biglaw to slash hiring by up to 90%, WSJ

what's a non equity partner vs equity partner? very interesting with tax revenues repercussions as lawyers as a profession are the 2nd providers for the city, after finance.

non-equity partners are not paid, usually, on a profit basis. they receive a fixed salary, although many receive bonuses depending on the lawyer's and the firm's profitability. they are often service partners, hired because they are good attorneys but not necessarily the type to bring in business. They are held out by the firm as partners, and billed as partners, but often make significantly less than equity partners.

The truly top-tier firms do not have many, if any, non-equity partners, but that's just a handful these days. When work was plentiful law firms needed more partners but didn't want to expand the core partnership too heavily. It's become brutally difficult to become an equity partner for an attorney in NYC.

AR,

Thanks for summarizing.

got it. similar to the shift at even top universities from tenure to adjuncts. why make a long term commitment if you might need them only on the short to medium term. plus, those that get the tenure often get lazy afterward.

Its actually also something of a marketing and hiring ploy. Lists go around every year about which firm has the highest profit per partner. More partners = less PPP = less bragging rights = less ability to draw high profile partners from other firms.

but if making partner is so unlikely, does it really pay to work that hard for those lucky few partners to reap the bounty?

admin, it's been evolving, many people over the past few years thought they had quite a good shot at it, now it's become better known how difficult it is. plus, when you interview they don't exactly say only 3-8% of the first year class will make it. one of the huge problems law firms have encountered recently is that their natural employment cycles have changed. people who would have become fed up with the abuse are staying much longer because the number of positions outside the firms has remained relatively constant despite the increases in law school grads, and because the pay has become so good.

AR, I think you hit it.

Outside of Wall Street, there are few jobs you can jump from law associate salaries to and still pay your rent and loans....

"people who would have become fed up with the abuse are staying much longer because the number of positions outside the firms has remained relatively constant despite the increases in law school grads, and because the pay has become so good."

i heard a lot of "i'll work for the blood-suckers only till my student loans are paid for" lately but wonder whether that will be true given that the opportunities outside are not enticing either.

Not everyone goes in expecting to make partner. If your goal is to go back to a law firm in any decent sized city in a few years, it will generally be a big help to have spent a few years here. Likewise a lot of people move into government jobs in DC. Still others went to law school to do good, got stuck with a mountain of debt and had to take these jobs to get out from under it.

I think what you will see now is that kind of migration happening all at once and it will have some fallout for NYC real estate.

> i heard a lot of "i'll work for the blood-suckers only till my student loans are paid for" lately
> but wonder whether that will be true given that the opportunities outside are not enticing either.

I can't tell you how many friends said that coming out of law school, and all but one I know of left big firm law.

malthus, the percentage of people who have continued to slog until the end has increased dramatically.

but now, if the referenced article is correct, huge numbers of today's 2ls and 1ls won't be employed for years, if in the law at all.

Most of them can't afford to buy in Manhattan anyway.

Maybe not today, but if you are looking to unload your 1BR in a couple of years your potential buyer pool is looking smaller.

"Most of them can't afford to buy in Manhattan anyway."

very true, even for the years before the peak. but i know of several cases in which the parents made the purchase on their kid's behalf (& their own nest egg behalf). that's gone for good (imho), the old guys will tell junior that renting is smarter.

Actually, 2/3 of the associated I knew bought. Usually nothing spectacular, but they bought...

admin, before the peak it wasn't so hard. we bought a small two bedroom when my husband was a second year associate, in 1996. and a generously-sized two bedroom Chelsea apartment in 2001. After 2003 things changed.

Interesting, 10022. None of the associates I know have bought, except for one couple (both attorneys at big firms) who fled the city because they couldn't afford to buy. And most I knew have fled the profession, even just 3 years out.

"most I knew have fled the profession" and now do what?

"After 2003 things changed." yes, this period is the pre-peak i'm talking about 2003-2006. doesn't only apply to law, jonathan miller said that there were almost no first timers that bought in that period w/out helping hand from mom&dad.

evnyc, that might be a new trend (old as new). the younger attorneys have often left. where the bottleneck is is in the mid-level and senior associates. Among my husband's colleagues, most bought, but before 2003, some as late as 2005 if dual-income no kids. (not counting partners here, equity partners from most biglaw firms, although not all, have been able to buy).

All true, junior associates used to buy but were recently priced out (of Manhattan at least). Point is they will not be there to offer any support to the market as things continue to head down.

Admin, several have gone into international aid work. A couple were laid off recently and are not seeking to get back into the profession; I don't know what they are doing with their time. Some went to law-related government jobs, which I suppose is still in the profession but not in the big firm profession; one now teaches. Interestingly, neither of the two attorneys I know who went to hedge funds have been laid off.

And, one whom I am particularly close to went into finance (not a hedge fund). He saw what life was like for the mid-level associates and young partners, and wanted nothing to do with it. Aboutready, you've mentioned your husband's efforts to find a firm that allows a good work/life balance, and I commend him for finding one. It is not easy to do.

Oh, and friend/former attorney is getting a Ph.D.

Who the heck is Peter Zeughauser and why is he making idiotic claims? 90%? Come on...

evnyc, it's not at all. if i had become an attorney i don't think i'd have had the stomach to perservere. when i walk him to work we frequently pass his old law firm location. we often see the young partners (and the not so young) and many of them look like hell, physically. that life takes quite the toll.

thanks evnyc for the detail!

come on uwsmom, "just google it!" (like they say in Finland)

uwsmom, law firms have basically pushed back this fall's class as far as possible. they have really little to no need for it, but they already made the offers. but think about next year's class. if you have moved this year's class into next year, and this year you hired 125 people when you needed close to none, how many people do you think will get hired next year if partners' profits are down 30% and clients have said they don't want to pay for first years? one firm isn't billing out its first years (can't recall which one), has reduced their salaries and put them on an "apprenticeship."

"All true, junior associates used to buy but were recently priced out (of Manhattan at least). Point is they will not be there to offer any support to the market as things continue to head down."

Yeah, I think we're talking about a time difference. The folks I know who bought were probably 2000-2003 for the most part. I know 2 more recent associate purchases (2006-2007), but one was 2 income, and the other had some mommy/daddy help.

For whatever it's worth, here is my two cents as a partener at a large law firm:

1. To answer the question of who the guy is who is interviewed in the article, he's a consultant who works with law firms and is quoted in a lot of articles. I have no personal experience with him but in the articles where I've seen him quoted he generally comes off as credible. I am, however, a bit skeptical of a consultant (thus someone who is supposedly paid by law firms) who is talking about info that he/she would have presumably learned while consulting for the firms and thus betraying their confidences.
2. Regardless, I do think that his 90% number is widely exagerated although everything I see indicates that hiring in fall 2009 for summer associates in 2010 (for associates who will start in fall 2011) will probably be down, especially for the firms that made the mistake of hiring large classes this summer. I think that his 90% number is a worst case scenario for a couple of firms. Not that I have any real idea, see my next point.
3. Law firms are small, private and tighly controlled. Very few people actually know what is going on within a firm. Whenevery I read or hear that XYZ firm is in trouble, I always wonder. The only way one would most likely really know that is if (1) one is a partner at the firm, (2) one works at Citibank, the lender to most law firms (or a similar lender or consultant) or (3) one is a partner at another firm and have been interviewing a flood of partners from ABC firm. Well, maybe there are a few other ways, but essentially, you would likely be breaching highly confidential info by telling it. Thus, 90% of what gets passed on about law firms is just rumors and speculation. Even as an associate at a firm, I am not sure that you get a real accurate picture of the firm as a whole (for example, one may see that his/her group is slow, but not know about the entire firm or one may see associates being laid off/fired but not know the real reason-although as an aside I think that many, many firms are firing associates, saying that it's for performance based reasons and it is really as a result of the downturn.
4. My person thoughts on future hiring is that there will be a flight to students at what are seen as the top schools. For example, my firm is no longer interviewing at schools that just a few years ago it decided to start going to because the students at the top schools were getting literally 10 or more offers. Now, the students at the top schools are no longer getting a million offers. The idea of a student at say NYU not working as a lawyer is likely not accurate but the idea of a student at a lesser school not getting any offers is more plausable.

One other thing on non equity partners. I agree with everything above about them, but in my mind there are usually two camps: the Chicago firm style non equity partner and the Am Law (American Lawyer) none quity partner. The big Chicago firms have traditionally made a good share of senior associates "partner". At one point I think that if you were a 5th or 6th year and still around and were well liked you made partner (things may have changed in the last several years). These were non equity partners who got paid a salary but could hold themselves out as a partner for marketing purposes. The other kind of non equity partner is those partners at firms that do not contribute a sufficient percentage of their draw back to the firm in the form of capital contributions to be considered equity partners by Am Law. Every year Am Law does a survey of law firm profitability and it is very important to firms. As mentioned above, the fewer partners, the higher the profits. Am Law only considers someone an equity partner if he/she contributes like 7% (the number might have changed) of his/her draw back to the firm in the form of a capital contribution. Regardless, even if you only have to contribute say 6%, your firm very likely considers you an equity partner and you get paid out with a percentage of the firm's profits. In my mind, money is money, although at the end of the day equity partners usually get paid more $.

jojo, you had me until the "will probably be down."

please. and no, much of the information that can be released is not "highly confidential" and as many people here know, my husband is a local managing partner.

One thing I disagree with is the secrecy of how most of the firms are doing. All you have to be is someone who has a whole bunch of friends ho are partners at the various firms and always be asking them whenever you go out drinking, to brunch, etc. the right questions (over and over again). It's just human nature to bitch when things are heading South and someone you trust offers to let you unload on them (and I always do). i had one recent discussion where I inquired about a friend's firm's AR ratios, etc. and he told me that the week before he got bitched at for being tardy in turning in his time sheets and he snapped back "WTF does it matter? They aren't paying us anyway?".

Another thing to remember is that most firms are partnerships rather than corporations, and compensation at partnerships is WAYYYYYYYY different that corporate. Look at the investment banks on Wall Street: http://curiouscapitalist.blogs.time.com/2009/04/28/publicly-traded-investment-banks-big-mistake/

i don't know about that, 30yrs. everyone at the law firms knows that one of the major issues is collections. regardless of how much work a firm has, they are having troubles getting people to pay their legal bills (ironically the financials are often the worst culprits). As such, it really behooves them to get the bills out as quickly as possible.

attorneys are often not the best business people. my husband is horrible at chasing down clients for money, and yet that is what he is being forced to do. 30yrs, where else is it possible yearly to see almost precisely exactly how much every person is making? the numbers are published, there is remarkably little secrecy, actually.

jojo, equity partnership has nothing to do with capital contributions in many firms. nothing.

30 years, sounds like your friend was refering to shrinking pay, which I do think is pretty common these days. Regardless, there is another thing that he could have been refering to. I've read and heard about where some firms are delaying distributions, either because the firms really need the $, because they are being prudent or because they don't want to draw down on their lines more than they need to.

AR, I don't know about every law firm, and I don't know much about many firms. All I can say is that for every firm that I do actually know about what it means to be an equity partner and everything that I generally understand about law firm finance, equity partners have to make capital contributions. Some require upfront contributions, some retain a percentage of distributions, some firms let the partners finance all or a portion of the contributions but one way or the other they get you. You evidently think that there are some firms that don't require contributions. That may be the case, but I would be interested in how those firms work. I would be surprised if a bank would finance a firm that doesn't require capital contributions (and I think that having lines of credit, even just for rainy days or to bridge distributions around tax time, is quite common), but what the hell do I know.

If your comment was that many more firms than I suggested above have true income partners, you may be right, but I'm not sure. Take a firm like Orrick (and I use Orrick only as an example and I don't really know anything about the firm). Orrick's Am Law numbers show a large number of non equity partners. I dn't think that those non equity partners are really income partners. I think that they just don't meet the Am Law definition of what an equity partner is (ie they don't contribute a sufficient percentage of caital to the firm). Thus, Orrick is able to report higher profits per equity partner. Again just my two cents and I don't know what is really going on a Orrick or most firms. Also, at the end of the day, most income partners probably make close to what the bottom tier of equity partners make at all but the top firms, after you factor in capital contributions, full employment taxes, full health insurance premiums, required charitable contribuions, required retirement payments, etc that equity partners have to make.

jojo,

i wasn't clear. your post is very good, and raises many valid points. i'll try to discuss generally, as i do not want to present info that i am privy to that should not be presented.

historically law firms have been run in a very conservative manner. often they have even been laughed at for their lack of innovation and adherence to tradition. that tradition is proving very valuable for some firms. others that decided to go boldly where others had not gone before are in a mess of trouble.

back in the day capital contributions served a number of purposes. they provided a capital base, were used as a pension source, and were meant as a deterrent against partners walking away from the firm. in recent years the capital contribution process at the top firms has become very easy, as such it may be useful for the first purpose but has little to no value for much else. when i said that capital contributions have nothing to do with equity partnership, i meant that any healthy firm does not even consider that aspect when determining who and how many lawyers are to make equity. it's simply not a consideration. an unhealthy firm is another matter. a huge red flag is when a law firm makes a seemingly inordinate number of people equity partner, they may need to raise capital and quickly.

their are many differences between and equity partner and a non-equity one. but the most important one is legal. an equity partner signs a contract agreeing to be bound by the terms of the partnership agreement. that agreement can take different forms. i can tell you that most non-equity partners do NOT feel like partners. their business cards say partner, but there is a huge mental difference. until a few years ago, the service partner was fairly rare. not any more. DPW, STB, S&C, CS&M, etc. do not have them, i believe (although even those firms have been using the "of counsel" designation with increasing frequency), but the large majority of the Am Law 100 have them. So the numbers presented by Orrick are correct. Those income, or service, partners are just that. If they've signed the legal document, they are equity partners.

As to pay for non-equity partners, it varies tremendously. Some make the same as equity partners (mandatory retirement ages push many partners out of the equity partnership at some point, but they may remain tremendous rainmakers). At most firms, however, recently the pay has been quite a bit less, even factoring in all the expenses. Many firms make non-equity partners pay full health insurance premiums. I can tell you in our case the increase was very substantial, even accounting for all the expenses.

many firms are trying to take measures to reduce reliance on lending for operations. this, in and of itself, does not denote a troubled firm. there are others, however, who are requiring additional contributions and/or delaying distributions because they are in financial trouble.

orrick is an interesting example. if you wish to discuss, let's take it off-line. aboutreadyse "@" gmail.com

their=there. such a persistent grammar problem i'm having.

jojo - thanks for a thoughtful post. And I agree, that 90% "could possibly" be the worst case scenario for a few firms. I'm not willing to give it anymore weight than that and would be stunned to see it across the board. So, IMO, Pete's not saying much. Also agree that most of what is discussed is speculation, as you pointed out. It's absolutely true that associates are not always privy to crucial information about the current state of the firm.
30yrs - I'm not so sure partners would be eager to share their hardships. There has to be a strong incentive to keep such things private.

uwsmom, my husband's firm uses a different consultant, and they said virtually the same thing. but, time shall tell.

and i absolutely agree with you that partners will do everything possible to retain their earnings. law firms are highly opportunistic during down cycles.

I'm just slightly perplexed. So, these consultants are aware of the situation for their own clients. That's it. I looked at Peter's client list. He shouldn't speak generally (and maybe he isn't). My knowledge is VERY limited, basically to one top-tier firm. I'm not sure all firms are exeriencing the same hardship. My sympathy goes out to those that are.

no uwsmom, they hold roundtables at which the law firms present their situations, and then they prepare reports BASED ON what their clients are telling them.

Law firms that are not experiencing the same hardship still tend to retract in bad times. The real issue is how many people are going to leave on their own volition in these times, and where is the ADDITIONAL work going to come from to warrant additional associates? Some firms (bankruptcy, litigation, M&A probably soon) will have quite a bit of work. But they probably still have excess capacity, and as such have no need to hire more. Very herd like behavior in the law. Once one big firm starts a trend, many will follow. Will be interesting to see who the trendsetters are this time, and what trends they decide to set.

uwsmom, i wasn't clear. all of the attendees are not necessarily clients. they just pay to attend and discuss. great racket, no? people pay to be the research tools.

There are cycles that industries go through from time to time. The big law firms hired a lot of people over the last 10-15 years and there is now a pullback. This will likely change as time goes on. You saw it in public accounting firms after 9-11. Deloitte & Touche in NYC would normally hire a couple hundred accounting grads to start with them in August and they hired 5 people for 2002. As things turned around they were caught short and needed to ramp-up their hiring. It does seem likely that in 18-24 months law firms will have new business and need to increase hiring.

There will be new regulations and securities laws, creating needs in the law firms and banks/investment firms and there will likely be an increase in litigation coming out of this recession (which hasn;t really happened yet). Right now things seem so bleak because things are down at almost every turn in every industry.

waverly, the litigation machine is gearing up right now something fierce. those doors are about to swing wide. interestingly enough, Nomura just survived a motion to dismiss in its lawsuit against Cadwalader. may you live in interesting legal times.

AmLaw Litigation Daily, 5/19:

Nomura Suit Against Cadwalader Survives Dismissal
Cadwalader Wickersham & Taft has taken a lot of lumps lately because of its heavy investment in its securitization practice. Late last month it suffered another setback when a New York state court judge refused to dismiss a malpractice suit brought by Nomura Asset Capital Corporation arising from a commercial mortgage financing that Cadwalader handled more than a decade ago. The backstory is complicated, but the litigation raises questions about whether law firms could bear some liability for soured securitizations, even if they followed common industry practices.

Nomura sued Cadwalader in 2006, claiming that it had botched a 1997 assignment to advise and assist Nomura on the origination and securitization of 156 commercial loans totaling $1.8 billion. (Cadwalader had signed a tolling agreement that extended the statute of limitations.) The most significant claims arose from a $50 million loan made to a doctors hospital that went into default in 2000. Cadwalader, representing Nomura, had drafted documents that asserted that the trust that held these loans qualified for special tax treatment as a Real Estate Mortgage Investment Conduit (REMIC), which required that the fair market value of the real property securing each loan be at least 80 percent of the loan amount. In fact, the doctors hospital loan did not meet this 80 percent test, according to Nomura's own appraisal.

When the hospital loan went into default, LaSalle National Bank, the loan servicer, sued Nomura in 2003, citing the false representations about the loan's REMIC qualification. After an adverse ruling by the Second Circuit, Nomura in 2006 paid LaSalle $67.5 million to settle. Nomura then turned around and sued Cadwalader for that amount. Nomura was initially represented by the now infamous Marc Dreier. After the collapse of Dreier and his firm, the case was continued by former Dreier lawyer Amianna Stovall, who is now with Constantine Cannon.

Cadwalader, represented by Evan Chesler and David Marriott of Cravath, Swaine & Moore, argued that Nomura's claims were barred because the bank, when defending itself in the LaSalle litigation, had claimed Cadwalader's actions were proper. It also argued that the language Cadwalader used in the securitization documents was standard for the industry, noting that it was substantially similar to sample language suggested by a Standard & Poor's publication. Cadwalader also tried to point the finger at Dechert, which had helped originate the hospital loan for Nomura; Dechert was primarily responsible for verifying that the loan met the REMIC 80 percent test, it argued.

In an April 28 ruling, Judge Melvin Schweitzer stated that Nomura's position in the LaSalle litigation didn't bar it from bringing claims against Cadwalader, especially since its earlier arguments had failed. Perhaps most significantly, the judge ruled that Cadwalader's reliance on language in the S&P manual did not create a defense for a motion to dismiss. The judge also ruled that even if Dechert was primarily responsible for assuring that the loan met the REMIC test, Cadwalader had not established that it did not have a duty to verify this fact.

The court allowed to go forward another claim against Cadwalader arising from a $2.55 million loan to the owner of a Best Western Old Hickory Inn, but dismissed a claim relating to a defaulted KMart loan. Cadwalader and its lawyers at Cravath declined to comment.

Judge Schweitzer did note that "Cadwalader ultimately may prevail" on the S&P reliance argument if it can show that it followed customary practices. In the meantime, his ruling could send some shivers down the spines of law firms that handled securitization deals that later cratered.

AR, I agree with a lot of what you said, but am not sure about one aspect. First off, I'm sure that you know this, but a servicing partner is just a term that people use for a partner that primarily does the work brought in by other partners and thus a servicing partner could be an equity partner or a non equity partner. What I think that we may disagree about is the number of non equity partners at Am Law 100 firms. First off, I think that we agree on what an equity partner is-a partner that signs LLP agreement on the dotted line, has to contribute capital to the firm and shares in a percentage of the firm's profits. A non equity does not and gets paid a salary and possible a bonus (which could be based on a different factors, including how well the firm does). A non equity partner is very similar to an of counsel, although the partner title sounds better. Many firms have of counsels for a variety of reasons. Am Law's numbers are generally the most widely circulated numbers that everyone discusses (although Citibank also does a survey that is seen as much more accurate and detailed but the numbers are only showed to the participants in the survey and what is shown is masked a bit so that a firm can basically only get average numbers for firms similarly situated). Regardless, Am Law does not follow your definition of an equity partner. It only includes partners that contribute a significant portion of their income to capital for the firm (last time I heard, it was 7%). Thus, when one reads in Am Law that firm X has 100 equity partners and 50 non equity partners, it is impossible to know whether those 50 are what you and I think of as non equity partners or are in fact equity partners that do not have to contribute [7]% of their income to the firm (maybe it's 6% or 1%). Also, with some exceptions (such as the Chicago firms), firms do not advertise whether they have a true two tiered partnership. Thus, you may be right that most Am Law firms have two tiered partnerships, but from what I have seen, I don't think so.

I'll ask my husband for clarification. btw, he is an equity partner who was not required under the terms of his partnership agreement to make any capital contribution, but his income is calculated the same way as those equity partners who are required to do so. it's not a one-size-fits-all scenario.

the Am Law top 10 is not a two-tiered system. (although, i'd have to look at who is currently top 10, a couple of the firms that grew during the securitization craze may have made top 10, and some of those are definitely two-tier). beyond that i'd say it's becoming very common. the partnerships needed more partners for billing purposes, but they did not want to dillute the profits-per-partner for those already in the club. firms do not advertise it in the slightest. they don't even advertise if they are lockstep. i think many firms do not know where they'll be in terms of organizational structure in two or three years, and are trying to maintain flexibility. At a few firms, tradition will not be overturned without a massive internal struggle.

AR - very interesting stuff. I think many anticipated a slew of lawsuits against investment firms, bankruptcy cases, etc and, while it has picked up, there hasn't quite been the huge wave of activity they seemed to be anticipating.

above the law is reporting that Skadden has already informed this year's summers that they can expect to start sometime in 2011.

it's coming waverly.

I think so, once this sycle clears. It tends to happen like that in these industries. Down the road everyone will be begging for people and then a few years later they will have too many people...rinse & repeat.

waverly, i agree about the cycles. the problem is that law firms went heavily corporate. many of them are only 30-40% or so litigation these days, less at the partnership level. the mentality of a litigator is much different than the corporate attorney. they'll move as many as they can over to litigation when the time comes, but they still have too many bodies (Quinn and a couple of other litigation shops are notable exceptions to this, as well as the hubby's firm, thank god).

Firms definitely go through hiring cycles but if you believe that we just went through a credit and real estate bubble, I would not expect hiring for lawyers who service those areas to approach the numbers of 2006 (nor perhaps the compensation). E.g. I would guess that there are not nearly as many corporate lawyers in Silicon Valley as there were 9 years ago.

"Deloitte & Touche in NYC would normally hire a couple hundred accounting grads to start with them in August and they hired 5 people for 2002. As things turned around they were caught short and needed to ramp-up their hiring."

Same thing happened the year after my class at Arthur Andersen in '82/'83 (not sure the same thing happened on the accounting side, but knowing they way the firm worked at that time - before the split of consulting and accounting - I can't imagine it was much different on the accounting side than where I was)

"i don't know about that, 30yrs. everyone at the law firms knows that one of the major issues is collections. regardless of how much work a firm has, they are having troubles getting people to pay their legal bills (ironically the financials are often the worst culprits). As such, it really behooves them to get the bills out as quickly as possible.

attorneys are often not the best business people. my husband is horrible at chasing down clients for money, and yet that is what he is being forced to do. 30yrs, where else is it possible yearly to see almost precisely exactly how much every person is making? the numbers are published, there is remarkably little secrecy, actually."

hey, HE said it, not me: I was using it as an example of what people outside of firms knew about, not collection practices. one of the problms with a LOT of "professional" practices is that they aren't run by businessmen/women, but some professional who gets "promoted" to managing partner (or worse, in the case of smaller operations, let some glorified secretary manage the office). I have a friend who is part of a medical group practice in PA and he spends an inordinate amount of time dealing with the bonehead 9and often illegal) practices of the managing partner (although since they are incorporated, they call him President, but they run the place like a partnership). The "practice manager" is the secretary who has been there the longest and has little concept of business management.

I do think that a lot of firms are going to be in even more trouble than they currently are as they realize too late that their write-offs on AR are much larger than they anticipate.

I have a lot more to say, but have an appointment, so I'll leave an open ended: look what happened to the firm I used to work for Arthur Andersen: I'm not so sure you won't see the same type of implosion in a bunch of large law firms over the next year or two.

30yrs, i don't disagree. my husband spent a miserable year at Myerson & Kuhn just before it imploded. but i think that a good number of firms are aware of their write downs. many firms have added CFOs in the past couple of decades, and many are fairly conservative. some have overleveraged themselves, particularly in expansion, and of course many firms are vulnerable. all it takes is a few rainmakers decamping for higher profits to unravel the quilt.

"one of the major issues is collections. regardless of how much work a firm has, they are having troubles getting people to pay their legal bills (ironically the financials are often the worst culprits)."

ah, i love this. not only financials don't pay their bills on time. now they are asking lawyers to just work for free. sounds more legit or straightforward. and i thought they only had geithner/obama and the economy by the b*lls (note to self: add lawyers to that list).

U.K. Banks Get Lawyers for Free as Job Cuts Increase (Update1)
http://www.bloomberg.com/apps/news?pid=20601109&sid=aDgZ7A1NKEI8&refer=home

“A year or 18 months ago, it was almost impossible” to loan out lawyers because firms were too busy, Williams said. Now, U.K. firms have about 40 to 50 lawyers on loan at any time.

admin, i saw that earlier. the chutzpah takes my breath away.

in the US the law firms are loaning out the attorneys for pro bono work at least.

you mean "pro bono" for the financial industry? wasn't pro bono originally for non-profit type of work?

those are UK firms. in the US law firms are farming out associates to non-profits.

oh, i see. calling working for free for the financials doing "pro bono" sounded weird to me. hey, let's not rule it out though.

In 2-3 years there will be another hiring boom, just like early 1990s, late 1990s and early 00s. Law firms are the worst managed businesses going. Subway franchises are run better.

Law firms are managed badly because they are businesses, but the attorneys refuse to acknowledge the firm is really just a business and not something 'exceptional.' They also lack the self-awareness and humility to acknowledge they lack business/management training and don't know how to do it. They believe that if you are smart enough you can learn everything as you go along without formal training and education. Thus, with zero management training the lawyers attempt to manage and run a business as if they have MBAs. But they don't have MBAs. The result is often convulsive reactions to economic swings, short-sighted and/or poorly thought out employment and staffing decisions, and a unique ability to through phenomenal amounts of money at people and piss those people off at the same time.

Kyle, your description sounds just like academia.

Academia is just more vicious--not more badly managed. I mean honestly, I've seen firms distribute millions in bonus money and actually ERODE morale in the process. How do you pull off a thing like that? Only lawyers could come up with a way. And do it year after year. It is a mesmerizing thing to watch.

"The result is often convulsive reactions to economic swings, short-sighted and/or poorly thought out employment and staffing decisions, and a unique ability to through phenomenal amounts of money at people and piss those people off at the same time.'

Sort of like investment banks? ;)

http://www.abajournal.com/mobile/article/Howrey_bankruptcy_and_others_ended_era_of_great_expectations_for_BigLaw_fir