Tuesday, March 03, 2009

The Killing Floor*

In light of the slaughterhouse that appears to constitute today's legal market (add OMM to the list?), I have a few more thoughts on the matter since the previous post.

The L&W deferral appears to be directed at LA/NY. Other offices, you need something like a prospectus outlining your goals for the time off (so is that a "no" to "catching up on 'Lost,' '30 Rock,' 'Arrested Development,' and 'The Wire?'").

Someone asked if this presents firms "lower" down the food-chain with an opportunity to upgrade to say former L&W or Orrick associates. I did some thinking on this and asked around a bit. Tentatively, I don't think so. Some of the explanations offered, which make sense to me, are that these smaller shops tend to have the type of clients where having the top talent will not necessarily allow you to increase your billing rates. So there is not much of an up-tick. On the other hand, they are used to working with their associates who by their third year are heading into court and managing their own cases. The laid off L&W associate? Lucky to have taken a depo. Apart from that, the layoffs appear to be transactional heavy. And I just cannot see anyone hiring any transactional lawyers--even if you get rid of your own crop. Bottom line, a lot of small shops are getting tons of resumes and just tossing them aside.

A commenter asked (starting at 3/2/09 at 10:12) why SF/Cal? The response to McWho is right. Sorry McWho but it's not just the concentration of a few banks in SF (and BofA hasn't really been in SF for about 12 years now). The bigger problem is the dependence of emerging techies on available credit. This generated a lot of legal work ranging from VC agreements, IPOs, and lots of other fancy stuff that I do not understand. None of that is happening right now. Can you imagine if Google was trying to raise money to get off the ground today? We'd all be using Lycos!

*"Don't let the name fool you, it's not really a floor at all- it's more a series of grates that allow loose meat to fall through."



Blogger Dan said...

Here's the real question: how temporary is this? Is what we're seeing a hiccup (a violent hiccup, with some vomiting), or a permanent restructuring of the legal market? I don't mean to be alarmist, and I'm probably the least informed person on this subject. But I remember there were some rumblings about a shift from the BigLaw model to small, specialized firms even before this happened. Is anyone else a little afraid they won't just bounce back?

3/03/2009 12:39 PM  
Anonymous Anonymous said...

Not temporary at all. I think offers are going to be increasingly hard to get over the coming years as firms downsize, and I think firms are going to dramatically cut first-year salaries. I would be surprised if many 3Ls have their offers rescinded, but I expect almost everyone to have their start dates get pushed back.

Of course, these are just guesses. If we've learned anything over the last few months, it's that no one really has any clue what's going to happen.

3/03/2009 1:18 PM  
Blogger Toney said...

Lycos? It has been a while. I remember using Excite and their hand-selected results.

I talked to a partner at a small firm in SF (he asked me not to mention names, but about 100 lawyers), but there is a proposal being floated around about not taking on any summers at all in the future. He said that only about 10% of the summers they brought in stayed on to partnership, but that it took a year or two before new associates made money for you (learning curve, training, etc.). As a result, the plan they are considering would be just to hire transfers away from other firms, eliminating the training, and even cannibalizing a little bit of business away. He said about 80% of the partners in the last 10 years were brought in this way anyway.

This would turn recruitment on its head, but makes sense from a financial perspective. Especially since summers & 1st year associates are cost sinks. Of course, this would suck for students, and would depend on other firms NOT doing the same thing. Thoughts?

3/03/2009 1:27 PM  
Blogger McWho said...

Fair enough in re my earlier post. I was speaking without personal experience in the SF big firms.

I suppose my question is then, what do the firms DO there (or, more importantly, what will they do now)? What else is there in SF that is worth the fees? I'm not talking PA here---that will likely recover again.

And isn't the partner who spoke to Toney making exactly the mistake that Armen was talking about? A firm that relies on associates being able to run cases (as most single office firms do) would be making an expensive mistake to hire someone from Latham that had never made an oral argument before.

The upside to laterals is at least you know that they want to be in a firm for a few more years, rather than grab 3 yrs of salary and bolt to an alternative.

3/03/2009 1:56 PM  
Anonymous Anonymous said...

3Ls - What are you going to do with all your post-bar time now that we're all getting pushed back? It doesn't seem smart to drop a lot of money on a big trip, and I can only watch so much TV. It's going to be a boring few months.

3/04/2009 11:06 AM  
Anonymous Anonymous said...


3/04/2009 11:07 AM  
Blogger Dan said...

Looks like you guys were right on OMM. Is anyone else wondering why firms haven't tried scaling back salaries before laying people off? Seems slightly more reasonable to me. Then again, I've never had a salary before, so maybe I don't get it.

3/04/2009 11:46 AM  
Anonymous Anonymous said...

There was just a short article by James Surowiecki in the New Yorker about why salaries tend to stay stable even during layoffs.


3/04/2009 1:50 PM  

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