Legally Speaking - Legal Recruiter Blog

The economy may be slowing, but billing rates continued to rise, according to information provided by 127 law firms that responded to billing questions submitted as part of the NLJ 250, The National Law Journal’s annual survey of the nation’s largest law firms.

Billings climbed by an average of 4.3%, 70.6% of firms increased billings this year, and one firm broke the $1200 an hour mark.

The average of the average firmwide billing rate for 2008 was $363 per hour, compared with $348 in 2007. The average of the median firmwide rate this year was $350 per hour, compared with $347 per hour last year.

More Here…

Will law firm bonuses follow the leaders this year?

 Cravath, Swaine and Moore and Sullivan & Cromwell are usually the first two large law firms to announce associate bonuses and set the standard that many large firms follow.  Last year Cravath paid a year-end bonuses of $35,000 to $60,000 in addition to special bonuses of $10,000 to $50,000.

 As clients seek discounted legal fees in the midst of an economic downturn this year may not see $100k bonuses for associates.  During a meeting of law firm managing partners hosted by Citigroup Private Bank in August (before the economic crisis) one law firm leader came to the conclusion, based on discussions at the meeting, that while year-end bonuses would remain unchanged, special bonuses will be eliminated at many firms.

As for Cravath, Swaine and Moore and Sullivan & Cromwell, they’re not saying yet.

The NLJ 250 is out. 

The National Law Journal’s annual survey of the country’s largest law firms shows (no surprise) that hiring slowed significantly in 2008.  Seven large firms announced layoffs this year and two major firms on the list, Heller Ehrman and Thelen, dissolved, affecting about 1200 attorneys.  DLA Piper stayed at the top of the list and K&L Gates climbed into the top ten firms

Among the findings:

Growth is down.  The top 250 firms increased attorney ranks by 4.3%, compared to 5.6% in 2007. 

16 firms entered or left the list with several firms from the south and east entering the list and several from the Midwest leaving.

K&L Gates grew significantly, becoming one of the ten largest firms for the first time through mergers and lateral hires.

The credit crisis led to layoffs at several large law firms.  Seven large firms announced layoffs totaling more than 200 attorneys.  Hundreds more lost jobs with the dissolution of Heller Ehrman and Thelen.

It’s no longer raining cash on the legal idustry.

Dan DiPietro, client head of the Law Firm Group of the Citi Private Bank reaffirms some of the conclusions of the group’s Client Advisory, published jointly with Hildebrandt International this past January, updates others, and gives us a summary of their report for the first half of 2008.

From 2001 through the first half of 2007 law firms have reaped the benefits of a strong economy. Expenses grew, but profits outpaced them. Starting last year, however, expense growth, driven by continued hiring, started to outpace profits.

Despite a slowdown in demand firms continued to add lawyers, leading to a slowdown in productivity not seen since Q2 of 2001. ”The increase in total lawyer counts, coupled with the decline in demand, caused productivity, or average hours billed per lawyer, to drop by 5.5 percent in the first half of 2008.”

The advisory issued in January predicted profits of three to five percent this year, but profits are now predicted to remain flat or even fall by as much as ten percent across the industry and to fall five to fifteen percent at the AmLaw 100.

DiPietro suggests the silver lining of what promises to be a bad year for the industry is that firms will have to say goodbye to unproductive lawyers and get a better handle on expenses.

For recruiters and their rainmaker candidates the silver lining is that competition for top producing attorneys will increase.

Bruce MacEwen, Adam Smith, Esq.

Put these trends together, as reported by this month’s issue of The
American Lawyer, and what do you get?

• Midlevel associates, despite their pay jump since 2006, aren’t
  satisfied with with their compensation;
• New York City salary levels have
  penetrated every major market across the
  country;
• The annual midlevel associate survey “shows
  associates eyeing the door;”
  and
• Howrey is continuing its revolutionary efforts to end
  associate lockstep.

I suggest you get what could be the beginning of cataclysmic cracks in the
associate compensation/promotion/professional development model.

Shall we start with the easy stuff?

Read the rest…