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Law firms revise recruitment practices
Graduating Harvard University Law School students stand and wave gavels in celebration at commencement ceremonies in Cambridge, Mass.
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Kai Ryssdal: Just as students across the country are settling into their classes, right around now new lawyers at big firms are settling into their first jobs. Most of those first-year associates have known for at least a year, and some of 'em even two, where they'd be working. Big firms start recruiting way before graduation so they can lock in the best talent. Or that's the way it used to work until the recession hit.
With business drying up, some firms have found they can't afford to hire everyone they had promised jobs to. And so the legal profession is rethinking its old-fashioned way of doing things. Ashley Milne-Tyte reports.
ASHLEY MILNE-TYTE: Bill Urquhart is a partner at law firm Quinn Emanuel Urquhart Oliver and Hedges in Los Angeles. He went to Harvard Law School in August to recruit students for his firm's 2010 summer associate program. But Urquhart says he didn't have the usual competition from rival firms. Those that did show up interviewed fewer candidates. He says for the first time in years, law students, even from the country's top schools, can't guarantee their futures.
BILL URQUHART: They're freaked out. The whole situation is uh, something that they can't get their hands around and don't understand completely. They're very frightened.
They've seen what happened to the class of 2009. Many of those students had jobs set up, only to be told their firms couldn't afford to take them on this fall. Many firms have deferred start-dates to next year or beyond. Others have put new associates on half pay and asked them to do pro-bono work.
Orrick is a global law firm that works with financial institutions and other big companies. CEO Ralph Baxter says when the economy fell apart, Orrick's business dropped quite a bit. So the firm didn't hire any new lawyers this year. And it probably won't hire any in the U.S. next year. He says the bad economy is forcing law firms to re-think the way they do things: including the practice of committing to young associates almost two years ahead of their start dates. And locking in raises.
RALPH BAXTER: Law firms are so wedded to tradition. I mean we're trained in tradition. We're trained to follow precedent, we've done it this way all these years, we are comfortable with it. Oh my goodness, we can't change. And it's nonsense. Of course we can change.
One big change Orrick has made is ending the hallowed practice of lockstep: that's when firms promote associates at the same pace, giving lawyers matching raises each year, regardless of whether they do a good or bad job. Baxter says Orrick's lawyers are now promoted the same way other workers are.
BAXTER: They will not earn more money unless they deserve it. And that means we won't be passing additional cost along to the client, unless the lawyer is in fact able to deliver better, greater service.
Some firms have gone even further. Richard Ripley is a partner at Howrey, a law firm in Washington D.C. His firm has cut the number of hours first-year lawyers need to bill. It's also bolstered training, and ended lockstep. Ripley says clients are demanding efficiency, now more than ever.
RICHARD RIPLEY: What this economy has done, what I've seen, is that our clients are carefully looking at how many lawyers are on a case, who's doing what type of work, and can the work be pushed down to someone that is more junior.
And thus cheaper. Joel Henning is a consultant to the legal profession. He says it's high time law firms behaved more like other businesses. But he's afraid they may return to their spendthrift ways once the economy rebounds.
JOEL HENNING: I think that once we get business more robust and clients are screaming for legal services, that law firms will be screaming for the bodies they need in order to provide the services and all bets will be off.
Except perhaps those made by clients. Now they've gotten used to getting more for their money, they may not be willing to settle for anything else.
I'm Ashley Milne-Tyte for Marketplace.
I find it dubious that Mr. Baxter's firm is passing on savings to clients by moving away from lock-step salary increases. If that statement is true, it would mean that his firm has a separate billing rate for each associate that works there based on whatever that particular associate's salary is. Most firms that I've seen that eliminate lock-step still base associate billing rates on the number of years of experience the associate has, so for example all 3rd year associates might be billed out at $200 even if they all receive different base salaries. This certainly saves the firm money, but not so much the client.
This story really does not tell the whole story. There are hundreds of law schools in this country, and more are on the way. Meanwhile, there are literally thousands of these third tier graduates who cannot find jobs, and who cannot discharge the $150,000.00 they took in student loans in bankruptcy.
In essence, law schools are pushing out more and more JD degrees, for which no positions exist.
And while, agreed, to a certain extent caveat emptor - when you are talking about education, you are talking about peoples' hopes and dreams. American students have just not been raised to believe "I may not excel," or "I shouldn't follow my dreams."
The bottom line is that what the law schools in this country are doing is simply unconscionable. However, because of the nature of the legal profession, no JD can speak out against his/her law school, as that person will almost certainly be blackballed by the legal community.
A story about the proliferation of largely worthless third tier law schools would have been timely five years ago. It is overdue today.
I sympathize. But why is Marketplace making such a fuss about the lawyers who are being laid off, or not being hired, when this covers only a very small minority of lawyers graduating from certain schools? There are a whole lot more lawyers graduating now, or even in the past decade, that couldn't get jobs at the big firms, or small firms, or anywhere else. People have little sympathy for lawyers because they think they all make lots of money. Granted -Some do. But a lot of lawyers are just as desperate for work as many contruction workers, car assemblers, or bankers are right now. And these are not necessarily the ones that were laid off from six-figure jobs. These are often the ones who have been struggling to make ends meet since before the economy imploded.
