We have had a number of posts on the troubles faced by big law firms in the “new” (i.e. bad) economy. One of the best articles I have seen so far putting a face on this phenomenon was published by the New York Times a week ago. The NYT traced the travails of one white-shoe firm — White & Case — to demonstrate the effect of the fear and uncertainty faced by some of the bar’s best credentialed lawyers. (Click here for the article if you missed it; it’s definitely worth the read.) Here are a couple of key quotes:
At White & Case, the tensions have become so fierce that some people now fear staying home even if they are sick. Market forces have replaced “the social contract,” a top partner there said: camaraderie is “not terribly strong,” because “people are very scared.”
And this from the same White & Case partner:
“The loyalty of the institution to its people, and vice versa, isn’t really there anymore — it’s a different animal from what a lot of us were used to. It’s much more of a business now and less of a true partnership. The problem is we’re supposed to all be in this together. But at some point, you stop and think: ‘Well, maybe we’re not.’ ”
This is how the NYT sums the situation up:
“[T]he natural order of this world has been set on end by the economic crisis and the possible disappearance of fixtures like the pyramid system (under which associates are thrown en masse at certain cases, fattening the fees), and the billable hour itself (increasingly replaced by flat rates or retainers in a client’s market). The tectonic plates have begun to shift in a nauseating manner, bringing fear, ambiguity and psychological scars.”
Minneapolis isn’t New York, of course. If all of the lawyers laid off by that megafirm White & Case (around 300 at last count) got together and started their own venture here, it would instantly be one of the state’s largest law firms. The numbers do get one wondering where all those lawyers — particularly the corporate, transactional and M&A ones — will go in the current environment. Even if there were M&A work to be had right now, it certainly would be tough for a startup venture to land it.
Here in the Upper Midwest our firms never flew as high as the mega-East and West-Coast firms back in the glory days. There is therefore some grounds to hope that the fall here won’t be quite as dramatic. In any case, the most recent news at Big Law has been more about salary cuts (e.g. Dorsey and more recently Bryan Cave and Pillsbury) and revisions to how raises are handled (e.g. Fish & Richardson) than lawyer layoffs. That’s either good news or bad news — depending upon whether you are a glass is half empty or full type of person. It may mean that the worst is over, or it may mean that firms are starting to look as the change in business as structural rather than one that can be dealt with quick cost reductions.
![[Print]](http://minnlawyer.com/minnlawyerblog/wp-content/plugins/dmc_sociable_toolbar/print.png)
![[Email]](http://minnlawyer.com/minnlawyerblog/wp-content/plugins/dmc_sociable_toolbar/email_2.png)
![[Facebook]](http://minnlawyer.com/minnlawyerblog/wp-content/plugins/dmc_sociable_toolbar/facebook.png)
![[Twitter]](http://minnlawyer.com/minnlawyerblog/wp-content/plugins/dmc_sociable_toolbar/twitter.png)
By “glory days” do you mean the time when there wasn’t a gross over-saturation of law grads in the Twin Cities legal market? Is there really a need for four (FOUR!) law schools collectively graduating over a thousand heads per year?
Ex-RB, I think the “over-saturation” and “too-many-law-schools” tropes are a little tired.
The number of law schools also has no corrolation to the Big Firm layoffs.
It’s worth noting that the majority of grads don’t wind up in Big Law. But that aside, the traditional Big Firm structure depends upon an ever-growing base of young associates to keep pushing the associates above them upward toward partnership and to push up the partners’ revenue. Looked at that way, Big Law is structured in the shape of a pyramid. That is one reason large scale associate layoffs are of such concern to the entire model. Once you start cutting down the base — i.e. those young law school grads — it is only a matter of time until it starts to work through the system. With a narrower base to support it, the upper part of the pyramid starts to crumble downward and reshape into a leaner structure.
Lay-offs, then salary cuts… “It may mean that the worst is over, or it may mean that firms are starting to look as the change in business as structural rather than one that can be dealt with quick cost reductions.”
Or it may mean you try chemo, you try radiation, and if those don’t work, you try surgery, etc.
The change in treatments gives no clear indication of improved prognosis, short term or long term, other than one can assume the patient’s still sick if the measures are still being taken.
Anon, that you may think it’s “tired” doesn’t make it untrue. As a relatively-recent grad and one of the “lucky” ones from my non-first-tier Minnesota school to make it to BigLaw, I can tell you that the number of classmates of mine that ended up at Dick’s Sporting Goods or serving at Champp’s was greater than the number that ended up doing state clerkships in dandy places like Dodge and Koochiching counties – and yes, collectively those groups indeed outnumbered those that ended up at BigLaw or even mid-size firms. Good thing Thomson West is in town to catch a couple more of our grads from falling through the cracks, eh?
I can’t imagine what this year’s class faces. If you don’t think there’s something wrong with the job prospects of the vast majority of law grads in the state after having completed a $100k education, there’s simply something wrong with you.
And Mark, you’ll note that I made no assertion of any correlation between number of law schools and BigLaw layoffs. But I’ll tell you what – if the pool of talent is made a little less diluted by eliminating even a few hundred of these area grads per year, my guess is that that wouldn’t affect BigLaw’s recruiting one bit.
Anon 2 brings up a good point. The salary cuts certainly don’t guarantee the bloodletting is done. They could just be a prelude to the next round of layoffs or, as you point out, part of a desperation kitchen sink approach. The interesting thing about salary cuts is that you risk alienating the people who work at your firm, as opposed to layoffs where you sever relations with the affected individuals. On the other hand, you save jobs.
Ex-RB: I think you are correct that fewer law schools would have little impact on Big Law recruiting since it only aims at the top of the law schools that do exist and it’s not too likely a top-ranked law school would be eliminated from the mix.
Ex RB – an idea for you. You seem so bitter at the prospect of being intelligent enough to work at BigLaw but having no chance at success at this point due to forces beyond your control…and lots of law schools.
I started my own practice a year out of law school eight years ago. Didn’t take a few months before I was out-earning associates at the biggies downtown.
Eight years later, in the worst economy in decades, business couldn’t be better (seriously, record months lately). I am turning away cases left and right, left to select the cream of the crop.
Hasn’t been without hard work. Probably worked more hours than BigLaw associates for a few years. Today? I’m in at 8:30 and out by 4:30 almost every day. I answer to no one. No politics. My income? Better than the published data on the higher ups now defunct RB.
My point is not that “I’m great.” My point is that opportunities exist beyond the pryamid/Amway/BigLaw model.
I was an honors grad, law review, moot court, etc., and got interviewed by many big firms. No bites. Didn’t fit their mold I guess. Who’s laughing now?
You’ve got the same opportunity for a different reason. Take advantage.
Latest Anon, I’m not bitter at all – at least not for myself. I’m actually completely out of the practice of law, making about half of what I made in BigLaw and enjoying life a lot more than twice as much. And yes, I am also my own boss.
I never said anything about “chances of success” for myself – I’m bitter because so many of my classmates – the ones who were in my study groups, the ones whom I spent countless hours with on moot court and law review, the ones who had a good time at bar review with me (but not as good of a time as me) – all bought into the severely overpriced institution of law school and were unable to land anything paying more than a quarter of what I made…all because their GPAs were two-tenths lower than mine.
I’m sure you’ve all seen the bi-modal distribution of law grad salaries. For every grad like me who IS afforded a BigLaw offer, there are four or more stuck on the other end of the spectrum. And while I’m happy for those like you who were able to hang their own shingle, there are many others without any business acumen whatsoever who would and do flounder and pack up shop after a short while.
To me, law school is nothing short of a bad gamble. There are some winners who strike it big, others who work their tails off to be able to say that it was worth their while, but many more who just end up with a lot of resentment at their decision and a hefty student loan bill each month.
[...] 15, 2009 by Mark Cohen We have had a lively discussion on our post about the Big Law pricing models (i.e. continue to charge high billable rates at a time where there is not enough business and [...]