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Morris, Manning & Martin Rescinds Offers, Nixes Summer Program
Fulton County Daily Report
March 19, 2009
Morris, Manning & Martin has rescinded offers for six of its incoming first-year associates and canceled this year's summer associate program because of the recession.
Nationally, a number of firms have pushed back start dates for their 2009 first-year class and some have rescinded job offers, but Morris Manning is the first Atlanta firm to announce this kind of hiring pull-back. The Web tabloid Above the Law first reported the news on Tuesday.
The firm will pay the first-years that it's not hiring their $5,000 starting bonus, said Morris Manning's managing partner, Robert E. Saudek, in an e-mail to his firm's attorneys on Tuesday.
Morris Manning rescinded offers to the six 3Ls because it does not have enough work for them, Saudek said in the e-mail, which he provided to the Fulton County Daily Report. "We believe that our first goal should be to retain jobs for the associates who are already working for us before bringing in more associates," he wrote.
In the internal e-mail, Saudek said the firm did not rescind all of its offers to 3Ls, but he declined to be more specific with the Fulton County Daily Report. Last year, the firm hired six 3Ls, according to the National Association for Law Placement.
The firm has transferred associates from its corporate and real estate departments into litigation, Saudek wrote, but "we ... do not believe the work level is sufficient to bring in a whole additional class of first year lawyers."
Saudek added that when work picks up, Morris Manning will offer jobs to the 3Ls whose positions it has rescinded, assuming they still are available. "That could be in September or it could be next year," he said.
The cancellation of the summer associate program affects nine law students, eight 2Ls and a 1L, said Saudek in a separate e-mail to the Fulton County Daily Report. He added that the firm plans to resume the program when the economy improves and will make a decision on its 2010 clerkship program by this summer.
Morris Manning laid off four associates this year, but does not plan to make any additional reductions, according to Saudek's internal e-mail. "If the economy continues to decline, it is of course possible that layoffs could be made at some point in the future," he added.
Contrary to a report on Above the Law, the firm did not break the bad news to the law students by leaving them voice mails, Saudek said in the internal e-mail. The firm's partner who handles law school recruiting spoke to each of the affected students over the phone, he said.
Morris Manning reported earlier that revenue last year at the 154-lawyer firm dropped 4 percent to $99.1 million, which pushed down revenue per lawyer 4.5 percent to $643,235.
Net income dropped 14.7 percent because the firm increased the number of nonequity partners, who are compensated out of operating revenue, not profit. That increased the average profit payout for the firm's 40 equity partners by 3.5 percent to $834, 108.
TOUGH TIMES COULD PREVENT BACKLASH
Several local recruiters said the unprecedented economic downturn may insulate Morris Manning from a backlash in its future hiring efforts.
"It probably will give summer associates or law students pause," said legal recruiter Robert T. Graff III, but he pointed out that for businesses faced with making job reductions, cutting the last people in the door is standard practice.
"I think this is how most businesses look at it. Law firms are doing the same now," said Graff, a partner at Major, Lindsey & Africa, a legal recruitment firm.
He noted that in the last recession, firms laid off fourth- and fifth-year lawyers but not incoming first-years and summer associates.
"I doubt there will be much lingering impact," said David S. Gruskin of The Partners Group. "These are singular economic times. Firms are having to make tough business decisions."
Janet D. Hutchinson, the assistant dean for career services at Emory Law School, expressed disappointment with Morris Manning's decision but said the times are so unprecedented that it is difficult to predict the impact, if any, on the firm's future student recruitment efforts.
"We have students that are impacted, and we are focusing on how to be supportive of them," she added.
While rescissions of job offers are making headlines this year, said James G. Leipold, the executive director of NALP, some occur every year when firms either hire too many lawyers or experience a downturn in work.
There have been far more rescissions than usual this year, he said, but his organization has no numbers on how many firms have cut their starting classes.
Leipold said firms are more commonly delaying start dates from three months to a year in response to the recession instead of cutting associates before they've started work. Some firms are placing the first-years they can't use with clients at a reduced salary or paying them to work in public service for a year, also at a reduced salary, he added.
(Locally in Atlanta, Alston & Bird reported in February that it was offering laid-off associates the opportunity to work in-house for clients or for nonprofits and charities, while remaining on the firm's payroll, during the three- to six-month transition period they've been given to find another position.)
"Law firms do it absolutely as a last resort. They are keenly aware of the reputational harm," Leipold said.
But legal recruiter Melba Hughes said it's far better for a firm to cut first-years before they join the firm, instead of laying them off during their first year of employment.
She explained that first-years laid off during the year find themselves between a rock and a hard place, because of big firms' practice of hiring them as a class, right out of law school. "There are no other opportunities out there. Nobody has room for another first-year," she said.
Firms with openings for junior associates prefer hiring a more experienced second-year for the same salary, said Hughes, the principal of Hughes Consulting. But first-years can't go backwards and compete for entry-level positions with 3Ls, because they are outside of the law school recruitment system that larger firms use to fill those positions.
Hughes said she is seeing more laid-off first-years looking for work these days. "It is very rare during normal economic times to see a first-year attorney in the job market," she added.
Hughes agreed that the extraordinary nature of this recession means rescissions likely will not affect firms' ability to attract talented law students in the future.
"But it's very sad for the individual kids," she said. "There is no question that this is not where a 3L wants to be."
