Entry-Level Hiring at Law Firms Stabilizes — Lateral Hiring Drops but Continues to Match Entry-Level Hiring (3/12/03)

The market for entry-level associates at law firms has stabilized, according to the March 2003 edition of Patterns & Practices: Measures of Law Firm Hiring, Leverage & Billable Hours (a Review of Patterns & Practices in 2002), an annual publication from NALP. Law firms increased entry-level hiring by 3.7% from 2000-2001 and projected a decrease of 2.2% from 2001 to 2002. Just the opposite occurred in small firms, however, as hiring declined 3.4% between 2000 and 2001, but was expected to increase by 9% from 2001 to 2002. Also, employers had projected that their entry-level hiring would increase by 10.7% between 2000 and 2001 (see the prior edition of Patterns & Practices) but in fact the increase turned out to be 3.7%.

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 over 1,000 law offices representing 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 strongest in the Southeast region, with a 2.3% increase expected in entry-level hiring. In the West and Mid-Atlantic regions in contrast, entry-level hiring was expected to decrease by 7.6% and 4.2%, respectively. In the Northeast and Midwest very little change was expected.

  • Among the cities which collectively expected to hire at least 100 entry-level associates in 2002, changes from 2001 ranged from -23.7% in San Jose to 15% in Dallas. In some cities, the change from 2001 to 2002 is very different from the change from 2000 to 2001. For example, firms in Boston expected to hire 13% fewer entry-level associates in 2002 compared with 2001; from 2000 to 2001 hiring increased 6.8%. Firms in Minneapolis, on the other hand, expected an 11% increase from 2001 to 2002, after a decrease of 2.3% in the prior period.
  • Lateral hiring was off dramatically (-27.8%) between 2000 and 2001, resulting in firms hiring in aggregate slightly fewer laterals than entry-level attorneys in 2001, compared with hiring 38% more laterals than entry-level attorneys in 2000.
  • Lateral hiring decreased across all firm sizes, with a 34% decrease in the largest firms, compared with a decrease of about half that, 18.7% at firms of fewer than 100 attorneys. On an aggregate basis, smaller firms hire more laterals compared to entry-level attorneys than do larger firms, with a ratio of 1.27:1 in firms of less than 100, and a ratio of 0.76:1 in the largest firms. Among larger cities (again, those whose firms collectively hired more than 100 laterals in 2001), hiring was off in all except Detroit, Dallas and Houston. In the San Jose area, lateral hiring was off by almost 75%, and it was off by nearly half in many other cities, such as Boston, San Francisco, and Seattle.

Patterns & Practices documents other findings, including:

  • Nationwide, 86.5% of second-year summer associates considered for an associate offer received an offer. This ranged from about 81% in firms of 100 or fewer attorneys to about 90% in firms of more than 500 attorneys. At the city level, in Austin 61% of 2001 summer associates considered for an offer received an offer; in New York City and Pittsburgh, nearly all (about 96%) of summer associates did so.
  • In 2002, firms on average employed slightly more associates than partners, for a ratio of 1.16:1. Large firms are typically more highly leveraged, with a ratio of 1.62:1. Smaller firms, in contrast, employ fewer associates than partners. On a city-by-city basis, these figures ranged from 0.54:1 in Detroit to 2.43:1 in the San Jose area.
  • Although billable hour requirements ranged from 1,445 to 2,160 hours per year in 2001, most offices reporting a minimum require either 1,900 or 1,800 hours (22.6% and 21.6% of offices, respectively). Contrary to its reputation, New York City firms do not necessarily set the highest minimums. Although 28% of New York offices required 2,000 billable hours, more firms in Austin, Chicago, and Miami did so, 33%, 39%, and 40%, respectively. 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, half or more of the offices in Denver, 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 26% of offices reported an average of fewer than 1,800 hours per year, and about 19% reported an average exceeding 1,950 hours per year. About 58% of firms of 501+ attorneys reported that attorneys averaged more than 1,850 billable hours; for firms of 250 or fewer attorneys, the figure was 45%.

In addition to documenting nationwide and regional hiring trends, the 120-page report presents detailed information on entry-level and lateral hiring, offers, leverage ratios, and billable hours for 32 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, Northern Virginia, Orange County California, Philadelphia, Phoenix, Pittsburgh, Portland, Oregon, Raleigh/Durham, San Diego, San Francisco, San Jose area, Seattle, 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 (outside of Northern Virginia.)

Hiring Trends, 2000-2002

  # Hired in 2000 # Hired in 2001 # Expected to be hired in 2002 % Change 2000-2001 % Change 2001-2002 # Offices reporting
Entry-level associates 8,229 8,536 8,352 3.7 -2.2 1,046
Second-year summer associates 10,502 11,172 9,677 6.4 -13.4 1,091

Lateral Hiring, 2000 and 2001

# Hired in 2000 # Hired in 2001 % Change 2000-2001 # of Laterals Hired for Each Entry-Level Associate Hired 2000 # of Laterals Hired for Each Entry-Level Associate Hired 2001 # Offices Reporting
12,217 8,817 -27.8 1.38 0.96 1,172

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