Entry-Level Hiring at Law Firms Strengthens – Lateral Hiring Also Strong
04-17-2006

The market for entry-level associates at law firms has strengthened somewhat, according to the March 2006 edition of Patterns & Practices: Measures of Law Firm Hiring, Leverage & Billable Hours, an annual publication from NALP. Law firms decreased entry-level hiring by 3.5% from 2003 to 2004, but projected an increase of 10% from 2004 to 2005. Decreases occurred across all firm sizes between 2003 and 2004, but between 2004 and 2005 firms of all sizes expected to increase hiring, although the increase was expected to be more modest, about 4%, at firms of 251-500 lawyers. Hiring of second-year summer associates was up about 3% between 2003 and 2004, but it was expected to increase almost as much as entry-level hiring, 9.6%, from 2004 to 2005.

Using information drawn from the two most recent editions of the NALP Directory of Legal Employers®, Patterns & Practices provides expansive documentation of the hiring of entry-level associates, summer associates, and lateral attorneys at about 1,100 law offices nationwide.

Most regions of the country expected growth in entry-level hiring of 9 – 12 %. The exception was the Midwest, where a more moderate growth of about 4% was expected. Larger differences in hiring are evident at the city level.

  • Among the cities which collectively expected to hire at least 100 entry-level associates in 2005, changes from 2004 ranged from small decreases in Philadelphia and Northern New Jersey to an increase of almost 19% in the San Jose area. Hiring levels were close to steady in Los Angeles. Most of these larger cities mirrored the national pattern. Among the cities seeing the greatest pickup in hiring were Boston, where the 5.3% decrease between 2003 and 2004 was followed by an expected increase of 16.5% from 2004 to 2005; Houston (-13.2% to 14.0%); New York City (-6.3% to 13.1%); and Washington, DC (-3.7% to 15.9%). Not all cities followed the national pattern, however. San Jose reported strong growth in both periods, while Atlanta and Chicago reported some growth in both periods. The Northern New Jersey/Newark area, Philadelphia, and Phoenix are notable for expecting a decrease in 2005 after some growth in the prior period.

  • Lateral hiring increased by over 14% between 2003 and 2004, resulting in firms hiring in aggregate more lateral than entry-level attorneys in 2004, after hiring about equal numbers in 2003.

  • Lateral hiring was strongest in firms of 101-250 lawyers (up 21.9%) and in firms of more than 500 lawyers (up 18.2%). In contrast, lateral hiring increased by just 3.4% in firms of 251-500 lawyers. Despite the substantial increase in the largest firms, these firm in aggregate hired just about equal numbers of laterals and entry-level associates. In contrast, in firms of fewer than 100 lawyers, the ratio was 1.27 and in firms of 101-250 it was 1.57. Among cities reporting at least 100 lateral hires in 2004, changes ranged from a decrease of 19% in Chicago to more than doubling in Boston, and close to doubling in Kansas City. Other cities posting gains of more than 25% include Atlanta, Detroit, New York, Phoenix, Pittsburgh, and Washington, DC. Lateral hiring was steady, or nearly so, in Dallas, Philadelphia, and San Francisco.

Patterns & Practices documents other findings, including:

  • Nationwide, about 89% of second-year summer associates considered for an associate offer received an offer. This ranged from about 77% in firms of 100 or fewer lawyers to about 95% in firms of more than 500 lawyers. At the city level, in Baltimore, Columbus, and Kansas City, somewhat more than 70% of 2004 summer associates considered for an offer received an offer; in Boston, New York City, and Kansas City nearly all summer associates did so.

  • In 2005, firms on average employed slightly more associates than partners, for a ratio of 1.02. Large firms are typically more highly leveraged, with a ratio of 1.42. Smaller firms, in contrast, employ fewer associates than partners. On a city-by-city basis, these figures ranged from 0.52 in Detroit to not quite 2.0 in New York City.

  • Although billable hour requirements ranged from 1,400 to 2,400 hours per year in 2004, most offices reporting a minimum require either 1,800 or 1,900 hours (24% and 21% of offices, respectively). Contrary to its reputation, New York City firms do not necessarily set the highest minimums. Although about 18% of New York offices required 2,000 billable hours, more firms in a number of cities, including Atlanta, Chicago, Cleveland, Dallas and Miami, did so. In Philadelphia, Orange County, CA, San Diego, and 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, 60% of offices in Hartford and Nashville set their billable hours requirement at 1,800 hours per year; as did about 40% in a number of other cities, including Wilmington, Portland, OR, Baltimore, Denver, and Seattle.

  • With respect to actual billable hours worked, about 26% of offices reported an average of fewer than 1,800 hours per year, and 18% reported an average exceeding 1,950 hours per year. About 55% of firms of 251 or more lawyers reported that attorneys averaged more than 1,850 billable hours; for firms of 100 or fewer lawyers, the figure was 43%.

In addition to documenting nationwide and regional hiring trends, the 137-page report presents detailed information on entry-level and lateral hiring, leverage ratios, and billable hours for 37 cities and 7 states, including:

Cities – Atlanta, Austin, Baltimore, Boston, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver, Detroit, Hartford, Houston, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis/St. Paul, Nashville, New York City, Northern New Jersey/Newark area, Northern Virginia, Orange County California, Philadelphia, Phoenix, Pittsburgh, Portland, Oregon, Raleigh/Durham, San Diego, San Francisco, San Jose area, Seattle, St. Louis, Tampa/St. Petersburg, Washington, DC, and Wilmington.

States – California (outside of Los Angeles, Orange County, San Diego, San Francisco, and the San Jose area), Florida (outside of Miami and Tampa/St. Petersburg), Indiana, Michigan (outside of Detroit), New York (outside of New York City), Texas (outside of Austin, Dallas & Houston), and Virginia (outside of Northern Virginia.)

Hiring Trends, 2003-2005

  # Hired in 2003 # Hired in 2004 # Expected to Be Hired in 2005 % Change 2003-04 % Change 2004-05 # of Offices Reporting
Entry-level associates 6,646 6,415 7,055 -3.5 10.0 1,038
Second-year summer associates 8,470 8,717 9,553 2.9 9.6 1,175

Lateral Hiring, 2003 and 2004

# Hired in 2003

# Hired in 2004

% Change 2003-04

# of Laterals Hired for Each Entry-Level Associate Hired 2003

# of Laterals Hired for Each Entry-Level Associate Hired 2004

# of Offices Reporting

7,792

8,907

14.3

1.04

1.21

1,255

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