Numerous BigLaw firms have now announced a variety of “austerity efforts” that include layoffs, compensation reductions and deferments, cancellations of summer associate programs, delays in the start dates for first-year associates, and other budget cuts. Each day the list grows. I have yet to see an aggregate of firms in South Florida that have been mentioned in news articles, so we have narrowed the list and will continue keeping track. The published list of firms adopting austerity measures with South Florida offices are:
Akerman, Nelson Mullins, Greenspoon Marder, Littler, Buchanan Ingersoll, Dickinson Wright, Saul Ewing Arnstein & Lehr, Cozen O’ Connor, Duane Morris, Fisher & Phillips, FordHarrison, Fox Rothschild, Day Pitney, Bryan Cave, Blank Rome, Baker McKenzie, Baker Donelson, Goldberg Segalla, Hogan Lovells, K&L Gates, Marshall Dennehey, Mintz Levin, Ogletree Deakins, Pillsbury Winthrop, Reed Smith, and Shook Hardy.
If I have missed any, please add it to the comments.
What About Smaller Firms?
Of course, we hear about large international or national law firms in the news, but the same anticipation or internal acknowledgment of revenue loss is propelling boutique, local and regional firms to also take action by way of austerity efforts.
Even though so far unpublished, these measures should come as no surprise, as it should be assumed that every business, including law firms of every size, are doing what they can to mitigate exposure and risk.
How drastic the responses will be for smaller law firms will depend on myriad variables, including, but not limited to, the law firm’s compensation structure, amount of debt, collections, and marginal costs, all of which vary widely from firm to firm. A little disclaimer, due to the cornerstone of my business being confidentiality, I will not be confirming or naming firms in this article.
Where I Get My Information
To give context, my firm works exclusively with partner and associate attorneys, and I have been recruiting in this market for nearly twenty years. When I mention the variables above, I speak from experience and knowledge gained primarily through partner recruiting.
What is Going On
For the most part, it’s too early to tell what the impact will be on law firms, attorneys, or lateral recruiting in the coming year. There is a lot of worrisome data creating an undercurrent of uncertainty for us all. Economic changes are and will continue to affect every aspect of the business of running a law firm, including recruiting. On-campus interviews (OCI), summer associate programs, and start dates for upcoming first-year attorneys are being canceled or delayed.
Associates are being retooled to handle available work after receiving salary cuts. Partners are taking the biggest hit in compensation while tending to clients who are grappling with economic nightmares. It is not an easy time.
Post-recession years, specifically 2010-2014, were ones of record numbers of lateral partner movement. Should the economy right itself, we can only hope to see the same kind of growth after COVID-19.
I want to be clear that I know circumstances now differ significantly from those that led to the Great Recession. Any assumptions or assertions I have made based on history repeating itself are just that. However, the Recession is a modern precedent, and the only example from which to draw at this time. Even so, we may see historic lows in unemployment, estimates equalling that of the Great Depression (24%+), when one out of four people were without jobs. Things may get worse before getting better.
A Brighter Perspective
On a brighter note, while things have slowed, I still have partner and associate candidates interviewing with both large and boutique law firms. Business is continuing as usual, albeit in a different manner (remotely) and under an abundance of caution.
Law firm partners and leaders will be balancing economic prudence with meeting client needs. In some cases, they will need to hire to accommodate exploding practice areas. Multiple practice areas tend to thrive in economic downturns.
Another piece of good news is that numerous firms in our market are debt-free. Aside from expecting the next year to be very challenging, several debt-free law firms have told me they are well-positioned to ride out the market changes.
Considering market knowledge and the precedent above, I am looking at the following possibilities in the coming months:
• Further layoffs and cutbacks will continue.
• Recruiting will remain slow as law firms and laterals considering a move find their footing and ascertain effects on billings, collections, and the health of their firms.
• Well-positioned firms will have the ability to be opportunistic in terms of lateral partner recruiting.
• Law firms will seek lateral partners with business and may consider merger opportunities.
• There will be a consistent uptick in litigation, insurance, and bankruptcy. Opportunities will arise for associates to move within the litigation space or transition to bankruptcy, a practice area anemic in attorneys in our market. Transactions regarding distressed assets, including lending, will be busy as investors become opportunistic, benefiting both corporate and real estate attorneys. Real estate development will be slow.
What To Do Now
In the meantime, I encourage you to reach out to your favorite legal recruiter to queue up that relationship and confidentially share market information. If you do not know or feel comfortable with one, feel free to give me a call directly at 954-467-0590 or make an appointment with this quick link. I can keep you posted on law firm jobs and what is otherwise going on in the market.