NALP Bulletin, April 2004
Using information drawn from the two most recent editions of the NALP Directory of Legal Employers, a NALP annual research report entitled Patterns & Practices: Measures of Law Firm Hiring, Leverage & Billable Hours provides comprehensive documentation of the hiring of entry-level associates, summer associates, and lateral attorneys at more than 1,100 law offices representing about 600 major law firms. A new edition of Patterns & Practices (a review of practices in 2003) is now available. Its extensive series of tables documents the volume of lateral hiring compared with entry-level, the percentage of summer associates receiving offers, the extent to which law firms leverage their partners with associates, and the number of billable hours worked by associates. Tables are presented by firm size, by office size, by region, and by city and/or state.
Following are highlights of the findings from Patterns & Practices for 2003.
Entry-level hiring decreased 6.8% from 2001 to 2002, and was expected to decrease again, by 8%, from 2002 to 2003. Decreases occurred across all firm sizes but to a much lesser extent in firms of 100 or fewer attorneys. Hiring of second-year summer associates was off about 14% between 2001 and 2002, and was expected to decrease again, by almost 9%, from 2002 to 2003. Again, decreases were of lesser magnitude in firms of 100 or fewer attorneys.
Among the cities that collectively expected to hire at least 100 entry-level associates in 2003, changes from 2002 ranged from -16% in San Jose to 10% in Dallas. Of these cities, only Dallas and Houston posted an increase. Hiring levels were steady in San Francisco. Many other cities posted decreases in both periods. In a few cities, the change from 2002 to 2003 is very different from the change from 2001 to 2002. For example, firms in San Francisco expected to hire the same number of entry-level associates in 2003 compared with 2002; from 2001 to 2002, hiring decreased 22%.
Lateral hiring was off dramatically (-25%) between 2001 and 2002, resulting in firms hiring in aggregate fewer laterals than entry-level attorneys in 2002, compared with hiring just about as many laterals as entry-level attorneys in 2001.
Lateral hiring decreased across all firm sizes, with a 32% decrease in the largest firms, compared with decreases of 18-21% in firms of fewer than 500 attorneys. On an aggregate basis, smaller firms hire more laterals compared to entry-level attorneys than do larger firms, with a ratio of just over 1 in firms of fewer than 250 attorneys, and a ratio of 0.56 in the largest firms. Among larger cities (again, those where firms collectively hired more than 100 laterals in 2002), lateral hiring was down in all of them. In Dallas, lateral hiring was off by 50%, and it was down by 30% or more in many other cities such as Atlanta, Houston, Minneapolis, San Francisco, and Washington, D.C.
Nationwide, 85.8% of second-year summer associates considered for an associate offer received an offer. This ranged from about 79% in firms of 100 or fewer attorneys to about 91% in firms of more than 500 attorneys. At the city level, in Austin 63% of 2002 summer associates considered for an offer received an offer; in Columbus, New York City, Newark, and Tampa, well over 90% of summer associates did so.
In 2003, firms on average employed slightly more associates than partners, for a ratio of 1.12. Large firms are typically more highly leveraged, with a ratio of 1.58. Smaller firms, in contrast, employ fewer associates than partners. On a city-by-city basis, these figures ranged from 0.56 in Detroit to somewhat more than 2.0 in New York City and in the San Jose area.
Although billable hour requirements ranged from 1,336 to 2,160 hours per year in 2002, most offices reporting a minimum require either 1,900 or 1,800 hours (24% and 23% of offices, respectively). Contrary to its reputation, New York City firms do not necessarily set the highest minimums. Although 22% of New York offices required 2,000 billable hours, more firms in Chicago, Pittsburgh, and Miami did so — 35%, 29%, and 62%, respectively — and just about as many in Houston and Los Angeles did so. In the San Jose area, most offices required either 1,900 or 1,950 hours; in Miami, most firms required either 1,900 or 2,000 hours. In contrast, more than half of the offices in Denver and Hartford set their billable hours requirement at 1,800 hours per year; in Portland, OR, and Seattle about 40% did so.
With respect to actual billable hours worked, about 27% of offices reported an average of fewer than 1,800 hours per year, and about 18% reported an average exceeding 1,950 hours per year. About 51% of firms of 251+ attorneys reported that attorneys averaged more than 1,850 billable hours; for firms of 100 or fewer attorneys, the figure was 42%.
Summary of Entry-Level Hiring Trends — 2001-2003
|# Hired in 2001||# Hired in 2002||# Expected to Be Hired in 2003||% Change 2001-2002||% Change 2002-2003||# of Offices Reporting|
|By Firm Size:|
|100 or fewer attorneys||705||687||683||-2.6||-0.6||229|
|501 or more attorneys||4,214||3,984||3,577||-5.5||-10.2||360|
|By Office Size:|
|25 or fewer attorneys||213||225||251||5.6||11.6||214|
|101 or more attorneys||5,943||5,429||4,864||-8.6||-10.4||321|
|By NALP Region:|
|Kansas City area||84||66||72||-21.4||9.1||8|
|New York City||2,067||2,140||1,928||3.5||-9.9||108|
|Orange County, CA||88||88||88||0.0||0.0||21|
|San Jose area||251||159||134||-36.7||-15.7||23|
Note: State figures exclude any cities reported separately.