Entry-Level Hiring Continues to Increase in Law Firms — Lateral Hiring Surges, Continues to Outpace Entry-Level (4/5/02)

The market for entry-level associates at law firms continues to grow, according to the 2001 edition of Patterns & Practices: Measures of Law Firm Hiring, Leverage & Billable Hours, an annual publication from NALP. Law firms increased entry-level hiring by 5% from 1999-2000 and projected an increase of about twice that, almost 11%, from 2000 to 2001. This acceleration in projected hiring occurred across all firm sizes but was greatest at firms of 100 or fewer attorneys. Interestingly, employers had projected that their entry-level hiring would increase by 11% between 1999 and 2000, (see the prior edition of Patterns & Practices) but in fact the increase turned out to be 5%.

Using information drawn from the two most recent editions of NALP's National Directory of Legal Employers, Patterns & Practices provides expansive documentation of the hiring of entry-level associates, summer associates, and lateral attorneys at about 1,000 law offices representing well over 600 major law firms nationwide. NALP's unique access to such broad coverage over time makes Patterns & Practices the premier source for valuable perspectives on hiring at the national, state, regional, and city level.

Distinct regional differences in hiring are evident. The market was particularly strong in the Southeast region, with a 15% increase expected in entry-level hiring. In the Northeast, the Mid-Atlantic region, and the Midwest, expected entry-level increases were about 9%.

Among the cities which collectively expected to hire at least 100 entry-level associates in 2001, changes from 2000 ranged from -4.4% in Orange County, CA to 30.2% in San Francisco. In some cities, the change from 2000 to 2001 is very different from the change from 1999 to 2000. For example, firms in both Dallas and Houston expected to increase entry-level hiring by about one-quarter from 2000 to 2001, compared with decreases of 11% and 18%, respectively, in the prior period. San Jose, Charlotte, and Orange County, CA, also showed contrasts from increases to relatively flat growth.

Lateral hiring increased dramatically (30.5%) between 1999 and 2000, resulting in firms hiring in aggregate 36% more laterals than entry-level attorneys in 2000, compared with a nearly one-to-one ratio in 1999. Lateral hiring increased the most in firms of more than 500 attorneys, with an increase of 40.7%, compared with a rate less than half that, 18.5%, at firms of less than 100 attorneys.

Although some regional contrasts in lateral hiring are evident, differences are most dramatic at the city level. Among larger cities (again, those whose firms collectively hired more than 100 laterals in 2000) lateral growth was particularly strong in Atlanta (52%), Boston (47%), Houston (46%), and Orange County, CA (65%). In contrast, a decrease in lateral hiring occurred in Seattle.

Patterns & Practices documents other findings, including:

  • Nationwide, 90.4% of second-year summer associates considered for an associate offer received an offer. This ranged from approximately 81% in firms of 100 or fewer attorneys to about 93% in large firms. At the city level, in Houston 81.6% of 2000 summer associates considered for an offer received an offer; in New York City, nearly all (98.6%) summer associates did so.

  • In 2001, firms on average employed slightly more associates than partners, for a ratio of 1.15. Large firms are typically more highly leveraged, with a ratio of 1.60. Smaller firms, in contrast, employ fewer associates than partners. On a city-by-city basis, these figures ranged from 0.54 in Detroit to 2.67 in the San Jose area.

  • Although billable hour requirements ranged from 1,500 to 2,160 hour per year in 2000, most offices reporting a minimum require either 1,800 or 1,900 hours (21.5% and 21.3% of offices, respectively.) Contrary to its reputation, New York City firms do not necessarily set the highest minimums. In the San Jose area and Los Angeles, billable hours requirements of 1,900 or more hours per year are the norm, with 86% and 80%, respectively, of the offices which reported a minimum reporting at this level. This was also true of nearly three-quarters of offices in San Diego. For New York City, as well as Chicago, Houston, Orange County, CA, and San Francisco, the figure was 60%. In contrast, most or all of the offices in Hartford, Portland, OR, and Seattle set their billable requirements at less than 1,900 hours per year.

  • With respect to actual billable hours worked, about 18% of offices reported an average of fewer than 1,800 hours per year, and about one-quarter reported an average exceeding 1,950 hours per year. Comparison with figures for the prior year, 22% and 18%, respectively. Thus more firms reported actual billable hours worked exceeding 1,950 and fewer firms reported actual billable hours less than 1,800.

In addition to documenting nationwide and regional hiring trends, the 116-page report presents detailed information on entry-level and lateral hiring, offers, leverage ratios, and billable hours for 30 cities and 7 states, including:

Cities - Atlanta, Austin, Boston, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver, Detroit, Hartford, Houston, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis/St. Paul, New York City, Orange County California, Philadelphia, Phoenix, Pittsburgh, Portland, Oregon, San Diego, San Francisco, San Jose area, Seattle area, Tampa/St. Petersburg, and Washington, DC.

States - California (outside Los Angeles, Orange County, San Diego, San Francisco, and the San Jose area), Florida (outside Miami and Tampa/St. Petersburg), Missouri (outside of Kansas City), New Jersey, New York (outside New York City), and Virginia.

Hiring Trends, 1999-2001

  # Hired in 1999 # Hired in 2000 # Expected to be hired in 2001 % Change 1999-2000 % Change 2000-2001 # Offices reporting
Entry-level associates 7,751 8,159 9,029 5.3 10.7 1,015
Second-year summer associates 9,832 10,518 11,257 7.0 7.0 1,061

Lateral Hiring, 1999 and 2000

# Hired in 1999 # Hired in 2000 % Change 1999-2000 # of Laterals Hired for Each Entry-Level Associate Hired 1998 # of Laterals Hired for Each Entry-Level Associate Hired 1999 # Offices Reporting
8,983 11,726 30.5 1.09 1.36 1,114

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