The yield curve is inverted Forum

[Anonymous User]

It really does seem like a recession is increasingly likely in the near year or so. I am thinking of lateraling in early 2019 and am concerned that is an overly risky idea. How are laterals treated versus home-grown associates when it comes to layoffs? In a recession that probably won’t be as catastrophic as 2008-09, will the layoffs be brutal?

[Anonymous User]

bump for same situation/question; saw the yield curve thing on WSJ this morning

[oblig.lawl.ref]

Not an econ major but I would say truly impossible to say. Anyone's guess is as good as anyone else's. I personally wouldn't worry about it much unless you feel like you are a well above average associate at your firm (discounting for the fact that most people probably over estimate their value).

You can go through the process and then see how the market goes. If shit hits the fan I wouldn't pull the trigger.

If you think of yourself as a middle of the road associate you are probably interchangeable anyways and won't necessarily do great in your current firm in a bad recession.

FWIW hopefully the last recession was worse than the next. Firms still layoff in moderate recessions though.

I'm considering a move myself but have been having second thoughts because of the economy. I'll wait and see until bonuses come out and then test the waters knowing I may turn down an offer if things are looking bad in Q1.

[Npret]

It really does seem like a recession is increasingly likely in the near year or so. I am thinking of lateraling in early 2019 and am concerned that is an overly risky idea. How are laterals treated versus home-grown associates when it comes to layoffs? In a recession that probably won’t be as catastrophic as 2008-09, will the layoffs be brutal?

The layoffs hit mostly junior associates (1-2)and cut hiring drastically.. For other years, it depended on your department/group and your reputation.
My feeling is that laterals won’t be as protected as solid home grown associates. It can be an individual situational call and no one can tell you for sure.

[DCESQ]

Just in the Econ sense, the market is spooked. The Dow dropped 430 points because Canada arrested a Chinese company CEO for extradition to the US. I think they might be a self-fulfilling prophecy.
Tomorrow will be important. If the jobs and unemployment numbers are good, it might stave off any further sell-offs. If the numbers are bad, it might tip the cart toward a full bear market.
I cannot speak to the effect on employment.

[Anonymous User]

The 10 yr note never inverted, which is the one that matters. And it looks like the short term note dropped so we are good for now.

That said, I don’t think anyone truly believes a recession is not imminent. Can some of you more senior ppl who lived through 2009 give us juniors any ideas how to survive or what to expect?

[Anonymous User]

Wondering how a recession might affect 2Ls incoming as summer associates. I know that back in 2008, large numbers were no-offered. Although with the financial crisis that was a substantially worse situation.

[Anonymous User]

Another question to throw on the pile: how likely would it be for a deep recession to affect folks that have recently gone in house at large corporations? Assume it's a Fortune 500 company that has been around forever. I'm on the verge of making of a move from a finance group at a large law firm to such a company. For what it is worth, if a big recession hits, I think a lot of our finance group at my law firm is going to get slow.

My instinct says they are about the same risk of being laid off. But that the law firm will probably give me a longer runway (IE, you're getting fired in 6 months).

[Npret]

Another question to throw on the pile: how likely would it be for a deep recession to affect folks that have recently gone in house at large corporations? Assume it's a Fortune 500 company that has been around forever. I'm on the verge of making of a move from a finance group at a large law firm to such a company. For what it is worth, if a big recession hits, I think a lot of our finance group at my law firm is going to get slow.

My instinct says they are about the same risk of being laid off. But that the law firm will probably give me a longer runway (IE, you're getting fired in 6 months).

During the recession, I don’t recall anyone getting 6 months notice from a firm. Above the law had a lot of articles about layoffs and no offers, I would go back and find those.

[Lemming]

I'd be concerned for PE lawyers. 90% of PE backed debt issues are B2 or lower, debt to EBITDA is approaching 2007 levels, and purchase multiples are already above 2007 levels. Any recession is going to really hurt PE. Restructuring will get hot though.

[QContinuum]

Another question to throw on the pile: how likely would it be for a deep recession to affect folks that have recently gone in house at large corporations? Assume it's a Fortune 500 company that has been around forever. I'm on the verge of making of a move from a finance group at a large law firm to such a company. For what it is worth, if a big recession hits, I think a lot of our finance group at my law firm is going to get slow.

My instinct says they are about the same risk of being laid off. But that the law firm will probably give me a longer runway (IE, you're getting fired in 6 months).

During the recession, I don’t recall anyone getting 6 months notice from a firm. Above the law had a lot of articles about layoffs and no offers, I would go back and find those.

Probably not 6 months, but I remember reading ATL quite a bit and I recall a lot of firms giving people substantial notice. Granted, some firms gave some associates generous notice and severance, while screwing over other associates in the same office and even in the same class year.

I haven't heard of F500s giving anyone a long runway - the corporate world has adopted 2 weeks' notice pretty uniformly.

[Npret]

Another question to throw on the pile: how likely would it be for a deep recession to affect folks that have recently gone in house at large corporations? Assume it's a Fortune 500 company that has been around forever. I'm on the verge of making of a move from a finance group at a large law firm to such a company. For what it is worth, if a big recession hits, I think a lot of our finance group at my law firm is going to get slow.

My instinct says they are about the same risk of being laid off. But that the law firm will probably give me a longer runway (IE, you're getting fired in 6 months).

During the recession, I don’t recall anyone getting 6 months notice from a firm. Above the law had a lot of articles about layoffs and no offers, I would go back and find those.

Probably not 6 months, but I remember reading ATL quite a bit and I recall a lot of firms giving people substantial notice. Granted, some firms gave some associates generous notice and severance, while screwing over other associates in the same office and even in the same class year.

I haven't heard of F500s giving anyone a long runway - the corporate world has adopted 2 weeks' notice pretty uniformly.

I was wrong it seems Latham gave 6 months severance up to $100,000. That was the most anyone paid. I think that 3 months might be closer to the average.

Its a fair point about better severance from law firms than corporations. I don’t know how many in house lawyers were let go. It seemed that there was an aggressive change to bring more work in-house. But I don’t know the data. It may be in an old Citigroup report on law firms.

[Anonymous User]

Wondering how a recession might affect 2Ls incoming as summer associates. I know that back in 2008, large numbers were no-offered. Although with the financial crisis that was a substantially worse situation.

Did an internship with a judge whose clerk was summering at Paul Hastings in 2008. Heard that the no offer rate was upwards of 50%.

[Anonymous User]

Its a fair point about better severance from law firms than corporations. I don’t know how many in house lawyers were let go. It seemed that there was an aggressive change to bring more work in-house. But I don’t know the data. It may be in an old Citigroup report on law firms.

Anon from above here. Thanks for the responses, everyone. I figure 6 months may not be official, but if I am suddenly billing 20 hours a month with no future work on the horizon, I will count that time as part of the "warning" to find something else ASAP. I'm guessing it would take a few months of 20 hour months to work its way through the system, plus some official time/severance before I'm actually making $0.

I'll try and dig up the old Citigroup reports and see if they make mention of layoffs in 2008/2009.

[Npret]

Its a fair point about better severance from law firms than corporations. I don’t know how many in house lawyers were let go. It seemed that there was an aggressive change to bring more work in-house. But I don’t know the data. It may be in an old Citigroup report on law firms.

Anon from above here. Thanks for the responses, everyone. I figure 6 months may not be official, but if I am suddenly billing 20 hours a month with no future work on the horizon, I will count that time as part of the "warning" to find something else ASAP. I'm guessing it would take a few months of 20 hour months to work its way through the system, plus some official time/severance before I'm actually making $0.

I'll try and dig up the old Citigroup reports and see if they make mention of layoffs in 2008/2009.

Here’s the thing with those layoffs from firms. They were mass, virtually simultaneous layoffs. Even stealth layoffs were done in a compressed time frame.We are talking hundreds (eventually thousands) of people out of work and no one is hiring because it’s a recession.

If you are talking about being let go for typical law firm reasons, then I think 3 months to find a new job is normal. You are right that not getting work is a crucial sign.