Big firms across the country have dramatically cut the number of associates attending their 2009 summer programs, a sign that firms don't expect to see a talent shortage in fall 2010.
Cuts to the summer program, which is an expensive but important recruiting tool for most top firms, mean big savings in a year of economic uncertainty. But they also mean firms are feeding fewer people into their talent pipeline, and risk not having enough attorneys ready if demand picks up.
With the hundreds of associates deferred or laid off this year, firms appear to be banking that the risk is minimal, since the associate market will have plenty of pickings for the next couple of years.
"I think there will be, for the next year to two years, more first-years than law firms will be looking for," said Keith Wetmore, chairman of Morrison & Foerster.
"I hope that by the fall of 2010, firms will be close to being aligned again through smaller summer classes this year," he said.
Many of California's biggest firms have cut the number of associates in their programs compared to last year, some by 30 percent to 50 percent, according to data collected from the National Association of Law Placement. See The Recorder's table of how top CalLaw 25 firms are (mostly) shrinking their summer classes (pdf). For further data, see The Recorder's law school blog, The Shark.
The 10 largest firms nationwide also have cut their programs by similar amounts.
Industry observers said it's another sign big firms might be backing away -- at least for now -- from the high-leverage staffing models typical of the boom days. Associate-partner ratios have already taken a dive from layoffs and deferrals.
"Without a doubt, the summer-program cuts represent a strategic initiative to manage the talent pipeline," said Robert Depew, a managing director in the San Francisco office of Major, Lindsey & Africa.
"Essentially it's like shutting the gate for a bit, and it has a ripple effect with respect to the firm's needs," said consultant Wendy Tice-Wallner. "They already have a stockpile of talent that they can't use that is waiting for the work."
There are pros and cons to the move, Depew said.
"By cutting summer hiring, firms risk being ill-prepared to meet client needs and manage workflow should the market experience a surge in demand for legal services," Depew said. "But they reduce the risk and related stigma of being unable to extend full-time employment offers to all summer associates or suffering further attorney layoffs."
Firms take two to three years to recruit associates from top-notch schools. The process includes identifying a student, interviewing and inviting them for the summer, making an offer and waiting for acceptance, and then waiting until the student graduates and passes the bar. It forces firms to predict their hiring needs at least two years in advance.
Summer programs are known for their lavish extracurricular activities -- weekend pool parties at partners' homes, baseball games, lunches and dinners at high-end restaurants, excursions to wine country and white-water rafting trips. The activities give partners a chance to get to know associates socially, and to see if they will fit in at the firm and are the type of person who could build a business, said Tice-Wallner, former chairwoman of Littler Mendelson.
But summer associates' work for the firm, however small, also lets firms judge their core skills in writing and research, she said. Firms know a few won't cut it, and they integrate that into their pipeline calculations.
Tice-Wallner said she never would have left Philadelphia for sunny California if it hadn't been for a summer program she attended with Morrison & Foerster while she was a law student. After weeks of beautiful weekends and parties, she was sold, and joined MoFo after graduation.
On top of the expense of all that fun, summer associates at top firms earn $3,000 a week. Yet many associates leave the firm within five years.
James Rishwain Jr., chairman of Pillsbury Winthrop Shaw Pittman, said the new economy, "where no assumption is safe," is challenging the legal industry to rethink and re-evaluate the law firm model.
"This evaluation must include how law firms recruit law students from law schools and how law firms run their summer programs," he wrote in an e-mail.
Stacy Miller Azcarate, founder of recruiting firm Miller Sabino & Lee, believes firms might have to re-evaluate recruiting and associate training in general for the longer term and take a more serious tack with their summer programs.
"What's really going to happen is that firms are going to have to rethink their summer program and rethink their whole system, because it's so difficult to anticipate your hiring needs two years out," Miller Azcarate said.
"The social aspect is fun and it makes for an interesting summer," she said. "But I hate to say it, it's not summer camp, it's a profession."