Green Shoots Down Under

An Australian Lawcruiter sees a coming "Recruitment Storm".

"About six weeks ago things started to dramatically develop and increase and improve. A number of firms - in fact quite a large number of firms - that had made it very clear that they had put recruitment on ice returned to the market, and in some cases have returned to the market aggressively," he said. "I think we've already started entering a recruitment storm. I think everyone was expecting it to take place over the next six to 12 months, but I think it's happening already."

Even if this is overblown, I think this is another indication that the market is bottoming out. And not a minute too soon - here in the USA - for the 5,259 lawyers axed in the Top 250 firms in 2009 or, the 2,784 first-year lawyers whose start date was deferred.

No, really.

"Help Wanted: $7,500/year. Required: Long Hours, Emotionally Draining Hard Work + Celibacy + Resiliance ... For the rest of your life."

Sounds like an ad for first year associates! (Or Lawcruiters?) And with all these looming salary cuts, even the salary sounds right!

Anyone?

Thanks to Harry Joiner for the Link.

Memorial Day Starts: Summer Slowdown Begins

The kick off of the Memorial Day weekend means the start of the summer slowdown in the lateral recruiting business. This usually happens for two reasons:

1. Money never sleeps – but people take vacations: meaning that it becomes harder to martial the necessary interviewers to complete a lateral hire
2. Summer Associates: The arrival of the summer associates has a two-fold dampening effect on lateral hiring. Firstly, these folks demand a lot of attention by law firm management and recruiting departments - and this attention is usually at the expense of lateral hiring. The second dampening effect is the availability of bright and eager (and relatively inexpensive and temporarily employed) law students to do the kind of work that would otherwise be done by a (more expensive and permanent) new junior-level lateral hire. This latter effect is mitigated temporarily once the summer associates leave - but is then increased again in September as the new first year associates join their firms.

This summer, Lawcruiters will need to deal with the third factor of a potential slow-down in inhouse hiring, as typified by this story in the WSJ about Goldman Sach’s summer hiring freeze.

Speaking for myself (and no doubt for many of my Lawcruiter colleagues), I am frankly welcoming a summer slowdown after an unusually frenzied start to the 2007 lateral recruiting year. It’s been a great year so far, and there is much to look forward to in the remainder of this year. In the meantime, here is wishing a peaceful Memorial Day to all.

"Lifestyle Firms" No More

One of the odder features of the current market is the sight of law firms that historically billed themselves as “lifestyle” firms now going out of their way, during associate interviews, to insist and absolutely insist, that they are most definitely not a lifestyle firm. From one perspective, this is perfectly understandable since those law firms that have not yet re-jigged their economic models to allow for variable associate profitability targets (read: the AMLAW 200) need every new hire to be billing at maximum capacity – and thus have no need for associates who want to spend weekends with their families. On the other hand, as matters of branding and reality – it borders on the ludicrous to say that a top regional firm with global aspirations is “not a lifestyle firm” in the exact same way as Cravath is “not a lifestyle” firm. Forgive me – but when wonderful firms that just happen not to be in the Top 20 start going out of their way to scare off potential associate hires by telling them that they will be working just as hard as they are at Cravath “because we mean to become the next Cravath/Sullivan/Simpson” (and nothing but!) – I start wondering what it is that they are so ashamed of. Particularly if it is actually true (as is sometimes the case) that their associates do not work as hard as at Cravath!

The fact of the matter is that, for the sake of achieving profitability targets that will take them higher up the AMLAW 100 charts, these firms are sacrificing one of the few things that associates fleeing the Cravath-tier look for in a new home – and that is an expectation that they will no longer be in a Cravath-tier firm – or in a firm with Cravath-like aspirations. By shedding a significant distinguishing characteristic – these firms thereby place themselves at a significant recruiting disadvantage to better-known firms since associates will decide that there is no point in working 2500 hours at a “no-name” firm when they can be working those same hours at a more established brand. This creates a significant disincentive for associates to move on – and could potentially affect how successfully up-and-coming Cravath wannabees achieve their recruitment targets. Moreover, given that these firms will be expected to match the ever rising associate salary expectations – this reduced ability to attract associates carries a significant risk to their bottom line, in part because it will be harder for wannabe firms to attract premium business.

Finally, these firms may need to relax their recruitment criteria by accessing a much broader talent pool – well outside the New York market – to find qualified associates willing to work top-tier hours at firms that have little or no name recognition in the New York or global market. The broader candidate base will necessarily need to include attorneys with credentials that, 10 years ago, would hardly get a second look at premiere New York firms. This will require some significant institutional courage since law firms have historically touted their highly-credentialed attorneys to their clients as evidence of their competence in highly sophisticated matters. And yet, how many top New York law firms have the courage to allow their chairman be quoted as to his disdain for Yale Law School graduates? Cadwalader let Robert O. Link do this – with no ill effects to their recruiting or to their profitability. Then again, Cadwalader, which Link described as a meritocracy, has never pretended to be a “lifestyle firm” - only a very profitable one. Not every firm can be, or wants to be a Cadwalader. Where are our lifestyle firms when we need them?

The End of the H1-B: The Market for Attorneys Tightens

I’ve discussed in previous posts how stagnant U.S. law school graduation rates, combined with increased demand by AMLAW 100 tier firms for top legal talent, has motivated law firms to search further and further abroad for highly qualified associate talent. One effect of this has been increased costs for legal employers - both in respect of the cost of seeking and hiring foreign attorneys, as well as the cost of higher salaries and other retention costs as firms compete, in a situation of diminishing supply, to keep the lawyers they already have.

The supply crunch problem has now become acute with the effective closure of the H-1B Visa regime commonly used by our clients to import foreign legal talent. As of today, the US Citizen and Immigration Service (USCIS) has announced that it will reject any new applications for H-1B visas for jobs beginning on October 1, 2008. This is because it has already received, within the first two days of the start of the application period, at least 150,000 H-1B petitions to meet the congressionally mandated cap of 65,000 visas (or 85,000 visas using a different criteria) for this application period. This means that lawyers from countries other than Australia and Canada (who have their own visa regimes) are effectively blocked from legal employment in the United States, unless they fall under the one of the more restrictive alternative visa regimes.

Historically, the number of available H-1B visas were allocated on a first-come-first- served basis, resulting in new H-1Bs being denied or delayed where the annual quota was already filled. With the reduction in the amount of available visas from a high of 195,000 in 2000 to a low of 65,000 today, the amount of available visas (the “quota”) has been exhausted increasingly quickly. Last year, the quota was filled two months after the start of the application period. This year, as mentioned, the number was filled in less than 2 days – meaning that unless an employer had an application completed and ready to go on March 31^st, then they were more then likely to fail in any attempt to obtain the visa. Barring any changes to the quota - the situation will grow worse next year.

Obviously, this is great news for U.S. attorneys who will reap the benefits of the upward pressure on their salaries as the supply of qualified lawyers gets tighter. And this is clearly lousy news for law firms that have been trying to avail themselves of a broader pool of high-quality candidates - since they will likely conclude that the risks of a failed H-1B application do not justify the time and expense of recruiting a top foreign candidate.

They Come From a Land Down Under (More Tales from The Hunt)

In another sign of the ongoing squeeze for top legal talent - here is a story, from the Australian Lawyers Weekly, about the successes Milbank and White & Case have been enjoying in recruiting lateral associates from top Australian law firms. What is remarkable here is that New York firms are finally starting to do what their London-based magic-circle competitors have been doing for years: flying teams of partners to another continent to interview potential lateral recruits. No doubt that the successes of Milbank & White & Case in recruiting Australians will inspire their competitors to get on a plane as well.

Tales from the Hunt: We're Widening the Net, Eh?

As long as U.S. law schools continue to graduate the same amount of (if not fewer) graduates as they produced 25 years ago, lawfirms in New York, California and Massachussets (i.e., the States with the most law firms and the most liberal bar admission policies) will need to look further and further afield for qualified candidates. Canadian attorneys (see the National Law Journal article) are just the start.

A Great Time to be a Lawcruiter

Lawcruiter returns from his self-imposed isolation to remark that it is indeed a good time to be a Lawcruiter...

A current review of un-met associate-level attorney needs in Manhattan alone (approximately 700 searches listed, for multiple candidates in each case) for a universe of approximately 75 law firms in Manhattan alone represents (assuming an average fee of $45,000 per placement) approximately $31.5 Million in potential revenues...

Many of these searches are long outstanding, and information about these searches is disseminated among a wide spectrum of legal recruitment professionals – primarily because the existing pool of recruiters has been unable to meet these hiring needs. As a result, law firms continue to be motivated to work with the broadest possible pool of legal recruitment service providers in the hope that doing so will increase the likelihood of a successful hire.

Start-up costs for new recruiters continue to be low. Data-bases, once hard-to come by, are fungible and widely available. A basic database high-quality relational database program costs about $5000. Add to that phone costs, computer and email hosting costs and some advertising and, for a home-based start-up, you get a total initial sunk-costs of about $15,000 at worst. One placement puts you in the black. Dial for Dollars indeed...