3 ms·

I don't understand how it's possible that every single biglaw firm offers the exact same starting salary but that isn't considered illegal collusion, while land

by ummonk 3y ago

I don't understand how it's possible that every single biglaw firm offers the exact same starting salary but that isn't considered illegal collusion, while landlords using a market-estimation service as a starting point for pricing their units (but sometimes pricing below or above the algorithm's recommended price) is considered illegal collusion.

d0gsg0w00f 3y ago
Probably because legal defense outside of public defender is considered a luxury good. And it's rare to need a public defender if you're living a "normal" life. With housing, everybody has to live _somewhere_.
killingtime74 3y ago
(studied competition law in law school). Everyone having the same starting salary can be arrived at by non-illegal means, such as seeing what the others are offering and matching. To successfully prosecute for price fixing you need actual evidence of collusion. That is usually obtained by whistleblowing, as the first person usually gets a reduced sentence (example: https://www.accc.gov.au/media-release/cartel-immunity-policy-strengthened-whistleblowing-tool-launched https://www.accc.gov.au/media-release/cartel-immunity-policy...). Price fixing in buying/hiring is not monopoly btw, it's monopsony.
- aerhardt 3y ago
  Sorry to nitpick on this tangential detail, but what does “reduced sentence” entail? On paper it sounds like many people would rather take the secret to their graves.
  - killingtime74 3y ago
    It's not tangential at all. Depends on jurisdiction and policy by prosecuting authorities. Could be smaller fine, to complete immunity. I'm not familiar with American case law but I remember seeing that Matt Damon film "The Informant" that is based on a true story. The whistleblower (Matt Damon) was going to get complete immunity as he was the first to tell the FBI. https://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy https://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy. He ended up having his immunity rescinded for other reasons.
- IshKebab 3y ago
  What counts as collusion? Would those services that privately share salary information between companies count? Doesn't seem too different.
  - killingtime74 3y ago
    May need to read more for your jurisdiction (depends on your case law in your country). Usually it's explicit communication between the parties to price fix. If you were using those services that share salary information to communicate to your competitors, it probably does. If your employees/ex-employees do it without you telling them to (with evidence that you did), probably not.
tdb7893 3y ago
So the thing with lawyers is that there is no communication (i.e. it's only "tacit collusion"). In this case there is communication via the company with the pricing algorithms. My brother studied tacit collusion as part of his econ PhD (and new lawyers was one of the markets he looked at) but it would be a hard thing to actually legislate against and isn't illegal. You can't just be like "you guys can't pay the same".
- lupire 3y ago
  Of course there is communication. https://abovethelaw.com/2024/01/latham-salary-2023/ https://abovethelaw.com/2024/01/latham-salary-2023/ What's missing is the pressure on other firms to match. This is more like the leader raising pay and other firms chasing them.
  - tdb7893 3y ago
    I mean yeah they can see what other firms do but they aren't actually talking to each other (or at least not in a proveable way) to organize prices. It's a very different situation than having a business with an algorithm to share pricing models. Obviously law firms colluding on prices isn't good but how they are colluding is completely different.
pottertheotter 3y ago
When I worked in investment banking 1st year analysts made pretty much the same base at every big bank. They all used the same compensation consultant, which seemed iffy.
- rocqua 3y ago
  I doubt 1st year analysts have much salary complaints.

by ummonk 3y ago

d0gsg0w00f 3y ago

Probably because legal defense outside of public defender is considered a luxury good. And it's rare to need a public defender if you're living a "normal" life. With housing, everybody has to live _somewhere_.

killingtime74 3y ago

(studied competition law in law school). Everyone having the same starting salary can be arrived at by non-illegal means, such as seeing what the others are offering and matching. To successfully prosecute for price fixing you need actual evidence of collusion. That is usually obtained by whistleblowing, as the first person usually gets a reduced sentence (example: https://www.accc.gov.au/media-release/cartel-immunity-policy-strengthened-whistleblowing-tool-launched https://www.accc.gov.au/media-release/cartel-immunity-policy...). Price fixing in buying/hiring is not monopoly btw, it's monopsony.

aerhardt 3y ago
Sorry to nitpick on this tangential detail, but what does “reduced sentence” entail? On paper it sounds like many people would rather take the secret to their graves.
- killingtime74 3y ago
  It's not tangential at all. Depends on jurisdiction and policy by prosecuting authorities. Could be smaller fine, to complete immunity. I'm not familiar with American case law but I remember seeing that Matt Damon film "The Informant" that is based on a true story. The whistleblower (Matt Damon) was going to get complete immunity as he was the first to tell the FBI. https://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy https://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy. He ended up having his immunity rescinded for other reasons.
IshKebab 3y ago
What counts as collusion? Would those services that privately share salary information between companies count? Doesn't seem too different.
- killingtime74 3y ago
  May need to read more for your jurisdiction (depends on your case law in your country). Usually it's explicit communication between the parties to price fix. If you were using those services that share salary information to communicate to your competitors, it probably does. If your employees/ex-employees do it without you telling them to (with evidence that you did), probably not.

tdb7893 3y ago

So the thing with lawyers is that there is no communication (i.e. it's only "tacit collusion"). In this case there is communication via the company with the pricing algorithms. My brother studied tacit collusion as part of his econ PhD (and new lawyers was one of the markets he looked at) but it would be a hard thing to actually legislate against and isn't illegal. You can't just be like "you guys can't pay the same".

lupire 3y ago
Of course there is communication. https://abovethelaw.com/2024/01/latham-salary-2023/ https://abovethelaw.com/2024/01/latham-salary-2023/ What's missing is the pressure on other firms to match. This is more like the leader raising pay and other firms chasing them.
- tdb7893 3y ago
  I mean yeah they can see what other firms do but they aren't actually talking to each other (or at least not in a proveable way) to organize prices. It's a very different situation than having a business with an algorithm to share pricing models. Obviously law firms colluding on prices isn't good but how they are colluding is completely different.

pottertheotter 3y ago

When I worked in investment banking 1st year analysts made pretty much the same base at every big bank. They all used the same compensation consultant, which seemed iffy.

rocqua 3y ago
I doubt 1st year analysts have much salary complaints.