« Yale Law Women's Picks of the Year | Main | Sex or Race? »

Market Forecast--Dicey

Vivia Chen

May 1, 2011

Dice

Don't kid yourself--it's still brutal out there in the legal profession. Despite reports of an economic recovery, the revival of lavish bonuses, and stirrings of lateral hiring, the long-term picture remains shaky. If anything, the profession is more competitive than ever before, and insecurity reigns.

1. The most chilling news about the legal market comes from The National Law Journal, which reports that almost 10,000 lawyer jobs got thrashed in the last three years:

Revised 2010 figures show that NLJ 250 firms employed 2,868 fewer lawyers than in 2009. Expand that view to 2008, and the head count drain is a rounding error away from 10,000 attorneys. In the 34 years The National Law Journal has been surveying large firms to gather head count numbers, there have never been multiyear declines of this magnitude.

Still, we should keep it in perspective, says the NLJ:

Grim as the numbers may be, let's consider the following: Despite the cuts, the number of lawyers working at the 250 largest firms in America is still higher than it was in 2006 and not far from where it was in 2007 (i.e., the two years before the recession). And though the decreases are steep by big- firm standards, the cuts still represent less than 10 percent of the attorney workforce among NLJ 250 firms.

2. But it's marvelous to be a a big-firm partner--if you didn't get axed. Despite all those job slashings, big law firms made out like bandits. The American Lawyer reports that The Am Law 100 recorded a very healthy 8.4 percent jump in profits per partner (remember, PPP went down 4.3 percent in 2008 and climbed back a meager 0.3 percent in 2009). Am Law 100 firms had an average PPP of $1,366,695.

But the ugly side of all this is that profits came at a cost: Some equity partners ended up on the chopping block. Firms in the second half of The Am Law 100 were particularly ruthless. Reports TAL: "While PPP for The Am Law 1–50 jumped 5.7 percent over 2009, it rose a whopping 9.7 percent for The Am Law 51-100. The spike in profits was largely tied to head count reductions, as the bottom half of The Am Law 100 cut their equity partners at a rate that was nearly five times that of The Am Law 1-50."

3. China is a hot legal market for American firms. Duh! File this under news we could have guessed: "China was the second most popular foreign location for large U.S. law firms during 2010," reports the NLJ. Among the NLJ 250, 70 firms had offices in China, with 2,055 lawyers posted there.  The U.K., of course, still dominates when it comes to American firms.

But before you sign up for Mandarin lessons at Berlitz, consider this: Many firm offices in China are still not profitable, says the NLJ. China is a money drainer for firms, but it can't be ignored. "By the time today's new associates are partners in their mid-fifties, Shanghai may well be a financial center to rival London and New York," the NLJ reports.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

@Joe: In litigation at least, I think it has less to do with efficiency and more to do with the amount at stake. With the slump in the economy, the stakes go down and law firms are given smaller litigation budgets.

I think most big law firms realized that they simply didn't need those huge numbers of attorneys to get the same amount of work done. They learned to be more efficient with the people they already had.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Subscribe to get The Careerist via e-mail

Enter your e-mail address:

Delivered by FeedBurner

About The Careerist

The Careerist takes an inside look at how lawyers shape their careers and manage their lives. The blog aims to dissect developments in the profession, provide useful information and advice, and give lawyers a platform to voice their views. The goal is to provide a fresh, provocative take on the state of lawyering.

About Vivia Chen

Vivia Chen

Vivia Chen, The Careerist's chief blogger, has been covering the business and culture of law firms for a decade. A former corporate lawyer, Chen is fascinated by those who thrive (as well as those who don't) in the legal profession. Her take: Success in the law (and life) doesn't always travel a linear path. If you have topics you'd like to discuss or information to share, contact her: VChen@alm.com

To search across all ALM blogs, go to www.Lexis.com.