rayiner wrote:If the economy isn't any worse than it is now, hiring will definitely be better. Class of 2011 didn't just have to deal with a bad economy, they had to deal with:
1) Firms that had way too many bodies.
2) Firms that had people in the pipeline for 2011 via deferrals.
I don't doubt for a second that hiring 'could' be better, it's just very far from a sure thing. Last year everyone was saying how 2011 had it better than 2010 and look what happened. All of us would benefit from a better economy, I just think the class of 2012 should be cautious in making their plans.
You are making two huge assumptions.
1) Yes, firms had too many people but that had nothing to do with the class of 2011 who are still two years away from starting work and would not be competing with mid-levels (the current junior associates who were fired) for work assignments anyway. The firms had too many people to be profitable this year. So they slashed and burned. But guess what, if profits don't turn around this year
rain making partners will leave. They have no reason to stay since the business will follow them and they essentially carry the firm on their shoulders. Once partners leave for firms that were profitable this year, you're going to see non-profitable firms shutting down. It already started a little bit last year, but this is nothing new. Look at previous examples like Brobeck from the dot.com bubble. Once partner's profits go down, the big swinging dicks will leave and the firm will collapse in an instant. This is why PPP is such a huge deal and why Latham will screw first years over in an effort to keep PPP high. Firing people last year was to correct profits in the short term. So your first assumption has nothing to do with why hiring was down for the class of 2011.
2) Deferrals causing a pile-up is certainly something 2011 had to fight with. But, as we have seen with Kaye Scholer already, not every firm is going to honor those deferrals (because they simply don't have enough work for first years, which means first years are net losses to the firm, which means profits go down, partners leave, firm implodes, see above). So assuming firms are going to honor deferrals, but things stay the same, then how are they going to deal with the class of 2012? After all, Cravath is looking at around 160 first years starting in 2011, do you really think they are going to need even 45~60 more for the year 2012 unless the economy turns for the better in short order? Or is it more likely 2011 will also get deferred to avoid lay offs of first years and the awful publicity that comes with it? Any number of elite firms who are probably going to honor the deferrals will have this problem and the only way to solve it is to keep hiring down for the next several years to make up for overhiring from the classes of 2009/2010. Non-elite firms will simply not honor the deferrals rendering your point moot because those deferrals were not the reason 2011 suffered, the firms were just not profitable in this economy to begin with and if this economy doesn't get better they will not become profitable in time to help 2012.
If the economy gets better, 2012 will be golden. If things stay the same then the jury is out on how next year's OCI will be other than the obvious advantage that 2012 will be able to better pick which firms to target based off 2011's results.