Today’s front page Wall Street Journal Online article is compulsory reading for all law firm Managing Partners and H.R. professionals:
Hard Case: Job Market ?Wanes for U.S. Lawyers – Growth of Legal Sector Lags Broader Economy; Law Schools Proliferate
By AMIR EFRATI, September 24, 2007; Page A1
While the article admittedly says:
“For graduates of elite law schools, prospects have never been better. Big law firms this year boosted their starting salaries to as high as $160,000.”
It goes on to say:
“But the majority of law-school graduates are suffering from a supply-and-demand imbalance that’s suppressing pay and job growth. The result: Graduates who don’t score at the top of their class are struggling to find well-paying jobs to make payments on law-school debts that can exceed $100,000. Some are taking temporary contract work, reviewing documents for as little as $20 an hour, without benefits. And many are blaming their law schools for failing to warn them about the dark side of the job market.”
PUNCHLINE: My pre-law was comprised of a business degree which included a healthy dose of economics – it doesn’t mean I am right but here are my views (you decide what they are worth):
1) The balloon of increasing salaries at top firms (and "top firm wannabees") is going to SHRINK if not BURST. Fewer firms will compete with the top tier starting salaries and therefore average starting salaries will fall (in real terms – adjusted for inflation).
2) Mainstream firms (including many if not most of the AMLAW 200 and other major firms around the world) will find their appetite for enormous associate salaries waning in favor of dipping slightly deeper into the pool of candidates and offering top-third students in good schools much more than they might otherwise make (but less than recruits at the firms who continue to compete in the perceived feeding frenzy).
3) It’s not just the money! It’s the student loan! Students want respect, training, good work, a chance to know the names of their children, future prospects and a way to service their enormous public and private debt. So pay well (but not like you are trying to hire Angelina Jolie for the lead in your next movie), find a creative way to “help them with their student loan” and return your focus to where it has always belonged – making your firm a great place to practice law. (The following illustration relating to student loans is one of nine very useful illustrations included in the article – click on image to enlarge):
Footnote: How quickly things change: A three-month economic history on this blog site:
New Lawyer Jobs (US) Up by Largest Percentage since 2000 Posted July 17, 2007
Excerpt: "90 percent of 2006 law school graduates found jobs by February, 2007"
Doom and Gloom for the legal profession – it’s coming Posted August 3rd, 2007
Excerpt: "How much longer can the legal profession remain insulated from the market realities?"
And today this post Sharp Pin Approaching Associate Salary Balloon
Time is flying! Stay tuned.
(I’ve got a song lyrics stuck in my head "What goes up must come down" from Spinning Wheel by David Clayton Thomas of Blood Sweat and Tears (click for full original lyrics and you can get it stuck in your head too)