Legal marketplace trends: Howrey and the boom in small law jobs

Last week the legal marketplace was rocked by the news that 500-attorney firm Howrey will soon cease to exist.  At the same time, SimplyHired’s Trend Report showed that legal job postings in December 2010 were up nearly 97% year-over-year.  In a year when an extremely large and well-respected firm saw its PPP slashed in half, where are all of these postings coming from? 

Per the New York Times, the answer is small employers: “[e]mployment by companies in the private sector rose by 297,000 last month…[but] [c]ompanies with 500 or more employees were responsible for only 36,000 of that number,” which represents only about 12%.

Although I haven’t found statistics on the size of the firms responsible for that 97% figure, it’s not a far cry to assume that many of them are much smaller than Howrey.  After all:

• The number of licensed U.S. attorneys is about 1.1 million;
• The percent of U.S. firms and legal service providers with fewer than 10 employees is 91%; and
• The percent of U.S. law firm market comprised of firms with at least 100 employees is only 0.4%.

Although Howrey may be top-of-mind at the moment due to its size and prominence, it’s important to remember that it represents only a small chunk of the legal marketplace.

Should associates pay firms for the privilege of learning to practice law?

Dan Hull recently proposed on What About Clients? that law firms should not pay new associates for the first 2-3 years.  Not only that, newbie lawyers should pay firms for the privilege of learning from them.  He first floated this idea in 2008, arguing that associates receive the greatest training in the first few years but there is no guarantee they will stay with the firm and allow the firm to reap the benefit of this investment.

The idea of associates paying their firms is subject to many knee-jerk criticisms – e.g., these lawyers have student loans to pay off, this will result in a reversion to the days when lawyers trained for years as apprentices and only white men from wealthy families could afford to become lawyers, and what about labor laws?

Hull’s proposal is nuanced though, and disposes of some of these criticisms.  Top new associates – the ones hiring partners deem worth the investment – would receive some payment.  The rest would receive no money or would pay the firm “tuition” and their hours would not be billed out.  And since his initial 2008 post, a couple of firms have indeed adopted a model wherein new associates are paid reduced salaries for the first year or two while they undergo intensive training programs.

But many firms are not motivated to follow the Hull school and pursue the most dedicated “lifers.”  In an eye-opening recent article from the ABA Journal, Debra Weiss exposed recent research concluding that some hiring partners choose associates for other reasons: 

One hiring lawyer, for example, indicated he would select a fictional candidate, “Julia,” from Yale Law School even though he believed she would not enjoy the work and would probably quit in two years. Yale law grads, he said, are likely to succeed in life and Julia could potentially one day be a judge, a congresswoman, a client or a politician. And if she has a connection to the firm, it can help.

 Whatever your position on this employment philosophy, if a firm decides that lower salaries in the first couple of years result in losing candidates they’d rather hire, presumably that system will be rolled back.  And if law schools and the bar work more closely with one another to more clearly sync their curricula and their expectations, presumably this will also impact firms’ attempts to modify compensation.  In any case, it’s clear that a one-size-fits-all approach to compensation won’t suit the many diverse legal employers in this country.

Generation Y lawyers: We don’t fax, but we do watch a lot of Law & Order

If you’re an attorney over 40, you’ve probably formed some impressions of my cohort of Generation Y lawyers.  Perhaps you think we are slackers, or possibly even incompetent, ask too many questions about work-life balance, have overly-high opinions of ourselves, and/or expect partners to coddle us.

Here are some facts you might not know about us:

• I never learned to use a fax machine.  When I began working as a lawyer, I started with scan/print to PDF.

• I took all of my law school notes on a laptop as well as all of my law school essay exams.  (However, I did use a good old-fashioned #2 pencil for multiple-choice exams).

• I took the bar exam on a laptop, as did about half of those who sat with me in my state.

• I was 11 when John Grisham published The Firm.

• When I graduated from law school in 2006, the average tuition & fees for a private law school were $30,520, or $91,560 over 3 years (not accounting for interest).

• When I graduated from law school in 2006, the median starting salary at the largest New York law firms was $145,000.

• I once briefly reviewed a stack of paper documents.  Other than that, all doc reviews have been performed online.

• There has been at least one woman on the U.S. Supreme Court throughout my lifetime.

• I was 10 during the Anita Hill hearings.   The Monica Lewinsky scandal broke while I was in high school.

• As long as I can remember watching TV, Law & Order has been on the air.  It debuted in 1990, when I was 10.

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