Associate Hiring Still High

S.F. Daily Journal - May 23, 2001

Associate Hiring Still High
The Economic Slowdown Hasn't Prevented Bay Area Law Firms From
Taking On About the Same Numbers This Summer and Fall

By Karen Coleman
Daily Journal Staff Writer

SAN FRANCISCO - Even as their clients continue to slash staff and announce gloomy earnings expectations, top corporate law firms in the Bay Area are continuing to add new associates near or above 2000's boom-year levels.

Some firms, such as San Francisco's Brobeck Phleger & Harrison and Orrick Herrington & Sutcliffe are welcoming their biggest classes of summer and fall associates. Others are putting new lawyers into the pipeline in nearly the same numbers as during last year's economic boom.

Brobeck Phleger is bringing 56 summer and 37 fall associates into its Bay Area offices this year, compared to 45 in the summer and 30 in the fall of 2000. Orrick Herrington's Bay Area offices have 35 summer associates and 18 fall associates coming in this year; last year it was 25 and 13.

While it is nearly impossible to plan for the two-year pipeline from the third-year law student summer job offers to training newly hired first-year associates, some firms showed more moderate numbers in their hiring.

The area's biggest firm, Morrison & Foerster of San Francisco, is thinning out its associate pipeline, at least for 2001.

The firm is bringing 68 summer associates but only 35 new fall associates into its Bay Area offices. Last year, the firm hired 56 summer associates and 50 fall associates.

Palo Alto's Cooley Godward has come down from last year's record-high associate classes, bringing in 62 Bay Area summer associates this year to last year's 73 and 53 fall associates compared to 60 in 2000. Pillsbury Winthrop, also in San Francisco, and Palo Alto's Wilson Sonsini Goodrich & Rosati are also paring back their numbers of freshman lawyers.

Because each year's summer and fall associate classes are planned so far in advance, their size is more a function of long-range planning than they are of the current economic environment.

That leaves associates and law firm managers crossing their fingers that work will pick up for the newest recruits.

"I think everyone kind of hoped we'd be out of this by now," said Avis Caravello, the principal of Avis Caravello Attorney Search Consultants.

Caravello, who recruits associates and partners, is the headhunter most often mentioned when large firms ask who they use for associate searches.

Caravello and other recruiters, unlike law firm representatives, admit that the incoming classes will exacerbate the job market crunch already being felt among associates already established in their firms. With most big firms paying $2,400 a week for summer associates and yearly salaries of starting at $125,000 for first-year associates, the pinch is being felt on both sides of recruiters' desks.

The dish on associate Internet chat boards and among other lawyers and recruiters holds that associates who are already at big law firms are sweating out increasingly stringent performance reviews and the specter of 1990s-style layoffs. All the newcomers, then, must be adding fuel to the fire.

Not so, say law firm hiring partners and associates. Though all acknowledge that corporate work is slipping, the attitude at law firms remains optimistic.
According to Thomas Hornish, a sixth-year associate in San Diego who co-chairs Brobeck Phleger's associate advisory committee, lawyers there are getting more, not less, secure as 2001 shakes out.

"We had some angst earlier in the year, but I think [firm chairman] Tower Snow has been has been perfectly clear, in the press and otherwise, that we aren't laying people off."

Hornish said that the attrition this year is actually shaping up to be less than it was at this time in 2000, even without counting the lawyers who voluntarily hopped into general counsel posts for start-up companies.

"The way I describe it to the people I talk to is: 'We were working at such a crazy pace last year we're almost at a normal pace.' And it's not like we're struggling for work either," Hornish said.

Brobeck Phleger, followed close behind by Wilson Sonisini, is the firm most often held up as the poster-child for law firm over-hiring and layoffs. Snow, like other law firm managers questioned, says he and his partners will take a hit in profits before laying off any associates who are meeting expectations.

"I think everyone feels as secure as they can in these circumstances," said Kelly Ames Morehead, a seventh-year associate in the Palo Alto office of Wilson Sonsini.
While associates everywhere tend to the pragmatic, Morehead said those at her firm seem generally optimistic and content. She said turnover is slowing at Wilson Sonsini; associates who have left have moved out of town for personal reasons, she said.

Morehead acknowledges that morale has been better at her firm, but said that negative rumors, most recently involving layoffs of large groups of associates at Wilson Sonsini, have dogged the firm for as long as she can remember.

"That's what you get when you're at the top," she said.

Several area recruiters do say there has been an uptick in associates looking for work, though all say that few are admitting that if they've been given walking papers by their firm.

Caravello says there has been a clear increase in the number of associates looking for work in the Bay Area market. She says what no managing partner will acknowledge for the record.

"Even though in the last year and a half the law firms slightly loosened their standards in terms of the people they were willing to accept, the bottom line is this: If you got hired by a big firm, you were a talented performer and you have the credentials."

"What I learned from the early 90s is that people land on their feet. I was able to place most of those associates who got laid off."

She wouldn't name names, but noted that she immediately could think of two associates who were fired then but are now successful partners at big law firms.

"People who are panicking now should just take a deep breath and know that things do cycle back and there's no reason to go running for the hills," she said.

Jason Catz, a University of Michigan law student summering at Pillsbury Winthrop in San Francisco, shares the guarded optimism that has replaced the unbridled variety of last year. So far, he said, the associates he's met in his first week have been nothing but welcoming.

"Everybody seems to be happy here. The reason I chose Pillsbury in the first place had to do with what my gut feeling was about the people," said Catz.

He said the firm's diverse practice areas and historical avoidance of layoffs were also important to him. As for the size of the firm's classes, 47 summer associates and 23 fall associates in the Bay Area this year, he was crossing his fingers just as the firm's managers must have been.

"With all that lead time, you have to hope they weren't overhiring two years out," he said.

John Jameson of the Los Angeles recruiting firm the Jameson Group said that most California law firm managers have been around long enough to know that laying off lawyers, especially while trying to couch layoffs as firings of poor performers, is bad for business.

"They almost always got egg on their faces because the truth came out," he said, noting that the now-bankrupt San Francisco firm Graham & James and Los Angeles' Latham & Watkins are still remembered for laying off lawyers at the start of the 1990s, even though each let fewer than 50 lawyers go in the middle of the last big recession.

Recruiters, lawyers and law firm managers all say it's too early to say which way the economy is sliding. And, while they may have varying levels of optimism, all agree that the economy will come back around.

Even the associate market, which has tightened up considerably, isn't dead yet.

"There's this huge fear out there that nobody's hiring, the market has slowed down and there are layoffs. And yet, over the last two weeks ... we've been doing some housecleaning and calling every firm we work with to find out who's looking and who's not," Jameson said.

While the recruiters wouldn't drop names, local outposts of firms such as the New York-based Milbank Tweed Hadley & McCloy and Chicago's Mayer Brown & Platt are looking to build offices here.

McCutchen Doyle Brown & Enersen, Gray Cary Ware & Freidenrich and Heller Ehrman White & McAuliffe are among the somewhat smaller firms that didn't binge so heavily on associates last year and are now eager to have first pick in the lateral market.

"There are a surprising number of firms that are looking, many for multiple people," Jameson said.

Wilson Sonsini associate Morehead waxes philosophical about the apparent inverse relationship between work and associates coming into law firms this year.

"We don't have a lot of control over things like the state and national economy, but we have control over ourselves. Most people are coming in and focusing on doing a good job of being a lawyer and offering client services. And that's really all you can do," she said.