Let’s talk about chaos. The numbers on this year’s Texas Lawyer Associates Survey have no discernable pattern. The state’s largest firms are all over the map in terms of the number of new hires, although salaries are pretty consistent, according to the chart. The chaos likely results from the turbulent economy, with some firms clearly reluctant to fill every empty office with fresh-faced new associates.
“It doesn’t surprise me that firms are all over the board,” says Haynes and Boone hiring partner Taylor Wilson of Dallas. “In this market, some firms have been more adversely affected than others.”
Nine of the 21 largest Lone Star firms responding to the survey say they have more new associates starting work this fall than last fall, 11 of the firms have fewer new associates, and the number is unchanged at one of the firms. Texas Lawyer collected statistics from 21 of the 25 largest firms, as reported on our 2002 “The 100 Largest Firms in Texas” poster; see Texas Lawyer’s June 24 edition. Overall, the 21 firms brought on 6.0 percent fewer new associates this fall than in 2001, a statistic that presumably reflects the troubled economy.
But offer rates the percentage of summer clerks asked to return next fall as first-year associates � are down at 12 of the firms and up at seven of them. The offer rates range from a high of 90.3 percent at Jones, Day, Reavis & Pogue in Dallas to a low of 0.0 percent at Godwin Gruber of Dallas. For 21 firms, the average offer rate is 67.4 percent, compared to 71.8 percent last year. That means fewer of this year’s summer clerks will become first-year associates in the fall of 2003.
However, comparing hiring percentages can be a murky proposition in one sense, since the size of the summer clerk classes vary from year to year. That’s a bitter pill to swallow for summer clerks who lost out and didn’t receive the offers they might have received in better economic times.
Historically, the numbers reflected in these two surveys � one on new associates and one on summer clerks � are thought to be leading indicators of the financial health of a firm. But not everyone agrees with that theory.
“I’m not sure you’ll find that’s accurate,” says Jim Jordan, chairman and CEO of Dallas-based Munsch Hardt Kopf & Harr. “There are too many other factors involved.”
Those factors include the quality of the candidates, acceptance rates and expected needs in specific practice areas.
However, the theory bears out in some ways. After all, busy firms should need more help and should be hiring many new associates.
The offers to 2Ls are connected.
Late each summer, firms look at how many summer clerks they’d like to have for the next year. Regardless of the process used, those summer clerks form the pool from which firms hire their new associates for the year after the 2Ls clerk. This means firms try to predict needs two years in advance.
Firms utilize a number of different theories in their employment practices.
Some firms, such as Texas giant Vinson & Elkins, want to hire as much talent as they can find � preferring to tighten their belts during lean times. The Houston-based firm hired nine fewer associates this year than in 2001. It reported hiring 11 fewer summer clerks and extended 11 fewer offers this year. However, its percentage of offers increased from 80.9 last year to 86.1 this year.
The firm’s numbers are a result of a desire to enhance its acceptance rate through a smaller program rather than a conscious decision to cut back on hiring, says Joe Dilg, V&E’s managing partner.
“The employment process is more of an art than a science,” he says. “We’re focused more on the strength of the talent we’re attracting rather than the business two to three years out. We feel if we can attract the good talented lawyers, we can continue to attract the high-quality business.”
Bracewell & Patterson shares this attitude, says Jennifer Jacobs, general counsel for professional development at the firm. “We don’t have a set number or a quota. We just look at the students. We take as many [as we see] who have the right credentials and an interest in our firm. We’re delighted to make room for them.”
Other firms approach hiring based on demand.
Dallas-based Jenkens & Gilchrist falls into this category. It had 12 fewer new associates starting this fall than in 2001, and its summer class was smaller this year by 20 clerks. The firm made 19 fewer offers this year.
“We try very hard to match our summer class and subsequent fall class to the rate of organic growth in our business base,” says the firm’s executive director, Roger Hayse. “Our existing clients are doing less transactions. Consequently, we don’t need to hire as many attorneys to accommodate the junior-staffing needs on those files.”
Whatever ap-proach firms take in their employment practices, it’s really little more than a crapshoot, agrees Munsch Hardt’s Jordan and Stephen Mason, managing shareholder of Chamberlain Hrdlicka White Williams & Martin in Houston.
Chamberlain decreased its clerkship class from 12 in 2001 to seven this year and made five fewer offers this year. “Part of it is that we’re being a little more conservative than we have in the past,” Mason says.
ONE OR TWO SESSIONS?
Akin, Gump, Strauss, Hauer & Feld is another firm with a much smaller summer clerk class � 27 fewer clerks this year and seven fewer offers.
Part of this is due to the firm’s projected needs, but it’s also explained by a significant change in the firm’s clerkship program, says Kenneth Menges, the firm’s Dallas managing partner.
“In Dallas, we moved to a first-half only clerkship program,” he says. “That cut the Dallas numbers in half.”
The primary reason behind the decision, Menges says, is that acceptance rates for new associate positions are higher for the first firms at which clerks work.
“It seems to be the case that students go to their preferred firm first,” he says. “New York and Atlanta firms require [clerks] to come there first. Dallas and Houston become their second choices. We think it’s a smart move that increases our ability to identify attorneys who want to join our offices.”
Haynes and Boone is opposed to this approach, Wilson says.
“I know a number of our peer firms are reducing the size of their programs [by going to one session],” he says. “We’re not doing that. We see our program being generally the same size. . . . We think it’s in our best interests to keep our program in two halves.”
Jones, Day, Reavis & Pogue is considering a move to one session for summer clerks, says the firm’s managing partner Francis Hubach. The firm had a good year � hiring two more associates and eight more clerks than last year.
“We’re looking at that,” he says. “The negatives are that you have fewer people coming in. My gut reaction to this is you would increase the odds of acceptance from the group.”
And acceptance rates are important to consider when extending offers, says Kirk Sniff, managing partner of Dallas-based Strasburger & Price. It goes to show you can get some of the clerks all the time, but you can’t get all the clerks all the time.
The firm hired three more new associates but had 10 fewer clerks this year.
“We adjust our number of offers based on the practice areas that have identified a need to us,” he says. “We anticipate a certain acceptance rate � between 60 to 75 percent historically � and make our offers based on that.”
High acceptance rates also can reduce the number of summer clerks hired the following year, Wilson says.
Haynes and Boone hired 10 more new associates this year and had 28 fewer summer clerks than it did last year.
“We hire our summers based on projected needs for the coming fall,” he says. “When we had a high acceptance rate for our permanent jobs, we didn’t need to have as big a program for this summer.”
One challenge with changing your summer program is that historical acceptance rates are thrown out of window, Menges says.
“The yield has varied over time given, not only competitive factors in the legal market but also practice areas that are hot,” he says. “We’re not sure if the historical yields will remain true since we changed our program. We think it will increase, but we’re not certain yet.”
Still another reason for smaller programs this year were that classes last year were exceptionally large, Jordan says. “A lot of firms got burned last year with gigantic summer classes. Then they didn’t have work for them. That creates a lot of internal discussion on how you’re going to do it next year.”
When firms decided upon their target numbers for 2001 summer clerk classes, it was late summer 2000. The economy was blowing and going, Jordan says. That means, inevitably, some of them were overstaffed, he says.
A depressed economy also impacts acceptance rates, Sniff says.
“The tougher the economy, the higher the acceptance rate you project. You can bring in a smaller class to choose from. It means you’re getting quality people because there are less positions out there,” he says. “I wish [the hiring process] was a science, but a lot of it is intuitive. There’s a feel to it and experience helps. You make intelligent, intuitive choices based on experience. I have a feeling that we have the opportunity to hire great, talented people during these tough economic times.”
The down economy does create opportunities, Mason says.
“The job market is tightening up some,” he says. “I’m thinking acceptance rates will be higher this year. I think large firms are making less offers than they have in the past. This should have a trickle-down effect.”
The economy also keeps attrition down, Menges says. “Attrition has declined pretty significantly in the middle associate ranks. We’re not having to move as aggressively in the lateral or entry-level markets. . . . There’s no question the struggling economy has made all lawyers � associates and partners � reluctant to jump to new career opportunities. In part because there are fewer opportunities but also because it’s safer for lawyers, who are basically conservative in their career choices, to stay with a firm they know and one that offers them a more predictable future.”
Like every cycle, the economy will swing up again. Some firm leaders predict that rise will occur soon and that there will be an increased demand for attorneys � particularly transactional attorneys � in two years. “In a couple of years, we’ll have a need in transactional areas,” Mason says. “I think we’ll see a need in almost every area two years from now.”
Are the current 2Ls listening? That’s the group that will be expected to fill those needs.
Whatever happens, it can’t happen soon enough, Hayse says.
“We, like many of our competitors, hope things pick up in a hurry so we can hire more new attorneys,” he says. “The last thing we want to do is hire a lot more lawyers than we have work for them to do. It does a disservice to them and to our law firm economics.”
Related charts:
Offers to 2002 Summer Associates at Large Texas Firms
New Associate Stats 2002
2002′s New Associates Compared to 2001′s Offers
