Female 3 35 48 67 79
Non-minority 4 23 47 66 76
Minority 4 28 52 75 85
Source: National Association for Law Placement (NALP).
51
Update of Association Attrition (2008).
51
National Association for Law Placement (NALP), 2008.
Kathleen B. Nalty, “Legal Profession “AIM” for Diversity: CCIE’s Innovation Inclusiveness Program,”
http://www.centerforlegalinclusiveness.org/clientuploads/AIM.pdf.
to Feb 2024.

Paragon Legal - A New Model (A)

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CASE: OB81A

LANDSCAPE OF THE LEGAL INDUSTRY

WOMEN IN THE LEGAL PROFESSION

CHALLENGES FOR WOMEN IN THE LEGAL PROFESSION

Part-Time Work and Flexible Hours

MAE O’MALLEY BACKGROUND

Growing the Company

PARAGON LEGAL: A NEW MODEL

Making It Work Financially

Paragon Legal Solutions

RECRUITING AND RETENTION

ATTORNEY CASE HISTORIES STUDIES

CLIENT CASE STUDY: AUTODESK

New Location Possibilities

FIRM SIZE — Number of Lawyers

2-25 26-50 51-100 101-250 251-500 501-700 701+ All Sizes

First $73,000 $86,000 $91,000 $110,000 $125,000 $120,000 $160,000 $115,000

Second 77,000 84,500 100,500 108,750 130,850 120,000 165,000 120,825

Third 80,000 91,800 108,000 112,500 134,675 125,000 169,500 125,000

Fourth 85,000 94,025 112,500 115,800 142,000 134,625 178,750 136,650

Fifth 96,000 99,050 116,000 122,400 146,700 138,300 192,500 140,000

Sixth 94,500 113,150 120,000 128,000 150,200 150,000 202,500 145,000

Seventh 104,000 123,000 127,500 130,000 160,000 158,275 218,750 157,950

Eighth 111,250 121,150 117,500 139,525 165,700 165,300 225,000 162,625

Source: National Association for Law Placement (NALP).49

Year FIRM SIZE (Number of Attorneys)

% leaving % leaving % leaving % leaving % leaving

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