Wednesday, July 24, 2013

25-Year Law Practice Employment Trends: Solo, Small Firm, BigLaw, or Someplace in Between?







I graduated from law school in 1982.  At that time,

  • 7.6 percent of new law graduates became solo practitioners; 
  • 40.3 percent entered small law practices (2-10 lawyers); 
  • about 11 percent entered firms 51 to 100 lawyers in size;  
  • only 15. 6 percent of new law grads entered large firms of 101 plus lawyers, and more women did that than men; and 
  • NALP, the Association of Legal Career Professionals, did not keep a separate category for firms with more than 500 lawyers. See trend report here
According to an earlier trend report, in 1982, about 10 percent of new law grads entered business and industry.

About 23,000 students graduated from law school in 1982.

Fast forward to 2007, the year of record employment among lawyers, NALP reports that:
  • 3 percent of new law grads became solo practitioners (a 4 percent drop);
  • about 33 percent entered small law practices (2-10 lawyers) (a 13 percent drop); 
  • about 6 percent entered firms 51 to 100 lawyers in size (a 5 percent drop); and
  • a whopping 42.3 percent of new law grads entered large firms of 101 plus lawyers (a 26.7 percent increase).
According to yet another report available from NALP, in 2007, about 14 percent of new law grads entered business and industry (a 4 percent increase).

About 43,500 students graduated from law school in 2007, an increase of 20,500 grads compared to 1982.

The data varies on each of these reports, but I have tried to use the most recent iteration of the data, which I assume reflects more complete information for each year.

What does this shift from smaller firm practice to larger-firm practice say about new law grads over this 25-year period?  Over time, did they shun more risk-taking jobs in smaller or solo practices.  Did they seek the perceived security and guaranteed higher salary of the BigLaw?   Were more jobs simply available in the larger firms?

What does it say about law practice, the legal client market, and access to justice for people who would more likely retain a small firm practitioner?

Now let's take it forward through the years of the last economic recession.  NALP reported that BigLaw (500 plus) hired 3,600 new associates in 2012, down from 5,100 in 2009, but up from hirings in 2011. Employment opportunities at BigLaw rose 27 percent over the last two years.

But what about employment in small and solo practices.  This data relies on NALP reports for each year available here.  You can see that the data for 2007 varies a bit from the later-reported data shown above.

In pre-recession 2007:
  • 576 (2.8%) grads opened solo practices;
  • 6,461 (31.3%) found jobs in firms of 2-10 lawyers;
  • 4,745 (23%) joined BigLaw (501+).
In 2008, 
  • 685 (3.3%) grads opened solo practices;
  • 6,479 (31.6%) found jobs in firms of 2-10 lawyers;
  • 5,193 (25.3%) joined BigLaw (501+).
In 2009:
  • 1,058 (5.3%) grads opened solo practices;
  • 6.749 (33.5%) found jobs in firms of 2-10 lawyers;
  • 5,156 (25.6%) joined BigLaw (501+).
In 2010:
  • 1,039 (5.7%) grads opened solo practices;
  • 7,160 (39.1%) found jobs in firms of 2-10 lawyers.;
  • 3,750 (20%) joined BigLaw (501+). 
In 2011:
  • 1,059 (6%) grads opened solo practices;
  • 7,570 (42.9%) found jobs in firms of 2-10 lawyers;
  • 2,856 (16.2%) joined BigLaw (501+). 
In 2012 (based on preliminary data):
  • 8,200 (about 42.9%) found jobs in firms of 2-10 lawyers.
  • 3,600 (19.1%) joined BigLaw (501+).  
The numbers indicate that the recession has forced (or encouraged) more graduates to find jobs in smaller firms or as solo practitioners.  

More recent grads may look at the news coverage of BigLaw layoffs and decide that the opportunities for new associates, over a lifetime, in those firms have become increasingly more limited and full of peril. 

In the interest of full disclosure, I worked at the largest law firm in Oklahoma straight out of law school.  I recall it had over 100 attorneys, but maybe it had about 80 attorneys.  I then moved to what was then the third-largest firm in the world for another three years.   As my career progressed, I moved to a 50 lawyer firm and then a 20 lawyer firm.  Each firm offered stimulating legal work and a very different work environment, culture, management structure, compensation system, hourly billing expectations, client base, and support staffing model.  I enjoyed all but one of those experiences.

Dec. 16, 2013 Update:  A new study shows graphically the shift in the staffing model in BigLaw over the last 25 years.  It shows a dramatic loss of associate positions.  

BigLaw "New Normal" Stories

Mayer, Brown (July 2013): http://www.newrepublic.com/article/113941/big-law-firms-trouble-when-money-dries#

Weil, Gotshall & Manges  (June 2013):  http://dealbook.nytimes.com/2013/06/24/big-law-firm-to-cut-lawyers-and-some-partner-pay/?_r=0  (60 associates or 7 percent laid-off).

1,000 lawyers and staff laid off on one day in February 2009: http://www.nytimes.com/2013/06/25/opinion/big-laws-troubling-trajectory.html  (with 2,000 losing their jobs over that month).

Firms shuttering satellite offices:  http://blogs.findlaw.com/greedy_associates/2013/07/mixed-news-in-biglaw-overall-hiring-up-but-layoffs-happening.html

AmLaw 200 layoff list as of 2009: http://www.americanlawyer.com/PubArticleTAL.jsp?id=1202425647706&THE_LAYOFF_LIST&slreturn=20130624105612#wilm

1 comment:

  1. It’s very interesting to note how law practice employment trends have changed over the years due to different economic factors. How do you see this trend developing in the future?

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