Less Than Happy Holidays For Associates

The outlook gets grimmer for associates, as several sources highlight their rough road.

As we previously discussed, The National Law Journal last month reported a 1.5 percent drop in the total number of associates at the country's 250 larges law firms.

Last week, the AmLaw Daily reported on the latest Robert Half Legal Hiring Index, in which seven percent more respondents said their firms intend to add jobs in the first quarter of 2011 over the the fourth quarter of 2010.

That would appear to be good news, except for this caveat:

"Fifty-two percent of respondents reported difficulty in finding skilled legal professionals. According to Volkert at Robert Half, this suggests that while law firms and legal corporate departments may have openings, they are mostly interested in candidates who are currently employed."

To dampen the outlook even further, simply being an employed associate doesn't seem to mean what it used to. The ABA Journal recently wrote:

"Some associates who managed to avoid layoffs now lack the exposure and experience of their peers from three to five years ago."

According to that article, the unexpected consequence of the recession is that many associates who retained their jobs spent the last two years doing "pro bono work and marketing", resulting in an unprecedented lack of real experience.

"Across the board at leading law firms in Chicago, Los Angeles and New York City, there are associates who haven’t gained the experience compared to years past, says Sheri Michaels, a partner at legal recruiter Major, Lindsey & Africa in New York City."

Which leads legal recruiter Amy McCormack to observe yet another potential change to the business of law:

"The dearth of experienced associates is even more reason for firms to abandon traditional class distinctions and evaluate junior lawyers on actual experience and legal skills."

ROI for Law School Downgraded

A few months ago we discussed the return on investment for law school tuition. Now, according to U.S. News and World Report, those numbers are looking even worse.

To put it simply, both sets of numbers are going in the wrong direction: Tuitions are increasing to unprecedented heights, while job prospects are both diminishing and paying less.

More money spent for less return can't be a good thing.

The problem starts with tuition, for which U.S. News cites ABA statistics:

• Average tuition at private law schools was up six percent in 2008 to $34,298

• State schools were up nine percent to and average annual cost of $16,836

• At Yale Law School, number one on the most recent U.S News ranking, tuition is $48,340 a year. The lowest tuition for a top 10 law school is at the University of California at Berkeley, which is in seventh place and charges in-state residents $35,907.

Now combine those numbers with dwindling returns, and the equation really goes down hill.

According to a separate U.S. News article, first-year associates at large law firms can expect to make $106,500 to $131,250, down 5.1 percent from last year. At midsize firms, associates can make between $71,500 and $100,750, and at small firms they might make from $49,750 to $73,000.

However, anecdotal reports indicate even those numbers are inaccurate, coming in significantly higher than real-world reports.

Reports from Manhattan, which historically would land at the higher end of the salary scale, say small firms are starting at $42k and midsized firms are offering $55k.

Job postings for small firms in Chicago are reportedly significantly less than that, starting in the mid 30,000 range. And this is without benefits.

However, the discrepancies might be explained by the source of U.S. News's salary statistics: Robert Half Legal, which is an attorney placement firm. If they are basing their statistics on their clients' salary offerings, then it's a safe assumption they are dealing with firms who can afford to pay the additional 20-25% of a first year associate’s annual salary that placement firms typically charge as a placement fee.

And this would argue for the anecdotal reports that those figures are out of step with real world offers.

Survery predicts increased hiring. Or does it?

Many in the blogosphere have latched onto a survey released last week by Robert Half Legal stating that 26% of attorneys polled indicated that their firms expect to increase legal professional headcount in the coming year.

While we hate to rain on anyone's parade, a closer look at the numbers doesn't support a whole lot of optimism.

First, let's look at the flip-side of the survey. While 26% said their firms expected to increase staffing, 67% anticipated no change. In other words, more than two thirds of respondents said headcount would remain flat.

That means the profession as a whole is looking at another year with two thirds of employers contributing to the current backlog of unemployed lawyers and new associates.

In fact, the press release touting the study discusses the difficulty firms currently face when they actually do post job openings, because they are overwhelmed with candidates.

"But locating the best candidates may be difficult, the survey results suggest. Forty-one percent of respondents said that it is challenging to find skilled legal professionals in the United States, despite high unemployment rates. Volkert noted that a single legal posting can generate several hundred resumes. "The sheer volume of applicants often makes the process more complicated for hiring managers," he said. "As a result, some firms and departments are relying more heavily on their professional networks, internal referrals and specialized recruiters to identify the best candidates for open roles."

But the real reasons to temper optimism are the results of the same survey from previous years.

It's neither surprising nor encouraging that in better financial times more than half of attorneys surveyed in 2004, 2005, 2006, 2007, and early 2008 expected increased hiring.

What is discouraging, though, is last year's survey. Dated March 26, 2009 -- well into the recession and a mere six weeks after Black Thursday, when law firms across the country began slashing jobs -- the survey found that 25% surveyed anticipated hiring in 2009.

"MENLO PARK, CA -- Despite a down economy and layoffs in the legal field, one-quarter (25 percent) of lawyers interviewed recently said their organizations would be adding personnel in the next 12 months."

Essentially the same number that reported in the affirmative this year.

Unfortunately, we know how last year turned out.