Large Law Firms Continue Cutbacks in 2010 (and Other Worrisome Developments for New Lawyers)

The ABA Journal reports that the 250 largest law firms shed 1.5% of their associate positions in 2010.  Partner numbers increased slightly, so it’s not quite right to say, as The ABA Journal did, that associates were hit the hardest.  On a net basis, they received the only hits.

There was more bad news in the last week.  NALP reported a sharp decline in law firm diversity (whether or not the recession is the cause is a topic we’ve taken up elsewhere), and The National Law Journal reported a decline in the demand for legal services in the third quarter of 2010.

There’s no good gloss to put on these numbers for recently-minted law school graduates and those graduating in 2011.  We can expect a continuing parade of law school graduates who paid a lot of tuition, incurred significant debt and invested their time and emotional energy for a more treacherous career path than they expected.  That is more than unfortunate.

If you’re thinking about entering law school in 2011 or 2012 (and graduating in 2014 and 2015, respectively), the news is more of a mixed bag.

On the one hand, it should make very clear that a career in law isn’t a “sure thing” and that, like other investments, preparing for that track is a significant risk.  To many of those who, like me, advise pre-law students, that’s an obvious point.  Still, it’s striking to me that in view of this challenging market, a relatively small proportion of people who contact me about engaging Advise-In start with the basics—why law school, why now?  For some, law school and the law make sense; for others, they really don’t, at least not now.  I’ve talked a lot about this and I’m quite sure I will again.

For now, if you’re considering law school, please, please work through the risks and rewards of that decision carefully.  Run spreadsheets of your likely position after law school and consider various possible states of the legal market at your graduation.  If you already have advisors you trust to be able to do the necessary analysis with you, great.  If you don’t, I’m happy to discuss whether law school is a good answer (you can sign up for a free consultation through the Advise-In website).  Of course, my financial interest is in people pursuing law school; that said, it’s not a great option for some, and it’s often not a great option now, and I try to help each person with an honest assessment.  But whether you talk with me or with others, or do the detailed analytic work yourself, it’s important to do it.

On the other hand, the current bad news shouldn’t determine whether you enter law school in 2011 or later.  It should influence that decision, of course.  There is even a potential silver lining for new law school students; if the demand for legal services increases in the next few years, law firms will have holes that need to be filled (and large law firms are outsized drivers of the legal employment market).  Since there will be fewer viable experienced lawyers (many of those having been pushed out of the market by the cutbacks of the last couple of years), law firms will need capable bodies, or those who can become capable, including new law school graduates.

Now, as I’ve said before, I think the chances are very low for a quick return to the flush years of much of the last decade but there is a reasonable chance that there will be a slightly artificially-enhanced demand for new J.D.s.  I say “reasonable chance” because I think it’s clear that law firms won’t leave behind the cost- and productivity-consciousness that they’ve emphasized during the economic downturn.  Still, a warmer legal market generally may give disproportionate opportunities to recent law school graduates.  Disproportionate in respect of what base remains the question.

~ by Kyle Pasewark at Advise-in Solutions on November 8, 2010.

One Response to “Large Law Firms Continue Cutbacks in 2010 (and Other Worrisome Developments for New Lawyers)”

  1. […] anticipate paying associates.  That’s of a piece with the reduction in law firm numbers that we recently discussed.  Even if the revenues of law firms increase (other than another frenzied legal boom such as we […]

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