Axing Associates Now Could Mean Problems Later, Expert Says
In a struggling economy, reduced levels of legal work and rising costs tempt law firm partners to cut associates. But the money they save by doing so now may result in associate salary increases later, if history repeats itself.
In 2002 and 2003, the number of associates employed by the country’s 250 largest law firms dropped, following the dot-com debacle. The next year, though, these law firms had to hire more associates and their salaries began to shoot up, reports the National Law Journal in an article reprinted in New York Lawyer (reg. req.). Between about 2005 and 2007, top first-year salaries at major U.S. law firms rocketed up from about $125,000 to $160,000.
Meanwhile, these firms not only had to pay more for associates, they had a shortage of third- and fourth-years to handle their legal work, says Keith Wetmore, the chairman of Morrison & Foerster.
That said, trying to hit the right numbers when hiring law students now for associate positions a year or two in the future is “somewhere on the spectrum between astrology and numerology,” he notes.
Because of an unexpectedly high acceptance rate, Morrison & Foerster wound up with 140 summer associates this year, compared to the 110 that his 1,160 law firm had sought. Wetmore said his firm will be more cautious about making offers the next time around.
The New York office of Dorsey & Whitney has taken a different tack and has eliminated its summer program, according to partner Robert Dwyer Jr., who heads that office. Other law firms that are opting out of summer recruiting this year include Chicago-based Arnstein & Lehr and Barnes & Thornburg in Indianapolis, the NLJ writes.
“Firms are really struggling with what their numbers need to be,” says Ellen Wayne, Columbia Law School’s career services dean. She hasn’t seen any drop in the number of law firms participating in on-campus recruiting there, but says the firms are taking more time than before making offers to potential summer associates.
Partners would be well-advised to tighten their belts a bit and lower their profit projections rather than make drastic cuts in their associate ranks, according to attorney and legal consultant Bruce MacEwen.
“A critical priority for management now is managing expectations and educating partners that some small percentage drop in profits is not the end of the world.”
Related coverage:
ABAJournal.com: “Will 2008 Be Law Firms’ Worst Year Since Early 1990s?”
