RECESSION PANIC MEGAPOST: Bad economy threads go here! Forum

[stab master arson]

The stock photo of the podiatrists is funny.

[imchuckbass58]

Hate to revive this thread, but check this:

http://blogs.wsj.com/law/2009/05/15/wil ... 0-percent/

[Cleareyes]

Hate to revive this thread, but check this:

http://blogs.wsj.com/law/2009/05/15/wil ... 0-percent/

Who's down with LIPP? Yeah you know me. Who's down with LIPP? Yeah you know me.

I don't know what else there is to say. Hopefully they're wrong, or most of the pain is done by the time we're all 2Ls.

[imchuckbass58]

Either that or the 1-year deferral option I have just became a lot more attractive.....

[Cleareyes]

Either that or the 1-year deferral option I have just became a lot more attractive.....

If they slash by 90% then there may be a glut of offers to the 2012 graduates because if they get that lean they're going to have to fatten up again relatively soon. We may even see a lot more people getting jobs through 3L OCI as firms scramble for talent to deal with rising work loads. I guess it's possible that this won't happen until the class of 2013, I mean nobody really knows how the economy will play out and anybody who SAYS they know is a filthy liar and you can tell THEM that I said that.

I wonder if there has ever been a year where YHSCCN students were seriously f*#@ed in terms of jobs.

[RVP11]

Either that or the 1-year deferral option I have just became a lot more attractive.....

If they slash by 90% then there may be a glut of offers to the 2012 graduates because if they get that lean they're going to have to fatten up again relatively soon. We may even see a lot more people getting jobs through 3L OCI as firms scramble for talent to deal with rising work loads. I guess it's possible that this won't happen until the class of 2013, I mean nobody really knows how the economy will play out and anybody who SAYS they know is a filthy liar and you can tell THEM that I said that.

I wonder if there has ever been a year where YHSCCN students were seriously f*#@ed in terms of jobs.

I'm gonna go ahead and say there's no way there will be 90% reduction in hiring across all of BigLaw. Maybe 90% or worse at certain firms, yes. From browsing around NALP, the average reduction is around 20% for firms' 2009 SA classes (compared to 2008).

Why would so many of these firms be bringing in summer classes right now? And don't tell me they intend on no-offering...I think that's a last resort for most firms because of the PR damage.

[Cleareyes]

Either that or the 1-year deferral option I have just became a lot more attractive.....

If they slash by 90% then there may be a glut of offers to the 2012 graduates because if they get that lean they're going to have to fatten up again relatively soon. We may even see a lot more people getting jobs through 3L OCI as firms scramble for talent to deal with rising work loads. I guess it's possible that this won't happen until the class of 2013, I mean nobody really knows how the economy will play out and anybody who SAYS they know is a filthy liar and you can tell THEM that I said that.

I wonder if there has ever been a year where YHSCCN students were seriously f*#@ed in terms of jobs.

I'm gonna go ahead and say there's no way there will be 90% reduction in hiring across all of BigLaw. Why would so many of these firms be bringing in summer classes right now?

Every firm is afraid to be the one who admits they have no work and won't hire people. Law firms are not completely rational and they are not at all independent in their actions. But once one firm takes the step there will be less stopping the next firm from taking it and so on and so on until...

If one firm doesn't hire then the other firms can poach all the talent it would have gotten. If no firms hire, the talent is screwed and everyone has to adjust to the new paradigm.

[imchuckbass58]

You have to keep in mind 2009 SA classes were hired before the brunt of the downturn hit - before Lehman went under, before BofA saved Merrill, before credit froze, before TARP, before unemployment shot to almost 10% -- you get the idea.

As for PR damage - it won't be damaging if everyone does it. I agree it looks bad, but it also looks bad if PPP tanks, all your top rainmakers defect and the firm fails (see: Heller, Thacher, WolfBlock). I think firms will no-offer whatever the "market" for no offering will bear - maybe 30%-40%. Before the boom, it wasn't necessarily normal for 90% or 100% of SAs to get offers. For many firms, I think this qualifies as a "last resort" scenario - you can bet if some firms are cutting salaries and de-equitizing partners they'll do no offers.

I agree a 90% reduction is hard to believe. But 50%? I could easily see it.

[RVP11]

You have to keep in mind 2009 SA classes were hired before the brunt of the downturn hit - before Lehman went under, before BofA saved Merrill, before credit froze, before TARP, before unemployment shot to almost 10% -- you get the idea.

So why not drop some of your 2009 SAs before you pay them a dime? If the firms were in such dire straits that they needed to cut 90% of their 2010 SA hiring, they'd at least take a bigger chunk out of their 2009s before owing them anything. Shortening associateships is one thing, but don't you think it would be more logical for a sinking ship to just say "we don't like you anymore" before anyone shows up? The firms had all spring to change their mind.

Maybe I'm confused about how this works. Feel free to correct me, I don't purport to know a ton about firm hiring. But it seems illogical that firms would have their hands tied on getting rid of any 2009 SAs before they start but are getting ready to cut their 2010 hiring by 90%.

[Mr. Matlock]

No.

And yes, there are other fields where this is the case but they're mostly glamor fields. That being said, everyone who complains about big law whines about how they are awesome but get passed over for the incompetent/equally competent guy with the Harvard degree.

I plan to be that incompetent guy with the Harvard degree that they are passed over for!

But I have a wife and daughter Cleareyes.

WOW, just when I start to like a guy, BOOM... I get blind-sided and left to rot.

Either that or the 1-year deferral option I have just became a lot more attractive.....

If they slash by 90% then there may be a glut of offers to the 2012 graduates because if they get that lean they're going to have to fatten up again relatively soon. We may even see a lot more people getting jobs through 3L OCI as firms scramble for talent to deal with rising work loads. I guess it's possible that this won't happen until the class of 2013, I mean nobody really knows how the economy will play out and anybody who SAYS they know is a filthy liar and you can tell THEM that I said that.

I wonder if there has ever been a year where YHSCCN students were seriously f*#@ed in terms of jobs.

And then... the HUNTED shall become the HUNTER!!

[sbalive]

You have to keep in mind 2009 SA classes were hired before the brunt of the downturn hit - before Lehman went under, before BofA saved Merrill, before credit froze, before TARP, before unemployment shot to almost 10% -- you get the idea.

So why not drop some of your 2009 SAs before you pay them a dime? If the firms were in such dire straits that they needed to cut 90% of their 2010 SA hiring, they'd at least take a bigger chunk out of their 2009s before owing them anything. Shortening associateships is one thing, but don't you think it would be more logical for a sinking ship to just say "we don't like you anymore" before anyone shows up? The firms had all spring to change their mind.

Maybe I'm confused about how this works. Feel free to correct me, I don't purport to know a ton about firm hiring. But it seems illogical that firms would have their hands tied on getting rid of any 2009 SAs before they start but are getting ready to cut their 2010 hiring by 90%.

Not only is no-offering a ton of PR damage, it's a waste of money.

This is fundamentally stupid.

If you're going to go to law school, go to law school, if not, don't.

In general to this whole discussion - - I can build a case why every single profession you can imagine is screwed over the next 5 years. Would that be helpful?

[airlineraddict]

Notice the dude said "could" be reduced by 90%. A lot of things *could* happen in the next year. I really wonder what the probability of a 90% drop is.

[ElmGrant]

Many professions could be "screwed" over the next 5 years, but how many of them require an additional 150k investment beyond UG?

That is the big problem with the legal job market. You're not just unemployed, you're also 150k in the hole. Thats a horrendous place to be.

I wouldn't be as concerned if law school tuition hadn't gotten so out of hand in the past 20 years.

[stab master arson]

Notice the dude said "could" be reduced by 90%. A lot of things *could* happen in the next year. I really wonder what the probability of a 90% drop is.

Also notice what he didn't say, which is what he's basing that figure on.

Oh, to be a consultant in a WSJ reporter's Rolodex....

[CE2JD]

You have to keep in mind 2009 SA classes were hired before the brunt of the downturn hit - before Lehman went under, before BofA saved Merrill, before credit froze, before TARP, before unemployment shot to almost 10% -- you get the idea.

So why not drop some of your 2009 SAs before you pay them a dime? If the firms were in such dire straits that they needed to cut 90% of their 2010 SA hiring, they'd at least take a bigger chunk out of their 2009s before owing them anything. Shortening associateships is one thing, but don't you think it would be more logical for a sinking ship to just say "we don't like you anymore" before anyone shows up? The firms had all spring to change their mind.

Maybe I'm confused about how this works. Feel free to correct me, I don't purport to know a ton about firm hiring. But it seems illogical that firms would have their hands tied on getting rid of any 2009 SAs before they start but are getting ready to cut their 2010 hiring by 90%.

Not only is no-offering a ton of PR damage, it's a waste of money.

This is fundamentally stupid.

If you're going to go to law school, go to law school, if not, don't.

In general to this whole discussion - - I can build a case why every single profession you can imagine is screwed over the next 5 years. Would that be helpful?

For some reason the shitty, short-term future of all professional careers doesn't make me feel better about the short-term, shitty future of the legal industry.

[Frank]

.

[rayiner]

Cutting the SA positions isn't the only way to save money on the SA class. My expectation is that OCI for fall of 2009 will result in fewer SA offers than in previous years. I am generally pessimistic, so I think this will happen for my OCI in 2010, as well. I hope not, but only time will tell...

Oh, OCI for 2009 will definitely be a clusterfuck. I'm expecting OCI in 2010 to be pretty bad too, but prolly in the 30% reduction neighborhood.

[Bankhead]

Cutting the SA positions isn't the only way to save money on the SA class. My expectation is that OCI for fall of 2009 will result in fewer SA offers than in previous years. I am generally pessimistic, so I think this will happen for my OCI in 2010, as well. I hope not, but only time will tell...

Oh, OCI for 2009 will definitely be a clusterfuck. I'm expecting OCI in 2010 to be pretty bad too, but prolly in the 30% reduction neighborhood.

30% reduction from class of 2008 boom numbers is basically "normal".

[crazycanuck]

I read an interesting article by a lawyer in the states who stated that he didn't think the amount of jobs lost were ever going to come back nor the work that supported it.

Edit: I can't find the article, I didn't bookmark it so you should probably disregard my above statement.

[airlineraddict]

I read an interesting article by a lawyer in the states who stated that he didn't think the amount of jobs lost were ever going to come back nor the work that supported it.

Edit: I can't find the article, I didn't bookmark it so you should probably disregard my above statement.

This is true to some extent, but largely false. Yes, the bread and butter of big law firms has largely disappeared: Transactional work. But this is because business simply isn't moving as quickly as it used to. With credit markets frozen, lending is not happening nearly as much, and lending provides the energy for business-making, which provides the work for transactional attorneys.

So yes, without transactional work, firms have to expand and focus on their litigation teams, but these teams aren't enough to pay for the firms' current size, so lay offs have happened, as well as salary cuts.

But the notion that this situation is permanent is far from the case. Transactional work is slowly picking up, and the market just has to pick up. That's just the way it works. It's not a matter of if. It's a matter of when. When the market does pick up, firms will be able to expand, etc. This may or may not hurt us significantly. Since, accounting for the impending Alt-A mortgage crisis, things should be improving by 2012, and since firms generally hire summer associates taking into account their needs for when those associates graduate from law school, it's simply false that firms will reduce hiring over the next two years based on their needs today. They will reduce hiring, however, and the question is: How much?

[Drake014]

You have to keep in mind 2009 SA classes were hired before the brunt of the downturn hit - before Lehman went under, before BofA saved Merrill, before credit froze, before TARP, before unemployment shot to almost 10% -- you get the idea.

As for PR damage - it won't be damaging if everyone does it. I agree it looks bad, but it also looks bad if PPP tanks, all your top rainmakers defect and the firm fails (see: Heller, Thacher, WolfBlock). I think firms will no-offer whatever the "market" for no offering will bear - maybe 30%-40%. Before the boom, it wasn't necessarily normal for 90% or 100% of SAs to get offers. For many firms, I think this qualifies as a "last resort" scenario - you can bet if some firms are cutting salaries and de-equitizing partners they'll do no offers.

I agree a 90% reduction is hard to believe. But 50%? I could easily see it.

I work in real estate and these conversations remind me of speculation in my area as to whether drops in the real estate market could go up to 40%. Most people thought that was crazy talk. It was, things dropped a little over 60% in most neighborhoods.

I made more money from the bad market than I ever did from the good. Be industrious and creative and you'll land on your feet. Hope for the best but prepare for the worst, find out what legal fields/markets are growing despite the downturn.

[rayiner]

I read an interesting article by a lawyer in the states who stated that he didn't think the amount of jobs lost were ever going to come back nor the work that supported it.

Edit: I can't find the article, I didn't bookmark it so you should probably disregard my above statement.

This is true to some extent, but largely false. Yes, the bread and butter of big law firms has largely disappeared: Transactional work. But this is because business simply isn't moving as quickly as it used to. With credit markets frozen, lending is not happening nearly as much, and lending provides the energy for business-making, which provides the work for transactional attorneys.

So yes, without transactional work, firms have to expand and focus on their litigation teams, but these teams aren't enough to pay for the firms' current size, so lay offs have happened, as well as salary cuts.

But the notion that this situation is permanent is far from the case. Transactional work is slowly picking up, and the market just has to pick up. That's just the way it works. It's not a matter of if. It's a matter of when. When the market does pick up, firms will be able to expand, etc. This may or may not hurt us significantly. Since, accounting for the impending Alt-A mortgage crisis, things should be improving by 2012, and since firms generally hire summer associates taking into account their needs for when those associates graduate from law school, it's simply false that firms will reduce hiring over the next two years based on their needs today. They will reduce hiring, however, and the question is: How much?

Yeah. Asserting that "the work isn't ever coming back" is tantamount to saying "US economic activity will never again reach the watermark of 2007." Which is just ridiculous, of course. It will happen, it is just a matter of how long it will take.

On a slightly unrelated note, here is an interesting article on how firms handled the last recession: http://www.law.com/jsp/article.jsp?id=1036630438700

[airlineraddict]

One could make the argument that the United States is clearly no longer the financial god of the world, that China will replace us. That might be true. If it is, though China has taken clear early steps in that direction, this won't manifest for at least five years, and even that's generous.

But even if China replaces the United States, it doesn't make sense to say that transactional work will never return to normal. The global economy is simply too well connected for major economies to isolate themselves and let everyone else suffer. Everyone would stand to benefit from a Chinese economic uprising, just like other parts of the world also exploded with growth through the rise of the American economy. So long as we have oil to grease the machine, things should be fine.

There are some short-term consequences with the United States' losing its perch, though.

[airlineraddict]

Something else to watch out for: Even if the economy does pick up, we will really have to wonder whether we're building another bubble. Since Obama seems anti-bubble, he will pop any super-accelerated recovery based on some new bubble. This might actually hurt him come election season.

What we really need is a sustained economic recovery based on a stable platform. This will take plenty of time, but the world will thank us for it.

[sba314]

One could make the argument that the United States is clearly no longer the financial god of the world, that China will replace us. That might be true. If it is, though China has taken clear early steps in that direction, this won't manifest for at least five years, and even that's generous.

But even if China replaces the United States, it doesn't make sense to say that transactional work will never return to normal. The global economy is simply too well connected for major economies to isolate themselves and let everyone else suffer. Everyone would stand to benefit from a Chinese economic uprising, just like other parts of the world also exploded with growth through the rise of the American economy. So long as we have oil to grease the machine, things should be fine.

There are some short-term consequences with the United States' losing its perch, though.

The grass may look greener over there, but China has a good number of economic issues itself.