Category Archives: california legal market trends

2012: The year of partner departure?

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This year may be the year of partner departure from some of the big firms.  Not to be mistaken:  partners leaving big firms to join boutique firms or to start their own firms isn’t a new phenomenon.  There are common reasons to do so: a change in a firm’s retirement plan; a huge client is conflicted out and the partner wants to keep the client; or a geographic change.  However, Delia Swan at Swan Legal Search predicts that this year may be when partners leave in droves.  Why?  Biglaw’s departure from the “old-fashioned” practice of law.

“The flailing economy and the business of law firm management are reasons that many partners are going to be leaving this year,” predicts Delia Swan.  “Talent is less important, it seems, than the ability to generate revenue.  Thus, those who still hold dear the honorable, old-fashioned practice of law and feel they’re over-charging clients will want to rectify this and will seek out firms with lesser hourly rates.”

In addition, the pressure is on at many law firms to produce a constant stream of business.  Many firms are pushing partners to generate more than $1M each year, while the salary earned by the partners isn’t increasing proportionately.  “Partners know that they can leave a big firm, keep their clients, charge the clients less and make more money.  It’s a win-win for the partner and client, but it’s a lose-lose for the law firm and the associates at that firm,” Swan said.

“Associates are left in a lurch, unless of course, they’re asked to join the departing partner.  Unfortunately, that is usually not the case in this market, since the new firm will likely have associates in its rank who will take on the new partner’s case load.  So, the associates at the old firm are left without work and without the opportunity to move to a new firm with the partner.  It can be devastating.”

As a result, associates who are left behind have to work even harder to make sure they stay busy and become invaluable to the firm.  In many cases, this means that the associates need to find work within the firm and start figuring out how to generate business on their own – outside of the firm.  Associates are “growing up” quickly in the big firm environment.

“Typically, associates aren’t expected to be generating cases until they’ve worked for years at the firm.  The firms aren’t pushing business development onto associates, but the associates who want to stay in the firm and make partner see the writing on the wall,” Swan said. “They need to make money for the firm, or they may find themselves off the partner track.”

What does this mean for partners and associates?  This year will certainly mean changes for the structure of many firms.  Associates will be working harder than ever and may have expectations placed on them beyond their typical workload.  However, associates who can step up to the plate and deliver decent legal work and a great book of business may step into the role of partner more quickly than ever.

Associates have much to be thankful for this Thanksgiving

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As any associate will profess, the life of a relatively-new attorney certainly has its ups and its downs.  In many cases, billing is up and bonuses are down.  However, there are many things associates can be thankful for this Thanksgiving.  For the first time in two years, associates can look at the positive road ahead and the struggles behind them.

  1. Things are finally, finally looking up in the legal market.  In 2011, we saw an increase in legal jobs across a variety of practice areas.  It’s possible/probable that many associates noticed these increases in their firms.  This is fantastic news even for those associates who already have a job.  Now they have the option of making a lateral move much more easily.  Partners are more willing to hire and more willing than ever to look at associates with 1-3 years of experience.   Associates with more experience will also benefit by being able to negotiate a higher starting salary than one year ago.
  2. The market is on the other side of the worst legal market in decades.  It wasn’t easy, and it most likely brought doubt into the minds of many an associate, but it appears that the market has taken an up-turn.  Although we see the legal market move cyclically (the beginning of each decade seems to have a down cycle), this was certainly one of the worst we’ve seen in decades – and associates can take pride in the fact that they survived.  The upside to this struggle is employability.  Although associates may not be aware of their flexibility and adaptability, employers are.  They know that associates who worked and thrived in this market have the stamina, the tenacity and the sheer willpower to keep going.  These traits make for excellent attorneys, and the best hiring partners know this.
  3. Mergers have, in some ways, helped.  Associates working in a firm that acquired or was acquired this year should definitely give thanks.  California was a hotbed of activity when it came to mergers and acquisitions this year.  As a result, many of the acquired firms actually grew in numbers.  Numerous acquisitions were made by larger firms without a strong West Coast presence.  Now that these larger firms have the “California office,” they will likely be expanding their presence.  This means more jobs and more opportunities for associates throughout California.
  4. Experience has increased among associates.  The last two years have been learning experiences for many attorneys – both personally and professionally.  Many associates learned more about the law than they would have two years ago because of cuts in staff and resources.  As a result, the associates’ resumes likely show much more experience and expertise now than associate resumes a mere five years ago.  This makes today’s associates more desirable.

Government regulation could save us!

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According to a survey of more than 400 lawyers conducted by Fulbright & Jaworski, regulation could be a huge driver of more work for attorneys in the next 12 months.

It seems that most of those surveyed thought that litigation would increase in the near future, although the answers about why the litigation would increase varied. More regulation, company growth and the poor economy where several of the top answers.

Among the respondents, regulations have caused more of them to retain outside legal counsel in 2011 than in 2010.  And, the trend is predicted to continue.  Approximately  1/3 of U.S. respondents expect litigation to increase next year. By sector, both insurance and energy led the way in expecting an increase in regulatory proceedings.

For you, the litigation attorney, this is great news!  If the respondents of this survey are correct, litigation opportunities will increase throughout 2012.  If you’re ready for a jump to a new firm or a new practice area, please contact us.

The year of the merger?

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It appears that law firm mergers are hip again, and California is where everyone wants to be!  According to a report by Altman Weil MergerLine, more law firms merged in 2011 (year to date) than in 2010 for the same time period by nearly 80 percent; and regional expansion seems to be fueling this fire.

A variety of firms merged throughout the country, three of those mergers were between national firms and California firms.  Philadelphia’s Fox Rothschild absorbed Chan Law Group, Dallas-based law firm McKool Smith acquired Los Angeles-based Hennigan Dorman and Kansas City firm Polsinelli Shugart merged with another Los Angeles firm, Quateman.

So, why does everyone want to be in California?

Delia Swan, principal at Swan Legal Search, says that California has always been a destination for law firms. “Unfortunately, the last few years haven’t been confident years in many firms, and acquisitions and mergers slowed down.  Now, in 2011, things are starting to pick up, and we’re seeing that with the moves of these firms.  California is a place many law firms want to have offices because of its importance as a state.  California has a huge economy, and it’s geographically desirable on the West Coast.”

Overall, Swan says, these types of mergers are a good thing for California’s legal market.  “Just because these smaller firms merged, it isn’t necessarily bad.  These larger firms will most likely be expanding the ‘new’ California offices and hiring more attorneys.  We love to see new legal jobs in the California market.”