JD Journal » struggling legal economy

News Flash – The Economy was Bad in 2009!

joshua — Thu, 10 Dec 2009 17:17:09 +0000

Hard as it may be for those who follow the legal profession to believe, the economy for the past year has been a tad rough. So says a slew of headlines, article and blog posts around the net this week. So before I fill you in on the predictions and prognostications of experts, allow me to look into my own crystal ball for a minute…

I predict that in the absence of any actual news, news organizations and blogs will run story after story about the economy for the next month, even when there are no new facts or figures to report. I predict that none of these stories will be the least bit surprising to anyone that didn’t pull a Rip Van Winkle this year. And lastly, I predict that we’ll all read them, looking for that nugget of hope to hang on to as the new year starts.

So now for the latest in what will likely be a long stream of similar articles: Citi Private Bank predicts that law firm revenues for the year are down by five to ten percent, despite increased 3rd quarter demand. Shocking, I know. From that nugget of news follows several dozen stories around the web disecting and analyzing, predicting, speculating and well… I suppose mocking.

More surprising than the overall decline in revenue is this tidbit… Law firms that cater heavily to financial services clients are – wait for it – seeing larger revenue declines than most.

Check back tomorrow for our exclusive report on this years unexpectedly high number of dogs biting mailmen.

Haynes & Boone Cut First Year Salaries

joshua — Mon, 23 Nov 2009 19:40:58 +0000

First year associates at Haynes & Boone will be starting after Thanksgiving, but at a reduced rate. The firm emailed its incoming associates and informed them that the salary for first years has been cut to $145k. The firm says that it has not decided on a pay structure for 2010 yet so this may be a temporary cut, but that seems unlikely in today’s market. The rush to $160k was fueled by competition for the best students coming out of law school and was coupled with other perks and benefits, lavish events and other promotions designed to win the hearts and minds of the next generation of lawyers. With law school enrollment on the rise and the number of biglaw jobs on the decline, the tables have turned a bit and firms don’t need to persuade recent graduates to come work for them. A job offer is enough.

Clients are also pushing for lower hourly rates, particularly from first year lawyers who are essentially getting on the job training at the clients expense. In today’s economy, firms are increasingly catering to the wishes of their clients in order to get the business and so more and more firms are offering cut rates for first year hours, or moving to alternative fee structures. None of this adds up to returning salaries to 160k next year for Haynes & Boone first year associates.

That doesn’t mean it won’t happen, and if it does happen I will happily eat my words.

Skadden Bonuses Match Cravath and Cleary

joshua — Thu, 19 Nov 2009 21:02:58 +0000

If you’re an associate at Skadden Arps, the good news is not only do you still have a job, you’re getting a bonus for surviving the year. The not so good news is that it’s the same as associates from Cravath and Cleary. There had been some hope that Skadden would buck the trend, much as they did last year when it paid bonuses around double that of most firms, but such is not the case. Like Cravath and Cleary, Skadden’s bonuses run from $7,500 up to $30,000.

Skadden, Arps, Slate, Meagher and Flom, LLP is a global firm headquartered in New York City with offices in twenty-four cities around the world. Core areas of practice include mergers and acquisitions, litigation, bankruptcy, tax, and securities law.

Reed Smith Asks Non Equity Partners for a Tithing

joshua — Mon, 16 Nov 2009 18:37:38 +0000

Render unto Caesar what is Caesar’s, or so the expression goes. Now Reed Smith is asking much the same of its non equity partners. Non equity partners are being asked to contribute as much as 15% of their base salary to the company or risk losing partnership status. Gregory Jordan, the firm’s chairman, had this to say about the plan. ““It’s about not just saying you’re a partner, but actually being one. It means something. It revolves around risk-sharing in the business.” Jordan defended the move, saying that it isn’t a means to get a quick cash infusion into the company, and going on to say that Reed Smith is having “a very strong year”.

A very strong year? That doesn’t square up with the history.

In March, Reed Smith laid off 100, 26 lawyers and 74 staff.

In May, Reed Smith cut all US associate salaries by 10%.

In August, Reed Smith cancelled on campus interviews at Fordham law at the last minute, prompting the school to ban Reed Smith from on campus recruitment for five years.

Last week, Reed Smith cut the salaries of incoming associates by 20% and lowered their billing rates for work done by new associates. This came two weeks after announcing a plan to move away from lock step.

If this is a very strong year, I would hate to see what things look like in a bad year.

Salary Freeze at Covington & Burling

joshua — Tue, 10 Nov 2009 21:43:30 +0000

Stick this one in the “It could be worse…” file.

At an all associates meeting today, Covington & Burling announced a freeze on associate salaries for all offices other than New York. Although Covington’s associates are probably not thrilled with the news, things could be worse. If Covington can reign in costs without having to lower salaries or cut jobs, it puts them a step ahead of most firms.

Back in April, Covington & Burling’s Diversity Update included a statement that they had not frozen salaries. It took longer than a month, but now we can finally link back to it.

Staff Layoffs at Day Pitney

joshua — Mon, 09 Nov 2009 19:58:01 +0000

Day Pitney has laid off 29 staff memebers in its third round of layoffs this year. In may, the firm let go of 20 lawyers and deferred incoming associates and in February it cut 66 staff positions. According to the firm, there won’t be any more layoffs this year and none are anticipated in early 2010.

Day Pitney was formed in 2007 from a merger between Day, Berry & Howard and Pitney Hardin. It employs 382 attorneys spread across nine offices in four states and the District of Columbia.

5259 Fewer Jobs at Top 250 Law Firms

joshua — Mon, 09 Nov 2009 19:50:07 +0000

According to a report issued by the National Law Journal, the top 250 law firms cut 5,259 attorney positions this year in the worst year since the NLJ began compiling the statistics. The firm shedding the most jobs was Latham & Watkins which has 444 fewer lawyers than last year. The number of partners grew by one percent over all, while associates were cut at the rate of 8.7% and of counsel and staff lawyer positions shrunk by 8.9%.

Cleary Gottlieb Follows Cravath on Bonuses

joshua — Fri, 06 Nov 2009 21:49:21 +0000

Cleary Gottlieb Gottlieb has confirmed their bonus schedule for this year, which falls right in line with Cravath. Cravath was the first major law firm to announce its year end bonuses. The bar was set so low by Cravath that it’s no great feat for other firms to meet it. Gottlieb

Like Cravath, bonuses at Cleary Gottlieb this year will range from $7500 for first year associates up to a cap of $30,000 for the most senior associates. Of course it could always be worse… at least there are no pink slips attached to the checks.

Cleary Gottlieb Steen & Hamilton has 12 offices and 900 attorney spread around the world. It is headquartered in New York City, which also houses its largest office.

More Layoffs at Dickstein Shapiro

joshua — Wed, 04 Nov 2009 16:35:05 +0000

In a firm wide memo sent out today, Dickstein Shapiroannounced that three percent of its associates and ten percent of its staff would be laid off. Affected personnel will be notified later today. The firm did not hide behind performance reviews or make excuses for the layoffs; the memo made it very clear that this is a purely economic decision and that they regret having to let go of talented hard working attorneys and staff. Mention was also made of a comprehensive compensation package that will include salary and medical coverage continuation, but was short on specifics.

Dickstein Shapiro LLP, founded in 1953, is a multi-service law firm with more than 400 attorneys in Washington, DC, New York, and Los Angeles.

Bonus Season has Begun!

joshua — Mon, 02 Nov 2009 21:13:24 +0000

Cravath Swaine & Moore has officially kicked off this years bonus season. It should come as no surprise that bonuses are lower than last year. The class of 2008 will get a $7500 bonus, and the class of 2002 caps out the bonuses at $30,000.

On the one hand, these are low. On the other hand, everyone receiving a bonus still has a job, which in today’s legal economy is a bit of a bonus in and of itself. What remains to be seen is how other big firms will react. Will this trigger a race to the bottom with other firms using Cravath’s low bonus rates as an excuse or will other firms pay out bonuses more in keeping with their own bottom line? Either way, we’ll keep you posted!

Morrison & Foerster Lower Incoming Associate Salaries in California

joshua — Tue, 20 Oct 2009 10:05:38 +0000

Morrison & Foerster is lowering the starting pay of its associates to $145,000 in California, while associates in New York and Asia will continue to receive the same pay. The firm is the first Big Law firm to lower California rates, which are generally the same as New York rates with associates in other offices receiving less. Firm Chairman Keith Wetmore noted that this is actually a return to the historical practice of major law firms paying associates in New York more than in other cities, in part due to higher billing rates.

Other firms have dropped salaries for first year associates this year, but they’ve kept New York and LA parallel.