Recruiting Troubles at Midsized Law Firms

Graduate School Law School
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<p>These are some exerpts from an article in the National Law Journal this week:</p>

<p>"Three years ago, Phillips Lytle took a step back from its recruiting strategy and crossed off some big-name schools from its on-campus recruiting list. </p>

<p>Good-bye Harvard. So long Yale. Farewell Georgetown. </p>

<p>“We found that, looking at ourselves honestly, we simply were not competitive,” said Edward Bloomberg, hiring partner at the 173-attorney firm in Buffalo, N.Y."</p>

<p>“The soul searching-or the law-firm equivalent-was part of a larger effort at Phillips Lytle that has required its leaders to deal with the reality of a job market where first-year associates are making double the starting pay just a day’s drive away in New York City.” </p>

<p>“Big law firms are snatching up qualified graduates as quickly as law schools can churn them out. And with those schools graduating about the same number of students each year, some observers say the tightest squeeze is on midsized firms, those with 150 to 350 attorneys that also want a steady, though smaller supply of associates each year.” </p>

<p>“In Phillips Lytle’s case, it hires about five second-year summer associates every fall with the expectation that they will become first-year associates after graduation. Although the law firm is not “abandoning hope” that it can snag some students from national schools, Bloomberg said, it has redirected its recruiting budget to regional schools.” </p>

<p>“The firm currently pays first-year associates an $80,000 annual salary. But in light of recent increases, especially at large New York firms that have upped their first-year associate salaries to $160,000, in addition to bonuses that last year started at $30,000, Phillips Lytle is re-evaluating its pay scale to stay competitive in the midsize law firm market.” </p>

<p>“With the large money-centered firms, we can’t compete,” he said. A “supply deficiency” is forcing top law firms to dig deeper into class ranks at the top schools and to spread their recruiting reach to regional schools that they previously passed over, said Ward Bower, a consultant with Altman Weil. </p>

<p>Consequently, those bigger shops are treading into territory formerly held by midsized and smaller firms. </p>

<p>“He [Ward Bower, a consultant with Altman Weil] estimates that law firms in the “AmLaw 200” – a list of the nation’s highest-grossing law firms compiled by The American Lawyer, a National Law Journal affiliate – now require about 10,000 new associates each year out of about 40,000 graduates coming from all of the nation’s approximately 200 law schools combined. At that rate, the AmLaw 200 firms hire about 50% of the graduates coming from the top 100 law schools.” </p>

<p>“In addition, an increase in law school tuition by some 267% since 1990, according to information compiled by the American Bar Association, has far surpassed first-year associate raises at even the highest-paying firm. The result means that a student’s option of earning a big salary at big firm to pay off debt often trumps the quality-of-life benefits that smaller firms tout.”</p>

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<p>Real interesting article. The question seems to be whether there is a higher demand for quality labor overall or simply a more uneven distribution toward large firms. I would be interested in getting an opinion in regard to this trend from someone more qualified and informed than myself.</p>

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<p>that’s very interesting–thanks for posting it. in my experience (1L currently looking for summer jobs), it’s not the location that’s a turnoff–there are some smaller markets I’d love to work in-- but the salary and hours. Loan payments are the same wherever you end up working, and the only school I know that gives LRAP for firms is Harvard. </p>

<p>Plus, a lot of these smaller firms don’t seem to have a better quality of life than the big firms (I’m talking about firm culture here. The cost of living and such in Buffalo and other small markets might lead to a better outside-of-work quality of life). If I’m going to be required to bill 1800+ hours a year at the firm that pays $80k and the one that pays $160k, why choose the lower-paying one, especially when the smaller firm probably has fewer practice areas (thus is more susceptible to market downturns in certain areas) and is constantly trying not to lose clients to a big firm? </p>

<p>On the other hand, after reading this wonder if, while the small firms are having a rough time recruiting recent grads, if they could market themselves as attractive lateral moves for those who didn’t make partner at big firms and/or want to move from a big city to a small one. That way, the little firms get people with experience, many of whom did attend the top law schools.</p>

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<p>If that’s truly the case, it should shoot down a lot of the questions and comments on this board about the need to go to a top-tier law school to have a fighting chance for a really good position as a 1st year associate. Of course, the top 200 firms aren’t all huge Wall Street firms, but this fact would make a lot of law schools (half of them, it seems) fair choices for many students.</p>

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<p>“150 to 350 attorneys”</p>

<p>Well, this definition doesn’t make sense. In my market and many others, some firms of this size are in the AmLaw 200, and some pay top market salaries and others don’t. So how can the AmLaw 200 be stealing all the good candidates away from mid-sized firms? And to the extent that the article implies that every firm in the AmLaw 200 has starting salaries well above $100k, well, that’s just wrong.</p>

<p>Phillips Lytle itself is in the NLJ 250. If it isn’t the biggest firm in Buffalo, it’s got to be in the top 2 or 3. I have to suspect that they would have a big challenge recruiting at Georgetown even if they were paying $160k to start. You have a population at the top 14 who can take their degrees anywhere in the country. Unless they have family in Buffalo, they aren’t moving to Buffalo, period. Most of them have already made up their minds to be in a particular city (read: NY or DC). Those who are looking for a more moderate pace and lower cost of living will look at Chicago, Houston, Seattle. I think the NLJ could have found a better example to interview – like a mid-sized firm in a desirable market that could plausibly compete with the big firms if it weren’t for the salary differential.</p>

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<p>A few observations:</p>

<p>If it is true that the top 200 firms are hiring 50% of graduating law students, I think that that number is still going to be highly skewed towards the top law schools (i.e. nearly 100% of the graduates of HLS likely have opportunities to go to work at one of the top 200 firms in the country, while a much smaller percentage of graduates from a lower ranked law school would have those opportunities). It would certainly be true, however, that the hiring is taking place at a lot more than just the T14 law schools.</p>

<p>The top 200 law firms (as compiled by the American Lawyer), as measured by profits per partner, profits generally, or some other measure, include a lot of firms that have a lot less than 200 lawyers and which are paying a lot less than the big firms in big cities are paying. Revenue per lawyer (including both associates and partners) at firms in the second 100 of the top 200 are often less than $400,000 (which is revenue before salaries, rents, utilities and other expenses are taken into account). If partners are taking home less than $200,000/year, you can only imagine what first year associates are making. In other words, getting a job with a top 200 law firm by no means guarantees that someone is going to make enough money to pay their student loans while renting an apartment, eating and making car payments. Please keep in mind, as well, that there are firms that would be considered to be midsized firms within the top 200 law firms. </p>

<p>Finally, I think that it is certainly true that midsized law firms benefit by hiring the refugees from the big firms, which saves the midsized law firms a not insubstantial amount of money that would otherwise be spent training and writing off hours worked of junior associates. However, that would also mean that these midsized firms may simply forego on campus hiring of recent law school graduates in favor of hiring associates who have spent a year or two or three (or more) at one of the bigger firms.</p>