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A swelling labor pool

Law school graduates face tough job prospects as firms streamline operations

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Print this page by Marilyn J. Shaw

Shannon Sherrill will be one of the lucky law school graduates in May. The Washington & Lee University student already has lined up a one-term appointment as a law clerk to Virginia trial judges in Staunton. But luck today may just delay hardship down the road.

“In 2011, it’s probable I’ll be back in the job hunt,” Sherrill says.  With a growing backlog of job-seeking law graduates, he expects competition to remain intense for two or three years. “There’s a glut of students, and law school graduates keep coming, while demand is quite low.”

In fact, the list of applicants does not end with recent law school graduates. Law Shucks, a legal industry blog, estimates that 4,600 attorneys were laid off last year at major U.S. law firms as they pared their staffs in response to the recession.

To streamline operations, they are hiring fewer new graduates and taking a hard look at longtime practices, including the traditional career path and pay-grade advancement to partner. In response to changing demand in the profession, many law schools are tweaking their curricula to make their graduates more marketable.

The job market for law school graduates has been tightening since 2007. The National Association for Law Placement says 89.9 percent of 2008 graduates found employment nine months after finishing school, down from a 20-year high of 91.9 percent in 2007. The decline was the first recorded by the association in five years. Figures for 2009 graduates will be released this month. Another decline is expected, since offers to 2008 graduates generally were made before the economy tanked.

“In general, the legal market is horrible. It’s the worst I’ve seen since I started teaching here 15 years ago,” says Jeffrey Brauch, dean of Regent University School of Law in Virginia Beach, which graduates about 125 students each year.

Students are finding that, because of declining donations and budget cuts, jobs are scarce among nonprofit organizations and government agencies as well as private law firms.  Government entities, in fact, are hiring mostly experienced attorneys for new positions, says James Leipold, executive director of the National Association for Law Placement, based in Washington, D.C.

One sign of the rising competition for jobs is the soaring number of applicants to be law clerks for federal judges. These clerkships are considered plum assignments reserved for the brightest students in each class. This year, clerkship applications rose 66 percent to more than 400,000 for 1,244 positions posted on the Online System for Clerkship Application and Review.

Traditionally, better than half of graduates find work in private practice. Law firms court promising students at the beginning of their second year of law school and offer them internships for the next summer. After seeing their work, firms then hire some students during their third year or after graduation. These graduates become full associates and begin the multiyear climb toward partner.

But the economic downturn has prompted discussions among some firms about changing this model for advancement and ending use of billable hours to charge their clients fees.

Because they typically use a partnership structure, law firms don’t operate as efficiently as corporations, says Mark Sirkin, a consultant for Hildebrandt, a New Jersey-based management consulting firm that advises law firms and corporate law departments.
“When business was good, when firms could raise their rates 8 to 10 percent year over year, when clients didn’t ask petty questions like, ‘What exactly did that second-year associate do for $350 per hour?’ these inefficiencies were more easily ignored,” he says. “But just as, in Warren Buffett’s words, ‘You only find out who is swimming naked when the tide goes out,’ so do these inefficiencies cry out to be remedied as the financial pressures mount.”

Guy Tower, executive director of the Virginia Bar Association, says the fee figures cited by Sirkin cites are more typical of New York City than Virginia but concedes that partnerships are inherently inefficient.

Some firms are taking steps to be more responsive to clients. In Virginia, for example, Williams Mullen and Reed Smith now offer a variety of fee arrangements as alternatives to the billable hour.

“There is going to be more pressure on attorneys to better understand the business needs of their clients, to become even more client-service focused and to develop the essential skills for providing excellent client service earlier in their careers. says Judith Itkin, partner in charge of lawyer resources at Richmond-based Hunton & Williams.

Her law firm, one of the nation’s largest, is adapting its hiring strategy as part of an effort to ensure it meets or exceeds clients’ expectations. The firm, which has about 950 lawyers globally including nearly 250 in Richmond, has increased its recruiting of experienced lawyers, judicial clerks and joint-degree holders with skills its clients may need, says Bill Walsh, one of two hiring partners.

The firm also is open to temporary or permanent alternative arrangements with lawyers, including those who may not be interested in making partner. Staff attorneys, who work up to 2,000 billable hours a year, and project lawyers, who work fewer than 1,000 billable hours, provide flexibility to the firm, its clients and employees. 

In addition, Hunton & Williams is customizing its summer internship program to meet students’ career goals and interests and to make the experience more meaningful to the participants. The firm plans to offer a “day in the life” experience, where the student shadows a partner and meets with clients. Seven to 10 students nationally will be invited to participate in the program this year and at least 10 new associates will start in April 2011. This April, after deferments, 32 full associates will join the firm.

Other firms plan to reduce the number of second-year students that they invite to their intern programs this summer. Charles “Chuck” Wilkins, spokesman for the Washington-based Venable LLP, says its summer program will have 17 interns. That compares with 30 interns last year, 17 of whom were offered jobs.   

In 2008, the law firm had 38 summer interns and offered jobs to 30.  Venable employs nearly 540 attorneys in offices nationwide, including one at Tysons Corner.

The story is similar at Norfolk-based Kaufman & Canoles. Ran Randolph, vice president of recruiting, says the 125-lawyer firm plans to invite five to 10 second-year students to work as summer law clerks. He anticipates that five of them will be offered jobs, which compares with 10 or 12 people several years ago.

While firms are hiring fewer law graduates, the swelling legal labor pool means the talent to choose from is strong. Randolph says the situation offers a chance for firms to restock their larder with “super high-quality students.”

Industry observers say smaller firms especially could benefit from this buyer’s market, snagging top graduates who are broadening their job search beyond the giants of private practice.  At the University of Richmond School of Law this past fall, more small- to mid-size firms — those with 60 or fewer attorneys — expressed interest in interviewing some of its 500 students, says M. Denise Carl, associate dean for career services.

In fact, Leipold of the National Association for Law Placement, believes smaller firms in mid-size cities are positioned to grow in this changing economic climate because of their lower costs and fees, compared with large, big-city firms.

Like law firms, law schools are adjusting to new realities. Because many employers want graduates with hands-on experience, schools are putting more emphasis on clinical programs that put students to work in the courts and with clients.

“At Virginia, we feel very good about the large number of clinical programs. We encourage our students to build their practical skill set … and make themselves more marketable that way,” says Kevin Donovan, senior assistant dean for career services at the University of Virginia School of Law, which graduates about 400 students each year.

At Washington & Lee, some third-year students tried out a year of courses that simulate legal practice environments and require participation in legal clinics and internships. The class of 2012 will be the first required to take the third-year immersion program, which was developed before the economic downturn.

Taking a somewhat different approach, Regent Law introduced a course this semester on how to start a legal practice. Nationally, one-third of 2008 law graduates found jobs in firms of two to 10 lawyers, and 3.5 percent started a firm, the National Association for Law Placement reports.

For his part, Sherrill, the W&L student, hopes eventually to work in a private law firm. “I haven’t decided yet what I’d like that to look like,” he says.

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