Early on during the recession, back before anyone knew just how bad the job market would become, a new shtick showed up in the comments on popular legal news and gossip blog AboveTheLaw.com:
This ship be sinkin’
That line, or some close variation, appeared seemingly without fail any time there was news of layoffs, salary cuts, deferred employment, or pay freezes. But, the news about the legal market was so bad for long that it became news when a week went by without layoffs. The “ship be sinkin’” joke burned itself out. It was no longer stories of ships sinking, but the oceans receding, and a it’s not news that a falling tide lowers all boats.
Now, the phrase “recovery summer” is starting to make its way on to talk radio. It seems that the worst is over. Or, to be more accurate, the worst of the recession is over. Soon, law firms will be facing the worst of the recovery.
One would think that the recovery would bring much needed relief. More deals, more business ventures, more work, and more billable hours. It looks great, until you consider why layoffs were so drastic. Every firm has slow periods and busy periods, and they have traditionally weathered them without reducing their headcount. What hurt the firms so much was that their normal hiring model broke down. In a normal year, a few associates will jump ship. They go into finance and banking, or the more life-style friendly small firm or government jobs that become appealing once your student loans have been paid down. In a booming economy, deserters abound.
“Natural attrition.” Firms hire associates with the expectation that many will leave of their own choice before ever being considered for partner. Junior associates often out number senior associates three to one. But, in this recession there are few jobs to move to. More associates held on to their law firm jobs instead of quitting the industry. Even if demand for legal work had stayed constant, the supply of lawyers would still have been too high for firms to sustain. It was the combination of high supply and low demand that caused so much carnage in at law firms. But, for those who are left, the worst may not be over.
When someone is let go from their job, we like to classify the event as either economic based or merit based. If you’re let go because the company can’t afford you, it’s economic. If you’re let go because you’re bad at your job, it’s merit. Law firm layoffs are mixed. If the economy were better, almost everyone who was laid off would have been allowed to stay at their job. But, the economy isn’t better, someone had to go, and the decisions about were based largely on merit. They’re not necessarily bad lawyers, but they were the weak link at their firms. Or, to put it another way, you don’t fire the super stars.
The people who avoid the layoff axe are the top performers, they have the most experience, and they’re the best at building relationships. And, as other markets pick up, they are the ones most able to leave their law firm jobs. When the economy recovers, there will be a two or three year backlog of associates who wanted to leave but couldn’t find anywhere else to go. They will not have lost their desire to leave. Many law firms have revealed themselves to be little more than poorly managed, soulless billable hour factories, instead of learned professional organization. The desire to leave the profession will be greater than ever.
If you announce record profits and then a few months later inform several of your associates that there isn’t enough work to justify keeping them, and then give them new assignments to work on in their remaining time and berate them for not billing twelve hours a day, you shouldn’t expect your remaining employees to have a terribly high opinion of you. And, you shouldn’t expect them to be any more loyal to the firm than the economy demands they be.
When the recession started, the catch phrase was this ship be sinkin’. When the recovery is finally in full swing the appropriate description will be this ship be burnin’.
Law firms will see the little talent they have retained fleeing the industry. And, they won’t be able to replace them. There will still be an army of unemployed attorneys, or attorneys who settled on something other than their first choice of industry. But, they will won’t be able to replace the big law attorneys that leave. Because of the recession, they haven’t been gaining relevant experience. Many have spent months unemployed, and those who found work aren’t likely to be working in the right practice areas. Writing a will or arguing DUI defense does not give you the appropriate knowledge base or skill set needed to work on a multi-billion dollar merger or form an international private equity fund. The missing legal jobs mean a general lack of experience among the people who should be filling the junior and mid-level associate ranks.
Law firms, and their clients, will be forced to make do with lower quality legal work, and the few people who made it through the recession and built up the right type of experience will find themselves pining for the good ol’ days when they only had to work 60 hour weeks and the ship was merely sinking.
