As law firms adjust to the new economic realities unleashed by the Great Recession, young attorneys are feeling the fallout. While today’s newly minted attorneys dodged the massive layoffs that swept though Big Law in 2009, they are finding limited slots at top firms, stagnant—even falling—salaries, and slimmer odds of making equity partner.
Still, it’s not all bad news for young guns. For those lucky enough to crack into a top 200 firm, the opportunities to hone one’s craft come early and often. “Talented associates are still in demand,” notes Mary K Young, a consultant with the Zeughauser Group, a management consulting firm. And signs show that associate morale is higher today than it’s been in several years. Big Law has never been for the faint of heart—that’s particularly true now. Expect pledging 60-plus-hour workweeks to a firm that will become your primary devotion. “There’s much more pressure being put on associates to hit the ground running,” says David Wilkins, director of Harvard Law School’s Program on the Legal Profession.
“The demands are greater, but so too are the opportunities for young associates,” says Eric Murdock, a partner with Hunton & Williams’s Washington, D.C., office. Today, big law firms are supporting, even nurturing, their associates in many ways—though not necessarily with rising salaries and bonuses. Support comes in the form of enhanced training so young associates gain rainmaking competencies earlier, added work-life flexibility to keep talent, and even alternative routes—some later, some lower paid—into large firms.
The recession triggered many changes affecting today’s young attorneys. Demand for legal services contracted 9 percent during the downturn and hasn’t fully recovered. “We’re seeing a sea change,” says Young. After 45,000 layoffs during the recession, firms are hiring, but not near earlier levels. The legal services demand curve in recent years “looks like a wild roller-coaster ride,” says Mark Medice, senior director of the Thomson Reuters Peer Monitor service. This year has seen “slow demand and rising expenses,” says Medice. “All the practices are moderating except labor and employment.”
“Today, clients are calling the shots,” says Wilkins. That’s led to fixed fees and other alternatives to billable hours. Clients don’t want to pay to train young lawyers. That has limited spots at top firms and given rise to legal process outsourcing firms, which focus on document review and other legal services grunt work at cheaper rates using domestic or foreign lawyers. Law firms also are looking to temporary and contract attorneys to hold the line on costs, says Marjorie Grossberg, a partner in the legal recruiting firm Major, Lindsey & Africa.
Among the class of 2008, 19 percent of attorneys went into full-time positions at law firms with 251 or more attorneys. Only 10.5 percent of the class of 2011 landed such jobs, according to NALP-the Association for Legal Career Professionals. Hiring was up in 2011, but “will slow down” with flattening demand, Medice says. “There are too many lawyers and too many law firms,” observes Greg Nitzkowski, global managing partner at Paul Hastings.
“The employers have more of an upper hand,” Wilkins says of the law firms, “but still the world belongs to talent.” It used to be that the most “talented” students graduated in the top quarter of the top 25 law schools. “Having great grades and being a wonderful person was great 10 years ago,” Nitzkowski says, but today firms look for more, including outside experiences, from military service to entrepreneurial efforts to other careers. “The successful ones are the scrappy kids,” notes James Leipold, NALP’s executive director, not always the top performers at elite schools. Wanted: individuals with good judgment, financial literacy, and an understanding of the client service business model, as well as those with good management, team, communication, and interpersonal skills. Of course, stamina to work long hours and pull those all-nighters is a given. “Law schools don’t teach much of that,” Wilkins says.
“Being a really good attorney isn’t good enough,” says Rita Davis, a commercial litigator and upper-level associate at Hunton & Williams’s Richmond, Va., office. You have to be an articulate communicator, a thought leader and understand the business of law firms. “I wasn’t half as savvy about marketing myself or developing business or client relationships,” she says.
You also might need to lower your salary expectations: “2009 was really the peak year that $160,000 was the peak [starting] salary,” says Leipold. While the top recruited entry-levels still fetch $160,000, “the middle salary at Big Law has fallen to $145,000,” he notes. The erosion of big firm hiring has triggered a plunge in average starting private practice salaries—from $130,000 to $85,000—in just two years. “There is a push-down effect,” says Leipold. “You see students who thought they were going to Big Law going into public interest” or other lower-paying positions.
That happened to Lisa Ventress, a 2010 graduate of Thomas M. Cooley Law School in Lansing, Mich. “When I started law school I wanted to work at a traditional law firm doing compliance work,” says Ventress, 28, of Frisco, Texas. Today, she works for Pangea3, a global legal process outsourcing firm, managing a team of five attorneys assisting with discovery in bank litigation cases. “I’m reviewing documents and checking the work of my colleagues,” she says. Big Law associates are doing more than just document review and discovery. “The work is not always going to be glamorous” but the 40-hour workweeks help, she says. Her pay is about one half that of a law firm associate, says Ventress, who entered law school in 2007 and racked up nearly $200,000 in loans.
The tight market doesn’t mean young lawyers are locked out. Cultivating early associate-level skills in federal government honors programs and other positions can lead to mid-level associate positions at large firms. Legal recruiter Grossberg says mid-levels are in demand, particularly those specializing in certain corporate work, intellectual property, and some other areas. Going forward, Grossberg foresees fewer summer and first-year associate hirings. The 86 summer associates Paul Hastings tapped last year was one of the largest classes among law firms. This year, the class fell to 74. In 2005-06, there were 109 and 144, respectively.
Meanwhile, the lives of associates overall seem to be brightening. After facing massive layoffs, hiring deferments, frozen salaries, and weaker bonuses, mid-level associates are happier about their jobs than they’ve been since 2004, according to the most recent survey of The American Lawyer. Of course, “I think when you have a job, you’re happier,” reasons Wilkins.
“In 2005 and 2006, everybody was getting jobs,” says Mor Wetzler, a Cornell Law grad and fifth-year associate in Paul Hastings’s New York office. “Younger folks coming in are more thankful to have a job now.” The survey cited Paul Hastings associates as among the happiest. There is an emphasis on pro bono work, training programs, and feedback at the firm, says Wetzler, and “it’s supportive at every level.”
“Associates grow up faster now than five to 10 years ago,” notes Hunton & Williams’s Murdock. “We’re working leaner generally, so young associates will have more responsibility and deal with clients earlier.” There is a push today for young attorneys to specialize quickly. Fifteen years ago, “you never had associate training programs around leadership or client interaction,” notes Nitzkowski. Today, first- and second-year associates get that training and constant performance feedback. “Originations really matter, client relationships really matter,” Grossberg says.
Keeping talent is key. At Hunton & Williams, Davis took advantage of a program providing attorneys flexibility for life’s milestones and surprises—a baby in Davis’s case. In 2008, she went part-time for a year. Judith Itkin, the firm’s partner overseeing recruiting and development, says Hunton & Williams is open to such flexibility because “losing 40 to 60 percent of your associates within three or four years is not a great model in this economy.”
Meanwhile, San Francisco-based Orrick, Herrington & Sutcliffe hires “career” associates for nonpartnership-track positions typically paid $65,000 to $85,000. The program has swelled at the 1,000-plus attorney firm, from less than 5 to nearly 50 in three years. “The practice of law is changing fundamentally,” says Orrick Chairman and CEO Ralph Baxter.
Whether such models can sustain new law school students, who face total tuitions in the $150,000 range, is unclear. “People ought to think very hard whether a legal career is for them,” says Wilkins. For those determined to pursue one, Wilkins suggests learning how law firm economics work and focusing on the intersection of “law, business, and public policy.” Davis adds: “Develop your skills early on. Ask and take advantage of resources. It’s a lot of work being an associate other than being an associate.”