RECESSION PANIC MEGAPOST: Bad economy threads go here! Forum

[06072010]

I wish I had a rabbit in a hat with a bat
and a '64 Impala

[davosdank]

...best 3 (approx) recession biglaw pages evah... rayiner/pkskeb/cleareyes..i'm lookin at u

[rayiner]

I forgot to add that another issue is that once you are in the door, it is what you do there that matters (to a large degree) and personal/social issues become paramount. This is a bug (feature?) with many workplaces. Once someone has the job they have inertia on their side, social connections, etc... I know big law doesn't suffer from this in the long term, since associates get ground up and spit out, but I think this explains at least part of the 2nd and 3rd year grades not mattering phenomenon. You get your summer job, you get inertia and independent data collected, and they don't care so much about the grades.

Possibly, but how then do you explain the incredible resistance in biglaw to hire people who have proven themselves in the minor leagues?

I think biglaw firms just want to be able to say "we hire only the 99th percentile". "We hire only from HYSCCN" is pretty much just a proxy for that. I dunno, maybe I'm just incredibly cynical...

[Cleareyes]

And I think that's right to some degree. I also think that we are ignoring fluffy factors like alumni networks, location, etc... that we can't account for, and doing so BECAUSE we can't account for them, which is one of the major flaws in this kind of reasoning. Difficult to analyze variables get ignored and shoved to the side even though they remain important despite being difficult to analyze.

That is a good point, but I'm operating under the assumption that fluffy factors account for a relatively small portion of the overall behavior. You may disagree with this assumption.

I do disagree. Evidence? The importance of region beyond the T14. is there any reason why a Miami law firm SHOULD prefer a Miami grad over a Wisconsin grad, objectively?

I think the top firms are stocked by T14 grads who have an incentive to perpetuate the elitism they benefited from (because their kids are likely to be T14 students, the threat of cognitive dissonance etc...) Thus they overrate elite institutions. I'm not saying Harvard students aren't better than Texas students, they mostly are, but they are probably overrated anyway.

Human beings, even very smart ones, are not rational. Why do we think that the law firms are run rationally when the investment banks clearly were not? (Unless you are a true cynic.)

[06072010]

is there any reason why a Miami law firm SHOULD prefer a Miami grad over a Wisconsin grad, objectively?

Fantastic point. I'm going to think about this and get back to you.

[Cleareyes]

I forgot to add that another issue is that once you are in the door, it is what you do there that matters (to a large degree) and personal/social issues become paramount. This is a bug (feature?) with many workplaces. Once someone has the job they have inertia on their side, social connections, etc... I know big law doesn't suffer from this in the long term, since associates get ground up and spit out, but I think this explains at least part of the 2nd and 3rd year grades not mattering phenomenon. You get your summer job, you get inertia and independent data collected, and they don't care so much about the grades.

Possibly, but how then do you explain the incredible resistance in biglaw to hire people who have proven themselves in the minor leagues?

I think biglaw firms just want to be able to say "we hire only the 99th percentile". "We hire only from HYSCCN" is pretty much just a proxy for that. I dunno, maybe I'm just incredibly cynical...

I lack an easy answer for that one. I think it's a combination of not wanting to admit they miss talent on the first pass, wanting to shoehorn everybody into the conveyor belt system that benefits the partners so much, and laziness?

But yeah, marketing is a big part of it.

[someday504]

I absolutely disagree with the value of the 2 institutions being equal.

I disagree with your disagreement, but frankly I don't think either of us can back our arguments up with numbers. That being said, I think we can look to the behavior of law firms for some insight. By all reports law firms care very little about your coursework, etc, or even your grades in your 2L and 3L years. This indicates they place a law value on the value-added by most of your law-school education. If this is the case, I don't see how they would place much value at all on the far lesser differences between the quality of the education at various top schools...

It could indicate that, or it could indicate that they believe that the value the institution adds isn't captured by specific coursework or grades.

If it were all about LSAT/Ugrad GPA why would they use a rough proxy like "What school you got into." They could easily ask for that information during OCI and use that to make their decisions. Instead they look at your performance in the school at question. Now I think I know the Rayiner argument here. The Rayiner argument is that they are looking at your performance within a competition pool created by the school, so it's about how you perform relative to other high LSAT GPA people. And I think that's right to some degree. I also think that we are ignoring fluffy factors like alumni networks, location, etc... that we can't account for, and doing so BECAUSE we can't account for them, which is one of the major flaws in this kind of reasoning. Difficult to analyze variables get ignored and shoved to the side even though they remain important despite being difficult to analyze.

i'm fucking sick of these well thought out, intelligent, rational posts

TITCR

[thelawgeek8]

--LinkRemoved--

[Kohinoor]

:-\ It's not funny enough to be humorous and not informative enough to be useful.

[SkyVan64]

FLAME
IBTL

[Kohinoor]

FLAME
IBTL

Those words don't mean what you think they mean.

[frotteur]

:-\ It's not funny enough to be humorous and not informative enough to be useful.

Agreed.

[simmersiz]

http://www.associatedcontent.com/articl ... chool.html

If those are the twenty most important reasons why I should consider not going to law school, I would sleep a lot easier. Only #2 gets at the money issue, and none of them really talk about the economy, oversupply of lawyers, etc.

[Drake014]

And I think that's right to some degree. I also think that we are ignoring fluffy factors like alumni networks, location, etc... that we can't account for, and doing so BECAUSE we can't account for them, which is one of the major flaws in this kind of reasoning. Difficult to analyze variables get ignored and shoved to the side even though they remain important despite being difficult to analyze.

That is a good point, but I'm operating under the assumption that fluffy factors account for a relatively small portion of the overall behavior. You may disagree with this assumption.

I do disagree. Evidence? The importance of region beyond the T14. is there any reason why a Miami law firm SHOULD prefer a Miami grad over a Wisconsin grad, objectively?

I think the top firms are stocked by T14 grads who have an incentive to perpetuate the elitism they benefited from (because their kids are likely to be T14 students, the threat of cognitive dissonance etc...) Thus they overrate elite institutions. I'm not saying Harvard students aren't better than Texas students, they mostly are, but they are probably overrated anyway.

Human beings, even very smart ones, are not rational. Why do we think that the law firms are run rationally when the investment banks clearly were not? (Unless you are a true cynic.)

Investment banks were run rationally, depending on how you look at it. Those running them ran them in a way that made them very rich.... it just so happened to make the investors and tax payers lose money. This is more a reflection of a flaw in a system that relies too much on individual self-interest.

[Cleareyes]

And I think that's right to some degree. I also think that we are ignoring fluffy factors like alumni networks, location, etc... that we can't account for, and doing so BECAUSE we can't account for them, which is one of the major flaws in this kind of reasoning. Difficult to analyze variables get ignored and shoved to the side even though they remain important despite being difficult to analyze.

That is a good point, but I'm operating under the assumption that fluffy factors account for a relatively small portion of the overall behavior. You may disagree with this assumption.

I do disagree. Evidence? The importance of region beyond the T14. is there any reason why a Miami law firm SHOULD prefer a Miami grad over a Wisconsin grad, objectively?

I think the top firms are stocked by T14 grads who have an incentive to perpetuate the elitism they benefited from (because their kids are likely to be T14 students, the threat of cognitive dissonance etc...) Thus they overrate elite institutions. I'm not saying Harvard students aren't better than Texas students, they mostly are, but they are probably overrated anyway.

Human beings, even very smart ones, are not rational. Why do we think that the law firms are run rationally when the investment banks clearly were not? (Unless you are a true cynic.)

Investment banks were run rationally, depending on how you look at it. Those running them ran them in a way that made them very rich.... it just so happened to make the investors and tax payers lose money. This is more a reflection of a flaw in a system that relies too much on individual self-interest.

I qualified with "If you are a true cynic."

CYNIC! I say. CYNIC!

I know the system appears to have worked this way but from my knowledge of people in New York they wanted very much NOT to kill the goose that laid the golden egg, and they did. I can't prove this is so, so if you want to be cynical I don't think I can convince you that they weren't just looting and burning the whole system down around them.

[jdlawmoney7]

Whats the NYC Law Market looking like ?

[nycRadRead]

A NYT Editorial last week by Adam Cohen was pretty striking. He posits this recession will remake the current legal landscape, especially affecting T-20 students and BigLaw prospects. Even BigLaw are laying off attorneys at a staggering rate and old, venerable firms are failing. No longer will first-year associates at top firms start at around $160,000; he suggests they may go down to as low as $100,000, where they were about 10 years ago.

To be sure a huge gap exists between private BigLaw practice and public sector jobs, which start new attorneys at anywhere from $40k-$60k a year. There wasn't always such a gap, and it will certainly shrink.

I would add (from what I've read from Alan Blinder and other econ/fed/finance types) that the breakneck growth in the financial sector we've seen over the past 10 years will never happen again, as investment banks like Morgan Stanley are now legally considered "banks", which subjects them to greater regulation and scrutiny. We can be sure hedge funds will also be regulated more closely. The days of leveraging 30 to 1 are over, as are the days of making a 30% return on capital. Greater regulation will obviously greatly decrease fat financial sector profits and therefore affect salaries for BigLaw attorneys of all sorts in the long-run as well.

So those on this forum who are attracted to law principally for the cash may want to rethink their law school plans. Especially since most of us will graduate with around $100k in debt, much of it from private loans carrying a ridiculous interest rate. And those that aren't should take a look at the realities of paying steep loan payments on a lower-than-anticipated salary.

Check out Cohen's article at: http://www.nytimes.com/2009/04/02/opini ... u4.html?em

[stab master arson]

Here's to betting the zillion dollars and mountains of new regulation the federal government's dumping on the private sector will keep law firms, big and small, afloat for many years to come. Might not completely make up for all the shrinkage, but it'll soften the blow. Uncle Barry would never let his fellow lawyers starve.

In any case, it's ridiculous to think that today's economic conditions, or more accurately the perception of today's economic conditions, will have much, if any, bearing on economic conditions three years from now. From what I've seen in the best posts on this thread, it seems like law firms are responding to the recession the way most businesses would: by shrinking its payrolls. Why is this so shocking to some people here (or, rather, JDunderground)?

I'm coming from the newspaper industry, and believe me, what's happening in the legal industry is nothing, I repeat, NOTHING compared to that. There is no fundamental shift in the way the legal "product" is produced or consumed, and while you might have somebody in Bangalore doing document review, you still need American lawyers to do everything else. Everything I've read and all the practicing lawyers I've talked to in person say the upheaval is almost 100 percent a function of basic economic forces, some of them micro- but most of them macro-.

Besides, $100K to start would amount to a 300-percent pay increase over my previous job. Which I already lost, anyway.

[stateofbeasley]

From what I've seen in the best posts on this thread, it seems like law firms are responding to the recession the way most businesses would: by shrinking its payrolls. Why is this so shocking to some people here (or, rather, JDunderground)?
...

Besides, $100K to start would amount to a 300-percent pay increase over my previous job. Which I already lost, anyway.

I don't think JD Underground is shocked at the layoffs. But people here fail to grasp that the main clientele of Biglaw, corporations, are scrutinizing every penny and squeezing out every bit of efficiency they can. And they are going to keep those efficiencies even when the recession ends. The fact of the matter is that corporate clients do not want to be paying $400/hr for the services of an associate who has no experience.

That "300%" pay increase assumes that you will be able to get a biglaw job. Most law graduates will not be able to get a biglaw job.

I know people here do not want to hear this, but the truth of the matter is that the legal job market was horrible in 2006 when I graduated. That was when the economy was doing well. Most of my classmates were forced to take low paying jobs. Those not in document review or biglaw are in most cases making less money than they were before law school.

If you want to be a lawyer, by all means, go to law school. Just make sure your debt burden is one you can manage if you graduate as an average student.

A lot of people go to law school by default (the stereotypical political science major, etc) because they want money. These are the people who end up mired in debt and in a profession that they just don't like.

[stab master arson]

I don't think JD Underground is shocked at the layoffs. But people here fail to grasp that the main clientele of Biglaw, corporations, are scrutinizing every penny and squeezing out every bit of efficiency they can. And they are going to keep those efficiencies even when the recession ends. The fact of the matter is that corporate clients do not want to be paying $400/hr for the services of an associate who has no experience.

That "300%" pay increase assumes that you will be able to get a biglaw job. Most law graduates will not be able to get a biglaw job.

I know people here do not want to hear this, but the truth of the matter is that the legal job market was horrible in 2006 when I graduated. That was when the economy was doing well. Most of my classmates were forced to take low paying jobs. Those not in document review or biglaw are in most cases making less money than they were before law school.

If you want to be a lawyer, by all means, go to law school. Just make sure your debt burden is one you can manage if you graduate as an average student.

A lot of people go to law school by default (the stereotypical political science major, etc) because they want money. These are the people who end up mired in debt and in a profession that they just don't like.

I actually agree with 90 percent of what you're saying. Your point about manageable debt burden is something everyone needs to read. And what you said about changing demand for newly minted associates has borne out in the conversations I've had with practicing lawyers. I recently had lunch with a Vault 100 firm partner who said it almost exactly the way you did. But he also said the law firm staff and wage reductions were "80 percent" the result of the economic slump. That's hardly apocalyptic for the long run.

But your post raises the question: Has there ever been a time when "most" law graduates have been able to get a biglaw job? Maybe 20 years ago, before every Tom, Dick and Harry University decided they wanted to start churning out JDs. But then again, the highest paying jobs in any field tend to go, with a few nonmeritocratic exceptions, to the people who were in the top tiers of their classes or who go to elite schools. The fact is, the legal field is not uniform: In some markets (I use that word in its most expansive sense) it's at least status quo; in others, it's not. And for the people who choose their school after researching how well its graduates place -- and who then strive to be at least above-average -- a J.D. will NOT be a dead end.

For us here on TLS, it just gets tiresome when, for example, guys going by the handle "Law Is 4 Losers" -- who apparently took out 120K+ in loans to go to a third-tier law school that has marketability only in a market that was already supersaturated with lawyers before it was gutted by Wall Street's collapse -- log in here to start screaming melodramatically like Cary Elwes about how we, too, are going to spend the rest of our lives chained inside a basement.

For however much hyperventilating about how law school sucks/rules goes on here, this board is still a great resource for the majority of people. To stage inter-BBS "invasions" isn't the best way to convey one's point and only reinforces the perhaps-errant notion that JDuers are, in fact, total losers and consummate dicks. That's all.

[texaslawyer]

The economy is in the tank and will likely remain there for a good while. I have a second major in economics and we were taught in Econ 101, you can't spend your way out of a recession and you can't borrow your way out of debt. We're still paying for The New Deal and it's almost 80 years old. Our great great granchildren might have it paid off, but it's doubtful.

[sba314]

If you want to be a lawyer, by all means, go to law school. Just make sure your debt burden is one you can manage if you graduate as an average student.

A lot of people go to law school by default (the stereotypical political science major, etc) because they want money. These are the people who end up mired in debt and in a profession that they just don't like.

Really? Do the intentions of someone entering law school greatly impact the amount of debt they have, and their starting salary after they graduate? Or is your support based entirely on the just-world phenomenon?

[Dick Whitman]

There is no rational reason to think the top of the salary range will fall to $100k. That's almost a 50% decrease.

Nor will the recession fundamentally alter the way corporations spend money. Their penny-pinching ways will subside as the economy improves.

These articles claiming the way the economy works will be fundamentally altered are based on the hopes of the authors, not any historical basis.

[awesomepossum]

rolling down the street smokin' indo sippin' on gin and juice



laiiiid back




with my mind on my money and my money on my mind.......

[stateofbeasley]

But your post raises the question: Has there ever been a time when "most" law graduates have been able to get a biglaw job? Maybe 20 years ago, before every Tom, Dick and Harry University decided they wanted to start churning out JDs.
...

For us here on TLS, it just gets tiresome when, for example, guys going by the handle "Law Is 4 Losers" -- who apparently took out 120K+ in loans to go to a third-tier law school that has marketability only in a market that was already supersaturated with lawyers before it was gutted by Wall Street's collapse -- log in here to start screaming melodramatically like Cary Elwes about how we, too, are going to spend the rest of our lives chained inside a basement.

From talking to attorneys in their late 40's and early 50's, I get the impression that even back in the 1980's, biglaw was still restricted to the top schools or the top 10% anywhere else. However, the number of legal graduates was still small enough that those people who didn't make biglaw could easily find jobs in government and eventually transition to private practice if they wanted.

Today, there are so many law schools churning out J.D.'s that even the low paying gov't jobs are highly competitive. There's just not enough space for everyone. Hell, even supposedly low-prestige document review jobs are now competitive. The partner who runs the current operation I work on interviewed six people for two spots. Things are that bad.