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A slowdown is nowhere in sight. With associate salaries up across the board, law firms face exploding costs that they could not have anticipated just 12 months ago. So what are they doing? They’re hiring even more of those expensive associates. Top partners at many of D.C.’s largest firms say they plan to hire as many new law school graduates as the market demands — and the market is very demanding. “We don’t have any plans to cut back on associate class sizes,” says Finnegan, Henderson, Farabow, Garrett & Dunner managing partner Thomas Jenkins III, who adds that the firm hired about 30 new associates in Washington last year. “We’ve got the work now and we need the people, so from our perspective it’s a pretty easy decision to make.” Several other firms, including Steptoe & Johnson, Arnold & Porter, Covington & Burling, and Wiley, Rein & Fielding all plan to bring on as many new associates next year as they are this year. TAKING A LONG-TERM VIEW But, says Angelo Arcadipane, managing partner of Dickstein Shapiro Morin & Oshinsky, “a tree doesn’t grow forever.” Though Dickstein Shapiro is still feeling the boom like nearly every other firm, Arcadipane is taking a longer view when it comes to bringing on new lawyers. Dickstein Shapiro hired 22 new associates this year and has not decided how large a class it will hire in 2001, according to Arcadipane. “You would not be a prudent, careful fiduciary if you did not consider how [associate salaries] would impact your staffing,” he says. Arcadipane acknowledges that many firms are going with the go-go market, but says there are two ways to look at hiring strategies. “One way to look at it is to go with the good times and hire as many people as you need to get as much work as you can get,” he says. “Another way is to look at it more long-term and staff in a way that cuts through the peaks and valleys.” Consultant Jay Jaffe of Jaffe Associates says that, although firms may not want to admit it, they will have to begin scaling back sometime. “I think they are going to have to be much more precise in their hiring standards because clients are saying, ‘You can’t bring these kids in to train anymore. You can’t bring them in on our dime.’ “ Jaffe points out that firms don’t have that much to gain by bringing on lawyers who are likely to move on in just a few years. “The era of the disposable associate is coming to an end. The up and out isn’t very efficient.” Rebecca Snow, hiring partner at Covington & Burling, says that more sophisticated clients are also changing the way firms train and assign work to their associates. “Clients are very focused on getting some experience for what they pay for,” she says. “In the past, when I was an associate, I could go to a deposition with a partner and assist on the case. People don’t do that anymore because clients aren’t going to pay for that.” Nonetheless, Snow says the firm is looking to bring on as many new associates as it did last year. “Our needs for people have increased,” she says, adding that the firm prefers to train lawyers rather than look outside. A DEEP LATERAL POOL Snow, Arcadipane, and others acknowledge that the D.C. market has a unique pool of lateral talent that can contribute to a firm more quickly than most recent law school grads: government lawyers. Arcadipane notes that government lawyers are more experienced than recent graduates, are less likely to move from firm to firm, and are fairly eager to take advantage of the discrepancy in salary between the federal pay scale and the private sector. But Snow cautions that some government attorneys are more valuable than others. “Litigators or SEC enforcers are more attractive” than those who handle only policy matters, she says. With a change in administration coming up, there could be a large class of government attorneys entering the private sector. But Jaffe adds that government attorneys can be a risk because they have not had to worry about office efficiencies or generating a book of business. A government lawyer, he says, “may be a bureaucrat and may not be a complete lawyer.” There’s no question that, for now, the big firms are hiring associates of all stripes and are willing to pay the new going rates. “Right now, the pipeline continues to be full, work is prevalent, and demands are great,” says Paul Rothenberg, a managing principal at Arlington, Va., executive search firm the McCormick Group. “In any business, you want to take a strategic long-term look. But now, that long-term look doesn’t show any significant drop in the market, so you have to have the resources. As long as the market and the clients are driving law firms to perform, they are going to do what’s reasonable and logical and add the resources.” Richard Wiley of Wiley, Rein & Fielding emphasizes, “We’re just not changing our system in terms of our number of hires. The marketplace says [associates] are entitled to that kind of salary, and I’m not one to argue with the marketplace.”

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