Market on the upswing? Forum

[Stanislaw Carter]

But things will still be a lot better than they are now at some point in the future. When firms hit a point where they need extra bodies or find that they have a gap in their hiring model, they'll hire more. I've already heard from a number of people in hiring that they expect to see increased hiring this fall, and we've heard reports from some of the megafirms that they plan to hire more as well. I don't expect this fall's OCI to be leaps and bounds better, but it is still better than nothing.

I think it just depends on the firm. For some firms, hiring is back to normal. For others, hiring has been on an inexorable decline. I think looking at nalp and comparing the numbers is instructive in this regard.

[AreJay711]

Is it really? Why is that? I don't know why that would be the case but I'm no expert on the legal market.

Outsourcing, staff attorneys, and a general reluctance from clients to pay junior associate rates for middling work product.

I don't disagree. But I also think it is a bit exaggerated. Permanently lowered? Probably. But things will still be a lot better than they are now at some point in the future. When firms hit a point where they need extra bodies or find that they have a gap in their hiring model, they'll hire more. I've already heard from a number of people in hiring that they expect to see increased hiring this fall, and we've heard reports from some of the megafirms that they plan to hire more as well. I don't expect this fall's OCI to be leaps and bounds better, but it is still better than nothing.

Will it ever be like it was 5 years ago? No. Are there still waaaay more jobs than there are grads? Absolutely yes. But I do think things will still be a bit better in the near future.

This is kinda what I was thinking. The economy is growing at 3% a year and and assuming legal needs are growing at about the same speed, even if 2/3 of that growth is on other areas like outsourcing and whatever, that would still lead to about a 1% growth of the US legal market. Some tasks simply have to be handled by junior associates for efficiency's sake (or the lowest paid attorney) and would lead to growth in the need for junior associates. The only issue would be if growth in supply of associates outpaced demand but the plight of most law graduates is pretty well publicized so that might not happen. Restrict the supply of new lawyers, like if the t14 all decided not to expand their classes or they are scared away, and eventually you get into a bidding war for top grads again.

[romothesavior]

But things will still be a lot better than they are now at some point in the future. When firms hit a point where they need extra bodies or find that they have a gap in their hiring model, they'll hire more. I've already heard from a number of people in hiring that they expect to see increased hiring this fall, and we've heard reports from some of the megafirms that they plan to hire more as well. I don't expect this fall's OCI to be leaps and bounds better, but it is still better than nothing.

I think it just depends on the firm. For some firms, hiring is back to normal. For others, hiring has been on an inexorable decline. I think looking at nalp and comparing the numbers is instructive in this regard.

True. But if some firms are back to normal this fall, some firms increase just a little, and some firms stay at the level they were at last OCI, then we're still seeing a pretty big improvement across the board. A lot also depends on the markets too... NYC is relatively healthy, Chicago is probably still going to be a bloodbath.

I'm not trying to be too optimistic. I'm a very "half glass empty" kind of guy. I just think there are some reasons to be cautiously optimistic for the upcoming OCI, and in future years. When people say, "The legal market will never recover," they are right to an extent, but I don't want people coming away thinking the legal market will always stay this crappy. It just means that it will never get back to the enormous boom of 5 years ago.

[Stanislaw Carter]

Some tasks simply have to be handled by junior associates for efficiency's sake (or the lowest paid attorney) and would lead to growth in the need for junior associates.

Staff attorneys can do this too. As I said above, the three threats of outsourcing, staff attorneys, and clients' refusal to pay for junior associates are what drive demand down. If a client refuses to pay for a junior associate's hours, the firm has to write them off and pay the associate full compensation for no revenue. It's a net loss to the firm. If corporate demand increases (and believe me, it has), clients of tier 2/3 firms will not all of the sudden start paying for junior associate work. GCs are wise to the pyramid schemes of law firms, and unless the firm provides a truly premium product, they will not pay for junior attorneys.

[Stanislaw Carter]

But if some firms are back to normal this fall, some firms increase just a little, and some firms stay at the level they were at last OCI, then we're still seeing a pretty big improvement across the board.

In my opinion, the class of 2012's OCI was the closest approximation of the new normal, at least is stands for the next 4-5 years. There might be a shift a few % points upward and downward, but it will all be roughly the same.

And optimism about the US economy is unwarranted. There's so much happening in the world right now, and so much happening within the US economy that it's pretty obvious that the writing is on the wall. On the legal front, the race for elite US firms to open foreign offices, the massive number of partner promotion in these elite US firms' foreign offices, and the international flavor that almost every mega-deal has these days is demonstrative of the fact that the US is simply no longer a growth market for law.

[AreJay711]

Some tasks simply have to be handled by junior associates for efficiency's sake (or the lowest paid attorney) and would lead to growth in the need for junior associates.

Staff attorneys can do this too. As I said above, the three threats of outsourcing, staff attorneys, and clients' refusal to pay for junior associates are what drive demand down. If a client refuses to pay for a junior associate's hours, the firm has to write them off and pay the associate full compensation for no revenue. It's a net loss to the firm. If corporate demand increases (and believe me, it has), clients of tier 2/3 firms will not all of the sudden start paying for junior associate work. GCs are wise to the pyramid schemes of law firms, and unless the firm provides a truly premium product, they will not pay for junior attorneys.

You sound like you know more about it than me. Either way, I'm sure won't be better by the time I or most of the other people considering law school right now will go through OCI.

[alumniguy]

If anything, that's not the case. The fact that clients in the Tier 2/Tier 3 range are more cost-sensitive implies the creation of another salary bump (say, $145k).

But the creation of this new salary will undoubtedly come from existing $160k firms that cannot continue to pay their associates at the $160k rate. Yes, there may be less of a bimodal structure, but it will be at the expense of current $160k group.

This is not inconsistent with what I said above.

Things do seem to be improving, but legal hiring is not (and may not ever be) at "pre recession levels."

The post implies the creation of a *new* cluster around 145k by firms "bump"ing up existing salaries. If that was not intended, then I agree.

The major issue is that several firms that do predominantly Tier 2/Tier 3 work continue to pay their associates "market" salary. These firms have been keeping up with the Joneses in compensation and when work was booming pre ITE, it was palatable because PPP was also dramatically increasing. If these Tier 2/Tier 3 firms don't adjust associate salary, then they are either going to take a hit to PPP OR they are going to make their associates work longer hours so as to ensure every last bit of revenue possible (which would lead to less entry level positions). Partners are likely willing to take a few years of reduced profits so long as their is the possibility that the economy improves. But, several years of lower profits will force management to reevaluate associate compensation or fear losing partners with substantial books of business that will jump ship for a firm that has higher PPP.

For what it is worth, we saw a bit of this play out when several T2/T3 firms reduced associate compensation by 10% or froze salary increases in 2009. Many have returned to market, but this likely occurred because of the massive layoffs that re-balanced the associate ranks in a way that reflected the firm's lowered revenue potentials.

[romothesavior]

By the way, this is a ridiculous abuse of the anon feature. None of you are revealing "sensitive employment related information about a firm, job, clerkship, etc." Please stop using the anon feature so we can actually follow the conversation and understand who we are addressing. Seeing one anon user respond to another after another makes it impossible to keep up.

[vanwinkle]

By the way, this is a ridiculous abuse of the anon feature. None of you are revealing "sensitive employment related information about a firm, job, clerkship, etc." Please stop using the anon feature so we can actually follow the conversation and understand who we are addressing. Seeing one anon user respond to another after another makes it impossible to keep up.

Agreed. Temp locking while resolving...

[vanwinkle]

Resolved.

The next person to inappropriately use the anon feature in this thread gets banned. Unless you have something requiring anonymity, make sure you are not posting anon. As a reminder, please do not discuss use of the anon feature in the thread; flag and report if there's a problem. See this post for more details: http://www.top-law-schools.com/forums/v ... 3&t=130748

You may all carry on with your debate.

[romothesavior]

That romo dude is such a narc.

[Stanford4Me]

That romo dude is such a narc.

I was going to +1 you in the mod thread, but figured they don't like clutter.

[lemonlyman]

I know some poeple on here are pessimistic about the condition of the legal market, but it sounds like some people think summer hiring has returned to pre recession levels and the market has atleast troughed. This is obviously not true for all markets but I think certain regions like the conditions in the northeast are improving and will continue to improve as the recovery continues.

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[dooood]

But if some firms are back to normal this fall, some firms increase just a little, and some firms stay at the level they were at last OCI, then we're still seeing a pretty big improvement across the board.

In my opinion, the class of 2012's OCI was the closest approximation of the new normal, at least is stands for the next 4-5 years. There might be a shift a few % points upward and downward, but it will all be roughly the same.

And optimism about the US economy is unwarranted. There's so much happening in the world right now, and so much happening within the US economy that it's pretty obvious that the writing is on the wall. On the legal front, the race for elite US firms to open foreign offices, the massive number of partner promotion in these elite US firms' foreign offices, and the international flavor that almost every mega-deal has these days is demonstrative of the fact that the US is simply no longer a growth market for law.

You know that people have been saying this for 40 years, right? Ain't nothin' new under the sun

[Stanislaw Carter]

Anecdotally, of the 1L firm receptions in NYC that I made it to, all the V10s and most V20s claimed they were increasing the size of their summer classes. Example, I believe it was a Cleary partner who said their summer program size was going up 50% from last year.

For some firms, including Cleary, summer class sizes will probably increase. I know this is the case at every V10 except for Weil, Skadden, Cravath, and Covington (I'm not saying they're not increasing. I'm just saying I don't know about them).

I in general question the wisdom of asking partners about summer class sizes, even hiring partners. Things change so rapidly in the market place that needs can change very rapidly. No one saw the Libya situation coming, fuel prices jumping up as a result, and the market being hampered. No one saw Japan's earthquake coming. There are a lot of global forces at play here that influence the markets at a fundamental level.

You know that people have been saying this for 40 years, right? Ain't nothin' new under the sun

I don't really care. Proof is in the pudding. I didn't post the nalp numbers. Nalp did.

[dooood]

Anecdotally, of the 1L firm receptions in NYC that I made it to, all the V10s and most V20s claimed they were increasing the size of their summer classes. Example, I believe it was a Cleary partner who said their summer program size was going up 50% from last year.

For some firms, including Cleary, summer class sizes will probably increase. I know this is the case at every V10 except for Weil, Skadden, Cravath, and Covington (I'm not saying they're not increasing. I'm just saying I don't know about them).

I in general question the wisdom of asking partners about summer class sizes, even hiring partners. Things change so rapidly in the market place that needs can change very rapidly. No one saw the Libya situation coming, fuel prices jumping up as a result, and the market being hampered. No one saw Japan's earthquake coming. There are a lot of global forces at play here that influence the markets at a fundamental level.

You know that people have been saying this for 40 years, right? Ain't nothin' new under the sun

I don't really care. Proof is in the pudding. I didn't post the nalp numbers. Nalp did.

Believe me, I wasn't weighing in on whether or not you cared. You're just expressing yourself in ridiculous generalities: "there's so much happening in the world today that the writing is on the wall." And the "race" for elite US firms to open foreign offices? Not much of a race; this has been happening since the Coolidge administration.

As for the "international flavor" on mega-deals (whatever that means), I'm assuming you're talking about M&A activity? Of the 46 companies involved in the 23 largest mergers and acquisitions last year, 29 were American firms (either the target or acquirer - more often acquirer). http://www.currentpartnering.com/scorecard/manda2010.

As for your theory that the crisis in Libya or the earthquake in Japan are affecting biglaw hiring practices, I'm not even going to dignify that with a response.

[Stanislaw Carter]

Believe me, I wasn't weighing in on whether or not you cared. You're just expressing yourself in ridiculous generalities: "there's so much happening in the world today that the writing is on the wall." And the "race" for elite US firms to open foreign offices? Not much of a race; this has been happening since the Coolidge administration.

Really? Do you want to count the number of foreign offices opened in the last decade? The last 20 years? Let's compare that to the number of foreign offices opened around the time of the Coolidge administration.

As for the "international flavor" on mega-deals (whatever that means), I'm assuming you're talking about M&A activity? Of the 46 companies involved in the 23 largest mergers and acquisitions last year, 29 were American firms (either the target or acquirer - more often acquirer). http://www.currentpartnering.com/scorecard/manda2010.

So what? The fact that foreign companies are so heavily implicated speaks volumes.

As for your theory that the crisis in Libya or the earthquake in Japan are affecting biglaw hiring practices, I'm not even going to dignify that with a response.

I think this is a convenient and cute way for you to say why you're right, but it's really just sophism. But take it from someone who is actually working in the deal pipeline. Being an insider is not really necessary to realize this common sense notion that global events influence liquidity and the capital markets in fundamental ways. Whatever influences such markets influences the financing for deals, and therefore influences M&A. Even aside from M&A, the number of IPOs put on hold even in the last year or so just demonstrates the uncertainty companies feel in the current market. These things influence the work pipeline and therefore influence hiring. You act like hiring partners have a magic ball and know exactly what their needs will be in two years and can determine the size of their summer classes down to a T. Nope. The number will vary constantly. The fact that 3L hiring is still taking place at many firms is a testament to this (and similarly, the fact that so many firms still no-offered many this past summer is also a testament).

Regarding whether the US is "in decline," I find it pretty shocking that you fail to realize this. That Goldman Sachs analyst coined BRICS for a reason; they're the next super powers and they're rising quickly. It's no surprise that US firms have flocked to open offices in those countries (except for India, mostly because of protectionist legislation).

[AreJay711]

That Goldman Sachs analyst coined BRICS for a reason; they're the next super powers and they're rising quickly. It's no surprise that US firms have flocked to open offices in those countries (except for India, mostly because of protectionist legislation).

Yeah, idk about the rest of the post and I really don't even remeber reading it but this is utterly wrong. BRICs are fast growing economies that are becoming an increaced part of the world economy. They fuel a lot of the growth in the world economy unlike other undeveloped countries that are kind of stagnating and more developed economies that are growing but at a slower pace. That is the reason they are grouped not because they are the next "super powers" or some such nonesense.

[Stanislaw Carter]

BRICs are fast growing economies that are becoming an increaced part of the world economy. They fuel a lot of the growth in the world economy unlike other undeveloped countries that are kind of stagnating and more developed economies that are growing but at a slower pace. That is the reason they are grouped not because they are the next "super powers" or some such nonesense.

Sorry. Didn't mean to imply that they were grouped for that reason. But I do think they are the next super powers (if they already aren't).

(Also: The 'S' in BRICS stands for South Africa)

[swc65]

I t You act like hiring partners have a magic ball and know exactly what their needs will be in two years and can determine the size of their summer classes down to a T. Nope. .

yet you have one that tells you who the next superpowers will be and whether the US is in long term decline? Ill give you that the US is becoming relatively less important, but most, if not all of that, is because other places are copying western-style capitalism and emerging from the dark ages. Relative falling and decline, IMO, are different. decline means things are getting absolutely worse rather than not getting better as fast as others. Of course, you also cannot take the US's current position (at the VERY bottom of a big cycle) and extrapolate some long term judgment. Just a few years ago things looked entirely different. As I am sure they will a few years from now- that's why it's called a cycle.

Edited 8000000 times to get the damn quoting right!! Grrrrr

[Stanislaw Carter]

Actually, let's go through this.

They fuel a lot of the growth in the world economy unlike other undeveloped countries that are kind of stagnating and more developed economies that are growing but at a slower pace. That is the reason they are grouped not because they are the next "super powers" or some such nonesense.

It's not just about growth. It's the fact they'll dominate too.

Select quotations from the wikipedia article [http://en.wikipedia.org/wiki/BRICS#.282 ... th_to_2050]:

He also stated that the BRICS demonstrate that the five emerging economies are emerging as a defining force to shape the new international political and economic order.

Goldman Sachs argues that the economic potential of Brazil, Russia, India and China is such that they could become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O'Neill, global economist at Goldman Sachs.[10] These countries encompass over 25% of the world's land coverage and 40% of the world's population and hold a combined GDP (PPP) of 18.486 trillion dollars. On almost every scale, they would be the largest entity on the global stage. These four countries are among the biggest and fastest growing emerging markets.

Goldman Sachs has argued that, since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population.

In the revised 2007 figures, based on increased and sustaining growth, more inflows into foreign direct investment, Goldman Sachs predicts that "from 2007 to 2020, India's GDP per capita in US$ terms will quadruple", and that the Indian economy will surpass the United States (in US$) by 2043.[21] It states that the four nations as a group will overtake the G7 in 2032

According to a new report from Goldman Sachs, China might surpass the US in equity market capitalization terms by 2030 and become the single largest equity market in the world. By 2020, US GDP might be only slightly larger than China's GDP. Together, the four BRICs may account for 41% of the world's market capitalization by 2030, the report said.

Just FYI: At least start 1L before posting in this forum. Over and out.

[swc65]

OMG I just realized your posts imply that South Africa may be one of the next super powers simply because its economy is growing fast. It's called the productivity frontier. the further you are from it the easier it is to grow fast. Once these countries get closer to it, their growth will slow.

[swc65]

Actually, let's go through this.

They fuel a lot of the growth in the world economy unlike other undeveloped countries that are kind of stagnating and more developed economies that are growing but at a slower pace. That is the reason they are grouped not because they are the next "super powers" or some such nonesense.

It's not just about growth. It's the fact they'll dominate too.

Select quotations from the wikipedia article [http://en.wikipedia.org/wiki/BRICS#.282 ... th_to_2050]:

He also stated that the BRICS demonstrate that the five emerging economies are emerging as a defining force to shape the new international political and economic order.

Goldman Sachs argues that the economic potential of Brazil, Russia, India and China is such that they could become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O'Neill, global economist at Goldman Sachs.[10] These countries encompass over 25% of the world's land coverage and 40% of the world's population and hold a combined GDP (PPP) of 18.486 trillion dollars. On almost every scale, they would be the largest entity on the global stage. These four countries are among the biggest and fastest growing emerging markets.

Goldman Sachs has argued that, since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population.

In the revised 2007 figures, based on increased and sustaining growth, more inflows into foreign direct investment, Goldman Sachs predicts that "from 2007 to 2020, India's GDP per capita in US$ terms will quadruple", and that the Indian economy will surpass the United States (in US$) by 2043.[21] It states that the four nations as a group will overtake the G7 in 2032

According to a new report from Goldman Sachs, China might surpass the US in equity market capitalization terms by 2030 and become the single largest equity market in the world. By 2020, US GDP might be only slightly larger than China's GDP. Together, the four BRICs may account for 41% of the world's market capitalization by 2030, the report said.

Just FYI: At least start 1L before posting in this forum. Over and out.

Do 1Ls learn the magic skill of quoting from WIKI at law school? LoL 40 years is a really friggin long time!!! 40 years ago Japan was supposed to overtake the US in 20 years. Peak oil was going to happen in 30 years, the list goes on. Long term economic trends are extraordinarily difficult to predict because there are just so many variables.

[Stanislaw Carter]

yet you have one that tells you who the next superpowers will be and whether the US is in long term decline?

This is just common sense. No crystal ball needed.

Relative falling and decline, IMO, are different. decline means things are getting absolutely worse rather than not getting better as fast as others.

This is a fair point. Regardless of whether the US is in decline or is becoming less relevant, neither situation bodes well for the growth of the country. I think the size of recent partner promotions among top M&A firms and the composition of those promotions that are outside the US speaks volumes about where firms see growth coming from. Hint: It's not here.

I'm not going to argue some broad economic point. I just think asking partners about the state of summer classes for 2012 is dumb. The reason is that the number can change constantly and sometimes even the partners are speculating wildly and feeding you BS. It's not really his fault. You're asking him to predict the future. He's helpless in the face of such a retarded question. That's my view. If you want to disagree, feel free to do so (or you can be really passive aggressive and say you won't dignify me with a response--classy).

Bottom line for all 1Ls: Just get the best grades and try your best. Whether or not Cleary is taking 90 instead of 80 next year should have no impact on that game plan.

[swc65]

Bottom line for all 1Ls: Just get the best grades and try your best. Whether or not Cleary is taking 90 instead of 80 next year should have no impact on that game plan.

Well can't argue with that. I guess I have to go back to outlining Econ and the Law.