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Am a lateral looking for tips on how to spin my first job out of law school. I spent my first year at a small firm in another city. The firm went under basically and everyone was let go eventually. I then went to a large firm and spent 1.5 yrs. Then lateraled to my current firm where I've been at for a year. In short, I got 3 firms in 4 years on my resume. I really want to leave out the first firm because (1) it's embarrassing. Boss was basically sanctioned for fraud; (2) worked as a law clerk, not a lawyer; (3) not really relevant area of law to my current career.

Is it ok to leave this out and start from the 2nd firm?

You can leave it off, but they will ask about it. It’s not just a few months, it’s 1.5 years. Why not avoid that awkward conversation and just include? You weren’t sanctioned, so it shouldn’t be embarrassing, unless you’re embarrassed by having worked in a small firm/for a solo.

Unless you did something wrong, it makes no sense to leave off. It is another market so any firm or company you apply to likely won't know about it. Just explain in an interview that you worked at a small firm that went under. That's going to have a lot less follow up questions than leaving an entire year off your resume.

I would put the position in a seperate category called legal clerkships which would go after your main attorney position section. You can also throw in your sumner clerkships in this section if you like.