DLA Piper expects to keep scaling back the size of its associate classes and make more use of staff attorneys as it revamps its associate program, the firm's leaders said.
The delayed class of first-year associates entering the firm in January has 85 lawyers, and only half of those will actually take up posts at the firm, while the other half go into public interest jobs and join the firm in the fall of 2010, said Frank Burch, the firm's global chairman. That class size is down from 100 last year and 120 in 2007, he said. The firm was also "careful" in hiring just 65 students into this year's summer program, he said.
DLA, the largest firm in the United States, with about 3,785 attorneys worldwide, is one of several firms rethinking its associate program amid the need for cost-cutting brought on by the recession and in light of clients' demand that they pay only for associates skilled enough to deliver consistent quality. The firm hopes by year end to have a new associate compensation, training and promotion structure that discards the traditional "lockstep" system of paying them based on years of service, the leaders said.
"People really want to rethink the model," said Lee Miller, one of the firm's joint chief executives. "I don't think the model is broken, but people want to rethink what they're doing and why they're doing it."
The firm expects that more work in the future will be done by staff attorneys, the leaders said. Such attorneys are employees, but are not on the firm's partnership track and are typically paid at lower rates.
Currently, DLA has about 30 staff lawyers. The firm will have larger pools of professionals who do certain things efficiently at a cost that makes more sense to the client, Burch said.
"My view is you're going to see a lot more firms very explicitly managing some part of their professional work force that way," Burch said.
The only challenge for firms in shrinking their associate classes may be that they find themselves short-staffed when the economy turns around, said Eden Mandrell, a Chicago partner at recruiter Major Lindsey & Africa who leads the regional associate practice group. Still, there are so many qualified lawyers in the market right now the firms could probably quickly pick up additional hires, she said.
"It's hard to have a crystal ball as to what they're going to need at that point," Mandrell said.
Although DLA is still developing the details of the new associate model, another general theme will be basing more of a given associate's pay on his or her performance, said Burch, who is based in Baltimore.
"When people have mastered certain skills that the market values, then they advance to new band and that's where the base compensation goes up," Burch explained.
Firms' moves toward more performance-based associate compensation is a positive development because it allows the firms to give bigger rewards for the best lawyers, Mandrell said.
DLA and other law firms increased first-year associate pay to $160,000 in 2007, with commensurate increases for more senior associates. Many firms began to question those salaries when the recession set in with some, including DLA, scaling them back as part of other cost reductions.
DLA in May said it would cut U.S. associate pay by 10 percent in June, lowering first-year associate salaries in big-city markets to $145,000 and in smaller markets to $130,000. That is a placeholder until the firm can restyle the associate program, said Miller, who is based in Chicago. The firm has also eliminated about 110 lawyer positions in the United States.
The firm has made the cost reductions that will put it in a better financial position by year end, Burch said. "You do the hard things, and there's a little bit of pain," Burch said. "Lee and I have never been people who run away from things."
The firm isn't currently planning on any additional job or pay cuts, but it will need to react to the economy and client needs as is necessary, the leaders said.
"What you're going to see is that we're going to react to the economy and what our clients are doing," Miller said.