Update On Legal Market for Large Firms — Q 2

By Terrence Galligan | Posted on

Hildebrandt and Citibank Private Bank both recently issued reports on the large firm legal market as of the end of the second quarter of this year (June 2012).  We regularly blog about their quarterly reports.

The latest reports are not positive. 

Among the key findings:

  • demand for legal services fell slightly (0.2%)
  • law firms’ expenses are continuing to rise faster than their revenues; however the pace of the increase has slightly slowed in Q 2
  • the growth in attorney headcount slowed slightly (the associate replenishment ratio went from 1.4 in Q 1 to 1.3 in Q 2
  • productivity (a measure of the ratio between capacity and demand) fell 2.5% (productivity also fell in the previous 2 quarters)
  • clients continue to exert pressure on pricing

The reports caution that hiring may slow as the year wears on, as firms realize that market demand does not currently justify adding additional capacity.  They predict that the large firm legal market will continue its “sluggish, largely flat trajectory” [Hildebrandt’s language] for the foreseeable future.

Employment Stats for 2011 Law School Grads

By Terrence Galligan | Posted on

NALP recently published some selected findings from its national law school grad employment survey (which collects information on employment 9 months after graduation).  They relate to the Class of 2011 (stats for the Class of 2012 will not be published until next year). 

We published the results of the Berkeley Law grad employment survey last Spring.  You can find them here.   

Here are some key comparisons.

Nationally, the employment rate for 2011 law grads was 85.6%.  Our 2011 grads had a 94.16% employment rate. 

Nationally, only 65.4% of those employed were in jobs requiring bar passage.  Here, the figure was 92.07% (An additional 4.14% of 2011 employed Boalt grads are in “JD preferred” positions).

Nationally, 49.5% of employed graduates obtained a job in private practice.  53.1% of our employed 2011 grads immediately entered private practice (another 12.76% of our grads went off to clerk for a judge immediately after graduation).

Only 16.2% of private practice jobs nationally were with large law firms (+500 attorneys).   In contrast, 59.74% of private practice jobs accepted by our 2011 grads were in firms of 501 or more attorneys. 

Conversely, jobs at firms of 50 or fewer lawyers accounted for 59% of all private practice jobs nationally whereas that figure was 15% at Boalt.  

Public interest organizations, including public defenders, accounted for 7.5% of post-law school grad jobs nationally.  15.52% of our grads went to work for public interest organizations in 2011.

Latest On the BIGLAW Legal Market

By Terrence Galligan | Posted on

Demand for large law firm legal services was, on average, up slightly for the first quarter of 2012, according to a recently released report by the well-known legal business consulting firm, the Hildebrandt Institute.  Its quarterly Peer Monitor Index Report contains information about key law firm business metrics.    

We’ve regularly blogged about the Peer Monitor system before, but to refresh you , it is a service that allows law firms to access their peers’ financial data (in the aggregate) in exchange for supplying their own data to the system for others to access (on a normalized and aggregated basis). There are 35 Am Law 100 firms, 35 Am Law 200 firms and 30 NLJ 250 firms in the system. You can find more information about the Peer Monitor system here.

While demand is up, the report sounds several cautionary notes:

First, demand is not up across the board.  Employment and IP litigation are up modestly, but corporate work is slightly down.

Second, firm expenses have increased by a higher percentage than demand, which has an effect on profitability.

Third, the replenishment ratio for associates is up slightly (to 1.4) in anticipation of increased demand that has “not materialized at a pace that fully utilizes the talent that is being added.”

The increase in demand for large firm legal services was highest in Silicon Valley (up 4% as a result of a concentration of IP-related work).  LA was next highest, with a 3% increase in demand (NY and CHicago were up 2%).  

Looking at all these factors together with the lingering uncertainty in the larger economy led the drafters of the report to conclude that “2012 could be one of the most challenging years in recent memory for law firms.”

NALP Report: Last Year’s Recruiting Volumes Slightly Up, Number of Summer Positions The Same

By Terrence Galligan | Posted on

NALP, the Association for Legal Career Professionals, recently completed crunching the numbers from last summer/fall’s recruiting season.  There is a nice summary in the National Law Journal.

Bottom line:  slightly more offers, slightly more callbacks, but overall (nationally) the average size of summer classes at large firms in 2012 is the same as it was for the summer of 2011.

Experts Forecast Continuing Challenges and Uncertainty in the Legal Market

By Terrence Galligan | Posted on

The latest annual Hildebrandt/Citibank Client Advisory is out.  We’ve posted about the Client Advisories before (see here and here). 

You can read the whole report here.

Some highlights:

  • demand for legal services is not likely to grow robustly for the foreseeable future
  • to gain greater efficiencies, firms will continue to seek out new business models based on “redesigned work processes, greater emphasis on project management, and new approaches to expense management and professional development”

Networking Guide for Introverts

By Terrence Galligan | Posted on

Here is some great career advice for introverts.  I remember reading somewhere that while extroverts outnumber introverts in the general population (by a margin of something like 3 to 1), among lawyers, there are actually more introverts than extroverts.

Introverted lawyers/law students may also want to check out a recently published book called “Quiet, Please: The Power of Introverts in a World That Can’t Stop Talking.”   You can read an interview with its author Susan Cain here.

December’s National Jobs Report

By Terrence Galligan | Posted on

According to the Wall Street Journal, the economy added 200,000 jobs in December 2011, but the legal sector lost about 1,800.  From December 2010 to December 2011, the sector lost approximately 2,700.

AmLaw’s Law Firm Leader Survey: Cautious Optimism for 2012

By Terrence Galligan | Posted on

The American Lawyer magazine just published their annual survey of large law firm (AmLaw 200) leaders.   Some key findings:

Despite the economy, 73% are optimistic about their firm’s future in 2012. 

Transactional practices at these firms continue to struggle.  Only about 20% are expecting to see any revenue growth in this area. 

A majority (58%) are expecting only modest (less than 5%) profit increases for 2012.

54% reported that clients refuse to pay for work of first and second year associates. 

75% used contract lawyers in 2011 (up from 55% last year).  37% outsourced work to lawyers managed by third parties (up from 25% last year).  28% outsourced work to non-lawyers managed by third parties, (a two-fold increase over last year).

With a continuing emphasis on greater efficiency, firms are increasingly expecting their lawyers to have project management skills.   One respondent said that, in order to succeed, it is not enough to have excellent legal skills, “you also must be able to manage teams and a budget, interact with people, and anticipate your clients’ needs.”  There is also an increased importance placed on the skill of developing new business (it is no longer enough to just  maintain existing client relationships).     

89% are expecting to add lawyers in 2012 through a combination of lateral and entry-level hiring.  However, only 29% are expecting a larger first-year associate class in 2012 (though that is up from 13% in 2011).  74% are expected to hire lateral corporate partners.  82% are expecting to add lateral litigation partners.    

Only 14% reported deferring starting dates in 2011, compared to 46% in 2010.

Q3 Numbers: At BIGLAW, Expenses Outpace Uptick In Business

By Terrence Galligan | Posted on

The well-known legal business consulting firm Hildebrandt Baker Robbins just published a report of its Peer Monitor Index, which includes information about key law firm business metrics for July – September of 2011.

We’ve regularly blogged about the Peer Monitor system before, but to refresh you , it is a service that allows law firms to access their peers’ financial data (in the aggregate) in exchange for supplying their own data to the system for others to access (on a normalized and aggregated basis). There are 35 Am Law 100 firms, 35 Am Law 200 firms and 30 NLJ 250 firms in the system. You can find more information about the Peer Monitor system here.

You can read a summary of the report here.

Among other things, the report shows that demand for legal services continues to grow, though the rate of growth has slowed.  At the same time, expenses have continued to increase as has the rate of that increase.   Part of the explanation for the increase in expenses is that new attorney hiring has increased (as it has been doing for the previous three quarters) in anticipation of growing demand. 

The report warns: “While firms have been hiring, however, demand has slowed as the year has progressed, widening the gap between law firm capacity and available work. Whether this trend continues will depend on the performance of the broader economy and whether we see continued recovery in litigation and transactional work.”  Stay tuned.