Big Law is Shrinking and So Are My Job Prospects
If you thought this past year was a rough job market in the legal profession, brace yourself. Legal consultant Peter Zeughauser predicts this year will bring another wave of massive layoffs and an unprecedented number of summer associates not being extended offers. You know shits really hitting the fan when equity partners are at risk of losing their cushy jobs.
The whole interview from the Wall Street Journal Law Blog is worth reading in its entierty:
Hi Peter. What’s the word? Tell us that the layoffs are slowing.
I wish I could. But I think there are going to be more. In fact, I’m fairly certain of it. I think you’re going to see another fairly sizable round come toward the middle-to-end of the third quarter.
Where are they going to hit?
It’s hard to say, but I think more New York firms are going to follow the lead of Milbank Tweed and make significant cutbacks. Milbank didn’t lay off any partners, but I think you’ll see others cut at the partner ranks, both at the equity and non-equity levels.
What gives you this sense? That what the managing partners are saying?
Partly that. But it’s more based on the data I’m seeing on the firms’ financial performance. The data is dismal, and it leads you to certain conclusions. Often consultants draw those conclusions sooner than the firms do, but they’re going to draw the conclusions too.
And what about the end, Peter? Is there light at the end of the tunnel?
It’s not going to be over before the end of the year. I think you’re going to see dramatically reduced offers to summer associates at the end of this summer, and dramatically reduced offers for people to come in as summers in 2010. These cuts could be very dramatic, as much as slashed by 90 percent.
What? 90 percent?
It could be. The firms are still way over capacity. I think at a lot of firms, the work has stabilized, but it’s stabilized at a low level and managements still haven’t yet corrected to that level.
When do you think we’ll return to the glory years of, say, 2005 and 2006?
Well, we’re still way ahead of 2006 in terms of compensation. We’re going to have a down year this year, and according to some calculations I’ve read, profits-per-partner across the board could be down as much as 30 percent unless there’s at least a 10 percent reduction in headcount.
Okay. Let’s circle back to partners. What do you see happening with them?I think you’re going to see underpeforming or poorly performing partners managed out, and I’m talking about both equity and non-equity partners. When I talk about poor performers, I mean I’m referring not just to hours and billable rates, but also their ability to attract clients. I hear from a lot of managing partners the lament that “my partners don’t act like owners.” I think these partners — the partners who “don’t behave like owners” — are going to struggle.
Not a good time to be coming out of law school, is it?
It’s not. But it’s really not a good time to be a 2L. They’re going to get hit the worst, I think.
Grim stuff. You didn’t tell us what we wanted to hear!
Ha. Yeah, I guess not. Sorry about that.
So there you have it. For a vast majority of students who lack the hookups or elite grades/institution, you’re destined to a career of diminished earning capacity and making your own coffee at work. Hope the $100k+ in loans and tedious hours of studying were worth it. If you attended law school for a reason beyond earning fatty paychecks - I dunno, maybe to actually do some good in the world - I suspect it still is.
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