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.
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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.
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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.
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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:
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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.
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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.
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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.
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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
|
|