aka ~50 billable hours a week which is more like 80 total hours per week plus commute

I'd say much more for very junior associates. The learning curve is fairly steep, but a lot of the first year is just learning how very much the practice of law differs from the practice of law school. Then, not every billable hour translates into a billed hour. Partners love to please clients by writing down and writing off time, both before and after the bills go out. This is particularly disheartening to the associates, who often don't even receive an explanation of why their time evaporated.

At a billing rate of $80/hour

That's actually a pretty good bargain. Even the upstate New York market supports wet-behind-the-ears-associate rates at well above $80.

There are a lot of factors in law firm retention, and many of those are discussed in the comments to Carter's post, which are worth reading if this issue interests you at all. I've often commented to those both in and out of the legal profession that there is a generational shift that becomes apparent in those born around 1965 and later. For the most part, those born before then cleave more readily to the "give-it-all-up-for-money" lifestyle, and those born after that, much less so. That's not to say there aren't still people willing to give up their waking life for $200,000 a year - - there are just less of them.

In addition, in-house opportunities are far more prevalent these days that even ten years ago. One of the reasons for that, though, is that corporations don't really like paying $185 an hour for an inexperienced pair of shoulders, even though they have to.

I made the move from private practice to in-house about a year ago. Truthfully, I felt like I had awakened from a long sleep. I knew I had made the right move when I caught myself thinking how strange it was to be driving home in daylight.

you give up every shred of privacy as yahoos with cameras follow you around

. . . and then some yahoo with a blog puts up the pictures . . .

Sorry James. Couldn't pass it up. : )

Now imagine if they said you have a choice. You can join our "get a life" associate program and get $80K starting salary while being expected to deliver 1250 billable hours (probably about 40 work hours per week) or you can join our "hard charger" program at $160K and 2500 billable hours. They will hire two associates for every "get a life" slot and one for the hard charge slot. The "get a life" slot filled by two people will actually work out to be more expensive (office space, support staff, benefits, etc) so we might have to up the requirements for that to make it a wash for the firm.

At a billing rate of $80/hour, a starting associate is at best a break even proposition for the law firm at 2500 billable hours and a starting salary of $160K plus benefits/office space. Go to high on the billable hourly rate and the customers might start complaining about paying $125 for a fresh out who hasn't even passed the bar yet.

If you add all this up, and knowing the competitive nature of the type of person who makes it into a top law school and then makes it into the top 10 or 20% of the class to go to a top law firm, I suspect that most would opt for the "hard charger" program until the reality of the life sets in. Then, how many would be willing to take a 50% cut in pay (vs say a 25% cut in pay and go to a corporation) in a couple of years.

All in all, this market doesn't sound like it is that badly out of whack.

I know the pains of the academic world due to friendships with Department Chairs. Not only do they compete with bigger name universities, they can't pay enough to over come the local cost of living advantages. They have had student groups upset because X teacher left for a school because they would pay them 10K more and the homes around the school cost $600,000 less.

Recently where I went it took them a year and a half to find a new engineering professor because the administration wanted a minority professor and just couldn't out bid the 100 other job openings for the 15 new minority PhDs. Eventually the school gave in on their requirements and they found a guy who wanted to move to California because he wanted to be close to his family, otherwise the position would still be open.