Tamara Loomis, Has the Recession Forever Changed Large Law Firms?, The American Lawyer, Oct. 6, 2009, available at http://www.law.com/jsp/article.jsp?id=1202434302753.
Complete article available on Law.com
Believe it: The worst economic downturn since the Great Depression has hit law firms hard. Historically, the legal sector has weathered recessions better than many other sectors have, buoyed by the attendant surges in litigation and bankruptcy work. That’s what’s happened, for instance, amid the wave of corporate scandals — the so-called Enron era — that followed the bursting of the high-tech bubble. Not this time. Big firms are hurting, their profit margins squeezed by both sagging demand and record-high expenses. The result: the now familiar litany of mass layoffs, salary freezes and cuts, deferred start dates for first-year associates, and canceled or downsized summer programs.
Given all that, the $160,000 question now is, what happens when the economy recovers? Will things go back to how they were?
The answer, according to law firm and law school leaders, is no. They say that the recession and events leading up to it have permanently changed the way business is done in the legal industry. The recent boom — with its eye-popping billing rates of $1,000 per hour, first-year associate salaries of $160,000, and bloated ranks of junior associates — is over. In its place, for now at least, is a new era in which law firms are expected to focus on being more cost-efficient. For the law student looking to join an Am Law 100 firm, that means smaller classes, more competition and lower pay.