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ABA: Downturn’s Losers: BigLaw, ‘Entitled’ Associates, Top Schools

Matthies

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Here is yet another article chronicling what I have said before, that I think what we are seeing in the legal hiring is more that just a bubble, but a complete change in the way larger law firms work. I don’t think we will ever return to the way it was 2 years ago, those days are gone for good. So what should be learn from this?

I think the key is for new students, as well as current students to understand the hiring patterns of the past are not going to work in the new economy and they should all, regardless of school, concentrate on other ways of finding employment other than simplify relying on OCI (or looking at past results of classmates any indictor of their probable job search success). OCI alone is just not going to be enough for future grads to be the main focus of the job search. And lastly I think law students need to better educate themselves on the business of practicing law so they are aware of the challenges facing firms and can talk intelligently about them in interviews, knowing how the paradigm is changing can make you a more valuable employee if the firm believes you understand the business side of the firm as well as the legal side.


ABA: Downturn’s Losers: BigLaw, ‘Entitled’ Associates, Top Schools
Posted May 7, 2009, 10:12 am CDT
By Debra Cassens Weiss

The downturn has likely ended the traditional BigLaw model that produces $160,000 starting salaries and relies on elite law schools to supply new associates.

The situation is so bleak, according to Indiana University law professor William Henderson, that some law firm hiring managers believe associate start dates will be pushed back even further, possibly from January 2010 to September 2010. Henderson makes his observations on the downturn’s likely winners and losers in a comment to a post at Brian Leiter’s Law School Reports.
The winners, in Henderson’s view, are regional law firms that will take work away from their larger competitors and the associates they employ. The losers will be big law firms with armies of associates and the elite law schools that supply the talent.

“There is a fairly general consensus that the bubble has permanently burst on the traditional BigLaw model that produces the $160K salary structure,” Henderson writes. “The high-leverage firms in major markets are reeling the most, primarily because there is a lot less money being spent by GCs, and they are imposing brutal cost-containment strategies.” Even if starting pay remains at $140,000 or $160,000, Henderson says, every extra dollar above that will be “merit-based.”

Henderson says two managers at large law firms predicted the September 2010 associate start dates and told him, “There are no jobs right now—none.”

As large law firms suffer, so too will the brand-name law schools, he says. “Many, many GCs are less impressed by ‘brand’ than by cost containment and results,” Henderson says.

“Numerous law firm partners have told me about natural experiments in which associate from regional law school A, who everyone underestimated, outperformed entitled and complacent associates from national law school B,” Henderson writes. “The firms are now systematically studying these observations using the techniques of industrial psychology. It is very interesting stuff.”

http://www.abajournal.com/weekly/downturns_losers_biglaw_entitled_associates_top_schools

"And lastly I think law students need to better educate themselves on the business of practicing law so they are aware of the challenges facing firms and can talk intelligently about them in interviews, knowing how the paradigm is changing can make you a more valuable employee if the firm believes you understand the business side of the firm as well as the legal side."

Totally solid advice, probably more important now than ever.  If I get what you're saying it's that it's no longer sufficient to simply be a great student. You now need to have something that will allow you to hit the ground running in a business sense.  Maybe I added the last bit from personal experience.

I think it's true.  I'm seeing it, anyway, in the firm I work for.  Nobody's hiring based on sterling academic records any more.  They'd rather hire someone who can start making money for the firm right away than make an investment in their future.  The simple truth is that the margin that used to be available to allow them to make long term investments in professional personnel no longer exists.  Clients don't have the money to subsidize it any more.

I agree that the paradigm is changing.

However, I seriously doubt school name will cease to have meaning.  I think it will simply change from a sufficient to a necessary condition for working in BigLaw and that BigLaw will never again be as "big" as it was in '06. 

Clients (at least mine, anyway) aren't going to stand for the following: "hey don't worry, this guy went to Catholic but he's a MUCH harder worker than our Harvard grads.  That's why we're putting him on your case... because you're one of our preferred clients and you deserve only the best.  We're saving the lazy old HLS guys for our less important clients.  In the meantime, please pay us $350/hr for the services of a guy who couldn't break 160 on the LSAT."

Yeah, right.

nealric

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‘Entitled’ Associates, Top Schools

I do kind of resent the constant allegations that biglaw summers and associates feel "entitled". Are junior associates often over compensated? Yes, of course, but that doesn't mean they had an unhealthy attitude about that overcompensation. Most people I know who are getting deferred or who did not get biglaw this summer don't feel indignation- they are just disappointed. Wouldn't you be disappointed if someone told you that you had won the lottery and then told you the next day that the state lottery fund had collapsed and you would be receiving no payments? 

Matthies

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However, I seriously doubt school name will cease to have meaning.  I think it will simply change from a sufficient to a necessary condition for working in BigLaw and that BigLaw will never again be as "big" as it was in '06. 

Clients (at least mine, anyway) aren't going to stand for the following: "hey don't worry, this guy went to Catholic but he's a MUCH harder worker than our Harvard grads.  That's why we're putting him on your case... because you're one of our preferred clients and you deserve only the best.  We're saving the lazy old HLS guys for our less important clients.  In the meantime, please pay us $350/hr for the services of a guy who couldn't break 160 on the LSAT."

Yeah, right.

Oh I don’t think school is going to stop mattering, but I do think firms won’t go as deep into classes anymore. There is simply not enough work or demand to hire that deep into every T14. School will still matter, the thing that will change is it won’t be a golden ticket anymore like 3 years ago. There will now be some doubt as to if you can pull market out of the middle of the class. The whole thing is just contracting, not so much alter the status quoe of elite school/elite firms. Just not as many new hires at the firms as we have been used to in the past, so less depth and more competition on the school side and for students try to land a big firm job.

Hence I think law students starting today need have a big picture game plan for finding work. I think the days of summer 2L OCI = guaranteed job are not coming back. The amount of no offers, if only because there are simply not enough jobs available, is going to go up. So are pushed back, then I’m afraid, revoked offers. So I think in addition to grades new law students need to have a 3 prong attack plan for finding a job, OCI + mass mailing + networking to make sure you cover all the bases. And they need to start doing that in 1L. You need to have a backup plan in place and working in case you do get no offered 2L summer.

And I think that’s my biggest point, in the past it has been common wisdom if you went to T14 you could get a market job from just about anywhere in the class. Those are the days I think are gone. Not because the schools are losing any prestige, but simply because there just are not enough jobs anymore to justifying going as deep into the class to fill your ranks. There is a lawyer glut with little demand, so it’s a hiring partners market, then can choose and I believe will choose to be very picky about who gets the few offers they have. That will mean students will not only have to stand out based on school and grades, but bring other things to the table they have not in the past like an understanding of the changing value added nature of the law business and how they as a new associate can hit the ground running to make that paradigm work.

Firms are going to be looking for pedigree, grades, and the ability to hit the ground running and start making money for the firm. You just simply won’t have the luxury anymore easing into the practice, ramping up slowly to your full productiveness, firms are going to expect and demand more profit making out of first year associates then they did in the past (either by creating business, billing more or other ways first years can increase they individual profitability). With leaner times means the need and desire to keep only the highest performing employee. Law students need to understand that, and get the fact that law is simply the service they provide, in the end a law firm is just like any other business in needs to trim the fat and cut expenses when times are learn. Being good at the law won’t necessarily be enough anymore to get or keep the job.

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‘Entitled’ Associates, Top Schools

I do kind of resent the constant allegations that biglaw summers and associates feel "entitled". Are junior associates often over compensated? Yes, of course, but that doesn't mean they had an unhealthy attitude about that overcompensation. Most people I know who are getting deferred or who did not get biglaw this summer don't feel indignation- they are just disappointed. Wouldn't you be disappointed if someone told you that you had one the lottery and then told you the next day that the state lottery fund had collapsed and you would be receiving no payments? 

I agree with that.  I also think that sometimes the sense of "entitlement" is really just a manifestation of panic with regard to the crushing debt they're carrying.  Not making the money back is really not an option - you've already stuck your neck out.  Your lottery ticket costs $150k and you've already paid for it.

Matthies

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‘Entitled’ Associates, Top Schools

I do kind of resent the constant allegations that biglaw summers and associates feel "entitled". Are junior associates often over compensated? Yes, of course, but that doesn't mean they had an unhealthy attitude about that overcompensation. Most people I know who are getting deferred or who did not get biglaw this summer don't feel indignation- they are just disappointed. Wouldn't you be disappointed if someone told you that you had one the lottery and then told you the next day that the state lottery fund had collapsed and you would be receiving no payments? 

That's how the partners at the firms are desceribing them, I did not change the tiltle, thats the way they wrote it. I also think the sense of entilement was more prvelant a few years ago, I think most of todays grads know that situation has changed, but these partners are speaking of thier past experinces, its far to early for any to judge how entiled this years crop seems to be. Although its intrersting they whenever they do one of those generaltional surveys, like what Baby boomers employers think of gen y employees "entitled" allways seems to come up, so it may be a diffrering of generational vaules since most partners are of that generation.

"h I don’t think school is going to stop mattering, but I do think firms won’t go as deep into classes anymore. There is simply not enough work or demand to hire that deep into every T14."

That will probably happen, but I that trend will be overshadowed by those showing special promise for making the firm money.  That is, I think firms will hire somebody with poor grades and a special aspect that makes the candidate more likely to generate money for the firm quickly (language skills, experience with potential clients, connections with potential clients, specialized background, etc) over stellar students who are otherwise ordinary. I think that, if all you have is great grades... you're still better off being from HLS... but that's no longer going to be enough.  It think it will be even tougher for people with great grades from lesser schools who also lack a "special aspect" that would give them better potential for generating money for the firm.

Incidentally, I'm not making this up.  This is coming from a hiring partner at my firm who I know personally.

"That's how the partners at the firms are desceribing them"

Yeah, but partners are assh@les.  You know that.  The same partners were at least as "entitled" when they were young associates.  That doesn't stop them from shitting on everybody else because now they're writing the salary checks instead of cashing them.

"You just simply won’t have the luxury anymore easing into the practice, ramping up slowly to your full productiveness, firms are going to expect and demand more profit making out of first year associates then they did in the past (either by creating business, billing more or other ways first years can increase they individual profitability)."

Spot-on.  That's almost verbatim out of my partner's mouth.

nealric

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That's how the partners at the firms are desceribing them, I did not change the tiltle, thats the way they wrote it. I also think the sense of entilement was more prvelant a few years ago, I think most of todays grads know that situation has changed, but these partners are speaking of thier past experinces, its far to early for any to judge how entiled this years crop seems to be. Although its intrersting they whenever they do one of those generaltional surveys, like what Baby boomers employers think of gen y employees "entitled" allways seems to come up, so it may be a diffrering of generational vaules since most partners are of that generation.
 

Sorry, I did not mean to attack any belief you might have about this, but about the allegations in general.

Frankly, I think every generation eventually comes to think the one after it is entitled (at least in modern history). I think a large part of this is the relatively consistent economic and technological growth that has occurred since the industrial revolution. In a very real way, each generation does live better than the one that came before it.

Matthies

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"h I don’t think school is going to stop mattering, but I do think firms won’t go as deep into classes anymore. There is simply not enough work or demand to hire that deep into every T14."

That will probably happen, but I that trend will be overshadowed by those showing special promise for making the firm money.  That is, I think firms will hire somebody with poor grades and a special aspect that makes the candidate more likely to generate money for the firm quickly (language skills, experience with potential clients, connections with potential clients, specialized background, etc) over stellar students who are otherwise ordinary. I think that, if all you have is great grades... you're still better off being from HLS... but that's no longer going to be enough.  It think it will be even tougher for people with great grades from lesser schools who also lack a "special aspect" that would give them better potential for generating money for the firm.

Incidentally, I'm not making this up.  This is coming from a hiring partner at my firm who I know personally.

I tend to agree with this, I also think though it will a boon to “affordable” graduates from local regional schools, but harder for graduates of local schools to break into distant markets. I think alots more is going to ride on your actual performance over the summer, and since local grades have a leg up being local the nod will go to them if they perform well (in local mid markets, NYC, LA, SF completely different story).

I don’t see a local firm in a mid market taking an unknown quantity from an out of state school simply based on school rank over a local grad who just spent the summer at your firm proving he could do the work. There just is not enough cushion anymore to hire 10 in hopes 2 workout. Connections will become ever more important and the nod will go to those locally connected students with proven track records first. Those going to a regional school but wanting to work in another regional will find that transition even more difficult than in the past because of the desire and ability to use the “try before you buy” system of clerking.