Career Development --> In a Down Market

New Realities

Legal hiring, like the economy, is cyclical. Following explosive growth in the late 1990's, we are, once again, in a downswing. (See "2001: The Uncertainty Principle")

The larger law firms hired so many entry-level and junior associates during the last few years, that they are having a difficult time keeping all those associates busy in today's slowing economy. Underutilized associates are being switched to busier practice areas, thus, there is very little need to add attorneys with three or less years of experience, regardless of their expertise. Furthermore, there is a marked slowing in hiring transactional lawyers at all levels of seniority, and actual layoffs and downsizing are in process. Northern California is the hardest hit because it expanded most dramatically over the past few years, primarily in the Silicon Valley high technology and biotech markets. However, law firms continue to hire for next year's summer associate programs, make permanent offers to summer associates of 2001, and bring on board those summer associates of 2000 to whom they made offers last year, with an eye towards improved economic conditions.

Many law firms are taking this opportunity for strategic hiring at the partner level. We have noted a significant increase in search requests for partners or groups of attorneys with significant books of portable business, especially in litigation and intellectual property, as well as in labor and employment, real estate, and corporate transactions. When offered higher compensation, more managerial responsibility, or a chance to head up a practice area, many partners have shifted firms.

Moreover, "merger mania" is upon us. Over the past few years, a number of out-of-state firms have come into California, each by acquiring several local partners with very profitable practices, or entire smaller to mid-sized firms. A large number of law firms, national, regional, and local, either are actively considering or have been involved in merger discussions with other firms. The trend seems to indicate that many of even the most highly regarded small to medium firms are having difficulty competing with the larger firms on associate compensation and in providing clients with a full array of legal services. The likely consequence of this consolidation, as in the accounting profession, is that there will be more limited choices for candidates considering law firm practice.

Another reality is that, after the tremendous increases in associate salaries and bonuses over the past two years, compensation is flat. Many firms have notified their associates that there will not be bonuses this year, and that base salaries are frozen. In addition, firms are employing other cost-cutting measures such as asking new associates to defer their start dates, and some have been offering unpaid leaves of absence to attorneys at all levels of seniority. There is an effort to avoid rescissions of offers to entry-level associates and, to date, there have been no salary reductions, but that is not out of the question.

Nevertheless, firms do have lateral openings to fill. However, with the changes in the economy, especially the decline of dot-com and emerging growth companies, the "hot" practice areas have shifted since last year. Litigation heads the list of most opportunities. Intellectual property remains very strong, especially patent prosecution. Next on the list are real estate/land use, followed by labor and employment. There still are some corporate positions available, but primarily for mid-to-senior level associates. Not surprisingly in this economic cycle, bankruptcy is heating up. "Warm" practice areas include international, environmental, tax, trusts and estates. "Cool" areas are healthcare, banking, and government contracts. And for those of you with "stars in your eyes": although Los Angeles is the entertainment capital, it remains extremely difficult to break into that industry unless you know someone!

In this tight legal market, firms are giving closer scrutiny to credentials such as grades, job history, and performance evaluations. Current hiring programs appear to be tailored to reflect a more conservative, long-term approach.

Career Development --> In a Down Market New Realities Legal hiring, like the economy, is cyclical. Following explosive growth in the late 1990's, we are, once again, in a downswing. (See "2001: The Uncertainty Principle") The larger law firms hired so many entry-level and junior associates during the last few years, that they are having a difficult time keeping all those associates busy in today's slowing economy. Underutilized associates are being switched to busier practice areas, thus, there is very little need to add attorneys with three or less years of experience, regardless of their expertise. Furthermore, there is a marked slowing in hiring transactional lawyers at all levels of seniority, and actual layoffs and downsizing are in process. Northern California is the hardest hit because it expanded most dramatically over the past few years, primarily in the Silicon Valley high technology and biotech markets. However, law firms continue to hire for next year's summer associate programs, make permanent offers to summer associates of 2001, and bring on board those summer associates of 2000 to whom they made offers last year, with an eye towards improved economic conditions. Many law firms are taking this opportunity for strategic hiring at the partner level. We have noted a significant increase in search requests for partners or groups of attorneys with significant books of portable business, especially in litigation and intellectual property, as well as in labor and employment, real estate, and corporate transactions. When offered higher compensation, more managerial responsibility, or a chance to head up a practice area, many partners have shifted firms. Moreover, "merger mania" is upon us. Over the past few years, a number of out-of-state firms have come into California, each by acquiring several local partners with very profitable practices, or entire smaller to mid-sized firms. A large number of law firms, national, regional, and local, either are actively considering or have been involved in merger discussions with other firms. The trend seems to indicate that many of even the most highly regarded small to medium firms are having difficulty competing with the larger firms on associate compensation and in providing clients with a full array of legal services. The likely consequence of this consolidation, as in the accounting profession, is that there will be more limited choices for candidates considering law firm practice. Another reality is that, after the tremendous increases in associate salaries and bonuses over the past two years, compensation is flat. Many firms have notified their associates that there will not be bonuses this year, and that base salaries are frozen. In addition, firms are employing other cost-cutting measures such as asking new associates to defer their start dates, and some have been offering unpaid leaves of absence to attorneys at all levels of seniority. There is an effort to avoid rescissions of offers to entry-level associates and, to date, there have been no salary reductions, but that is not out of the question. Nevertheless, firms do have lateral openings to fill. However, with the changes in the economy, especially the decline of dot-com and emerging growth companies, the "hot" practice areas have shifted since last year. Litigation heads the list of most opportunities. Intellectual property remains very strong, especially patent prosecution. Next on the list are real estate/land use, followed by labor and employment. There still are some corporate positions available, but primarily for mid-to-senior level associates. Not surprisingly in this economic cycle, bankruptcy is heating up. "Warm" practice areas include international, environmental, tax, trusts and estates. "Cool" areas are healthcare, banking, and government contracts. And for those of you with "stars in your eyes": although Los Angeles is the entertainment capital, it remains extremely difficult to break into that industry unless you know someone! In this tight legal market, firms are giving closer scrutiny to credentials such as grades, job history, and performance evaluations. Current hiring programs appear to be tailored to reflect a more conservative, long-term approach.	Hot Tips The Search Planning Your Search Assessing Your Marketability Resumes and Cover Letters Interviewing Strategies Special Circumstances Following Through Compensation Making the Transition Career Development Getting Ahead In a Down Market Making Partner Hot Practice Areas Law Firm Economics California Legal Market View our most recent Hot Tip - Same Desk, Different Job, posted 3/7/08 The California Bar Exam Listen to Your Recruiter Check out our new book, "The Right Moves: Job Search and Career Development Strategies for Lawyers"

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