Things Are Looking Up?
Though competition for coveted summer associate positions remains fierce and the number of first year associates hired remains low, at least things don’t seem to be getting any worse. 2010 was grim, with many firms halving the size of their summer class (Cravath was down from 123 summer associates in 2009 to only 23 this past summer), and some firms, such as Choate Hall & Stewart and McCarter & English, hiring no summer associates at all. In addition, offer rates for first-year associate positions fell from 89.9% for 2008 to 69.3% for 2009. Depressed yet?
On the bright side, the decline in hiring appears to have leveled off, and according to the New York State Bar Association, managing partners at many firms are optimistic about the legal market in the coming year. In a poll conducted by the NYSBA, only 2 of the 21 respondents predicted a continued decline in the demand for legal services, while the majority believed prospects were looking up. Most of those surveyed said they expected to hire the same number, or even a slightly larger number, of summer associates this year.
The recent economic woes have also prompted firms to reevaluate the way they bill clients who are watching their wallets nowadays. The drop in demand for legal services, combined with an influx of discount service providers, has given clients increased leverage and put pressure on firms to reduce fees in order to compete. General counsels are directing more and more less complex legal work to lower cost legal process outsourcing companies. Due to this reduction in business, as well as increasing client dissatisfaction with unpredictable costs and a reluctance to pay for the work of summer and first year associates, firms are looking into alternative billing methods such as fixed and value based fees, and hourly rates that bill the work of experienced and less experienced attorneys equally. In addition, firms such as Weil, Gotshal & Manges have done away with billable hour requirements in order to reassure clients that their attorneys are not taking more time than necessary on transactions in order to meet a quota. It will be interesting to see if these trends continue as the market improves, or if firms go back to business as usual.