bad ECONOMY = bad FALL 2008 OCIs?

[Burnanator]

Heads are rolling in BIGLAW (see below). Hundreds of partners are being cut from equity tiers or outright fired to makeup for the sluggish economy. What does this means for Fall OCIs?

Either BIGLAW will continue to hire at current numbers because (a) their pyramid scheme-esque profit structures depend upon large numbers of youthful (read: expendable) associates,(b) there's no way to predict Fall 2001 market conditions--more than two years away-- and (c) a traditional 10 year business cycle slump usually lasts less than 18 months, OR...

They'll *&^% their pants and cut expenses by trimming down the summer associate programs.

Thoughts?


*&^%'S HITTING THE FAN:

Jenner & Block de-equitized 10 partners:
http://blogs.wsj.com/law/2008/03/06/jenner-block-ousts-10-equity-partners/

Mayer Brown de-equitized/fired 45 partners:
http://blogs.wsj.com/law/2007/03/02/mayer-brown-purging-45-partners/

Cadwalader canned another 35:
http://www.abovethelaw.com/2008/01/breaking_cadwalader_announces.php#more

Clifford Chance lays off 6 in structured finance:
http://www.law.com/jsp/article.jsp?id=1194257039275&rss=newswire

Kirkland & Ellis engaging in conspicuously more stringent reviews:
http://www.abovethelaw.com/2007/10/nationwide_layoff_watch_are_th.php#more

[Burnanator]

I did some follow-up research ...

Based on NALP informtion from the 2001 recruitment season, which was impacted by a comparable economic downturn, BIGLAW recruitment indeed dropped, but not significantly. (http://www.nalp.org/content/index.php?pid=190)

- 23.9% of law schools reported a 5-12% decrease in the number of employers on campus

- 24.6% of law schools reported a decrease in excess of 12%

- Overall, 60% of law schools reported a decrease in OCI firms

- Interviews resulting in an offer dropped from 62.6% in 2000 to 50.2% in 2001

- Offers accepted went up from 31% in 2000 to 35% in 2001.

NALP summary: "(a) fewer students are receiving an offer from their summer employer and that, among those that do, more are likely to accept, and that (b) fewer callback interviews are resulting in an offer and that the acceptance rate to these offers is higher."

It's not the end of the world, but BIGLAW won't likely dig as deep into the 2L class as they did last year. My CSO office said the difference will be felt most among students in the "margin" who were somewhat competitive for BIGLAW interviews last year (40-50th percentile), but will be much less competitive this year.

It doesn't end there...

Among summer associates, the number receiving offers dropped from 89.7% in 2000 to 82.9% in 2001. The number accepting those offers rose from 65.8% in 2000 to 72.3% in 2001.

[uart]

August OCI at Emory is at capacity. While that doesn't speak of any particular number of offers out there to be made, the firms are still planning to be interviewing/hiring.

Keep in mind that a first year associate can do a lot of work for a lot less than a Partner. If you can replace one partner with a couple of first year associates for the same price...

[NYC2L]

Firms would much prefer to lay off 2nd or 3rd year associates rather than no-offering a bunch of summers. Why? A firm that no-offers receives a nasty black mark in the eyes of future law students. When the economy picks back up (as it inevitably will) those firms that no-offer summers will have a tough time recouping their reputations among law students.

In addition, the smart firms recognize that the down turn is temporary and will only reduce their summer classes as much as is necessary. Why? B/c when the economy turns around, those firms that drastically reduce their summer classes will suddenly find themselves with a dearth of junior to mid-level associates.

The best advice for those who will go through OCI this fall is to express interest in lots of different practice groups (don't pigeonhole yourself) b/c as corporate and structured finance contract, litigation and restructuring will surge. Also, people with SA positions this summer might want to buckle down more than usual b/c there will be more no-offers than last year (as a previous post seems to indicate).

[emtjp1028]

Come on, a few 1L's over a partner?  What work is the 1L brining in?  Let's be honest here!  Do you think that a firm paying a 1L market salary is raking in the dough from the 1L's work?

[mike4488]

Come on, a few 1L's over a partner?  What work is the 1L brining in?  Let's be honest here!  Do you think that a firm paying a 1L market salary is raking in the dough from the 1L's work?

Yes, 2000 billable hours at 300 bucks an hour.  Say they only even bill the client for 1500 hours (which is a pretty low number) the firm just made $450,000 and pays $160,000.  After expenses firms at least make $200,000 a year on first year associates.

fixed

[emtjp1028]

Mike, apparently you are confused by the conversation here.  A 1L is a law student, not a first year associate.  I, however, do appreicate the fact that you went through the math and everything! 

[deedeeleigh]

I don't know, with all the blogs and internet out there tracking who is getting laid off, I think SA's are more hesitant to go to a firm that is laying people off. It would make me personally scared that they wouldn't offer me a job at the end of my SA.

I don't think it's going to have that huge an effect on OCI, but it seems like firms are taking smaller SA classes. I've also heard rumors from scared 2L's who have heard that their firm overbooked it's SA class, and will not be offering as many spots. If that happens, there will be more 3L's participating in Fall Recruitment. I'm not sure how that would effect 2L's interviewing for an SA position, but I don't like the sound of any of it.

[1LMan]

Mike, apparently you are confused by the conversation here.  A 1L is a law student, not a first year associate.  I, however, do appreicate the fact that you went through the math and everything! 

Dude, now you just look stupid, because Captain was referring to first year associates, not 1L's, you made that leap yourself.....

[POTUS20]

Mike, apparently you are confused by the conversation here.  A 1L is a law student, not a first year associate.  I, however, do appreicate the fact that you went through the math and everything! 

Dude, now you just look stupid, because Captain was referring to first year associates, not 1L's, you made that leap yourself.....

2Lman - Actually, he didn't make that leap himself - Mike accidentally put 1L at the end.  I just thought I'd sink to your level for a second to correct you because the only feminine hygiene product on this board that likes to correct people to make himself feel better should be corrected as well. 

Keep up the good work, Doug Bagwell.