Welcome to the Big Law Business Section on the evolution of the legal market written by me, Roy Strom. Today, we look at what’s driving Big Law’s lawyer shortage: Not enough “good genes,” or Big Law’s own hiring tactics. Register to get this column delivered to your inbox on Thursday mornings.
Being a Big Law associate has never paid more—Cravath Swaine & Moore I just made sure announcing a new salary increase for mid-level and senior associates. Yet companies still don’t seem to be attracting enough associates.
I recently asked law firm executives if they thought there were actually too few people capable of doing the job of a Big Law partner, or if the current talent shortage was the result artificiality of profit maximization.
“No, it’s not contrived,” an AmLaw 50 law firm president told me. “Our microchips are great legal talents. And the truth is, there are only a limited number of people who fit the mold.
To cut it in Big Law, the chairman said associates had to be “pretty smart,” willing to work really hard sometimes and be really good with people.
“It’s a scarce resource,” the president said. “And when you find it, you know.”
Law firms are all about ‘excellence’, so it’s hardly surprising that they are seeing a shortage of naturally talented superstars.
But asking “How many people can does the job?” is very different from the number of people born to excel in this field. And the question that law firms ask themselves is not: “How many people do we have? need to do work?
There is no doubt that the collective responses of companies to this last question have led to their current situation.
Law firms never anticipated the level of attrition they are currently experiencing: as many as one in four partners left their firm last year. This lays bare a weakness created by the hiring strategies companies have pursued for much of the past decade when they cut the number of new lawyers hired in the wake of the Great Recession.
Lawyers in those classes, which in hindsight proved too small, are now receiving the biggest pay raises in Big Law’s ever-spiraling pay battle.
Consider: Law firms with more than 500 lawyers hired 3,980 first-year attorneys in 2013, more than 1,000 fewer than they hired from the Class of 2020, according to the National Association for Law. Placement. Granted, there are probably more firms with 500 lawyers today, but that’s still a big increase.
The 2013 class received raises and bonuses equivalent to more than 20% of the salary range in effect in 2019. This compares to less than 15% for their new class of lawyers.
“Snobbery” is one of the reasons there aren’t enough associates to handle client work right now, Nathan Cemenska, director of legal operations and industry insights at Wolters Kluwer’s ELM Solutions, says Law.com this week.
“If you think someone who hasn’t gone to one of the top 20 law schools can’t do quality legal work, and you refuse to hire or work with such a person, or you refuse to pay her a rate that she is willing to work, then you create an artificial shortage,” Cemenska reportedly said.
It’s no exaggeration to say that senior associates are Big Law’s most valuable commodity these days.
A big part of the reason was something beyond the managing partners’ control: they were a lot busier than they ever imagined.
Big Law’s talent pool is largely determined years in advance, so there was little the managing partners could do to conjure up the employees they needed. Some have broadened their horizons, turning to new US cities and overseas, hiring associates in Canada, Australia and elsewhere.
The question is, what should Big Law learn from this moment?
One possible answer: Nothing.
I think everyone kind of hopes that the last two years will be an aberration. Associates want the deluge of work to slow down. Managing partners want their employees to come back to the office and be less stressed. Demand could calm down and lawyers could work more normal hours. They could do that in a more normal office environment. Of course, partners in this scenario will not continue to enjoy 20% annual earnings growth.
There is another answer, however.
Law firms could recognize that there are more people capable of doing these jobs.
They could start hiring more lawyers at more law schools. They could spread the work around more associates and show they take concerns about increasing diversity and decreasing burnout seriously.
Today, the prestige of law firms is tied to the law schools from which they recruit. But firms could take their responsibility to train lawyers more seriously, seeing them more as the professionals they are rather than DNA lottery winners.
What’s the best message: “We only hire the best law graduates. Or: “Our training makes the best lawyers”?
Of course, all of this would be a blow to the productivity of law firms. Their financial results would pay the price.
the salary increases the industry has experienced over the past two years, it will be harder for law firm executives to justify hiring more partners now. But continuing to run such lean operations increases the risk of another costlier talent battle the next time the industry gets too hot.
Law firm executives with a long memory would do well to prepare for it now.
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On the NFL: Former U.S. Attorney General and Paul Weiss partner Loretta Lynch has defended her work for the NFL in its defense of racial bias allegations launched by former Miami Dolphins head coach Brian Flores. Lynch said to my colleague Chris Opfer the Flores costume and the cultural issues in the country “raise serious concerns” and that the NFL is “committed to resolving them”.
It’s all for this week ! Thanks for reading and please send me your thoughts, criticisms and advice.