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Not so long ago, when the nation was awash in optimism and initial public offerings, it was hard to tell who was having the better year: the law firms or the talent brokers that supplied them with lawyers. Now, it’s difficult to determine which of the two is hurting less. It’s a tough time to be a legal headhunter. The economic recession that has shaken so many San Francisco Bay Area law firms is taking a toll on recruiters as well. With a glut of unemployed attorneys on the market and slackening demand for them, headhunters find themselves in a tenuous role. To make it through this dry season, many headhunters are widening their net in search of new ways to bring in money. While headhunters offer a valuable service to law firms, they are not immune from the cost-cutting initiatives being undertaken at many firms. “In an economy like this, law firms and companies are very timid about spending money,” explains Julie Qureshi, co-founder of Solutus Legal Search. “Spending money on using headhunters, they believe, is one area where they can cut costs.” The potential savings are not insignificant. A legal headhunter’s standard fee is 25 percent of the newly hired attorney’s first year salary. Based on Bay Area law firm salaries, that can translate to as much as $50,000 for a senior-level associate. Much more economical for law firms are do-it-yourself recruiting methods such as employee referral programs. San Francisco’s Pillsbury Winthrop, for instance, pays its employees $10,000 if they recommend a friend who’s hired as an attorney. But Pillsbury, along with other law firms that pay employee referral bonuses, say such programs are not substitutes for headhunters. In fact, Pillsbury will host a reception for headhunters in January in order to stay in touch with legal recruiters. Few law firms are completely ruling out headhunters, or at least they’re not saying so publicly. But many are reducing their reliance. “There is good talent that is available without headhunters these days,” notes Peter Engstrom, the managing partner for Baker & McKenzie’s San Francisco and Palo Alto, Calif., offices. According to Engstrom, Baker & McKenzie has decided to use them only for “strategic initiatives.” This scaled-down policy is already being felt by many headhunters, who note that it has become much more difficult to get a foot in the door at law firms these days. “Take our most stellar corporate candidate — top of their class at Harvard, from an excellent New York firm, really good training,” says Kimberly Fullerton of recruiting firm Major, Hagen & Africa. “Last year we could have placed that person in a split-second. Firms would have flown him out. This year those people aren’t even getting interviews.” By far the hardest hit businesses for headhunters are placements for in-house counsel and law firm associates. The demise of Silicon Valley’s Internet companies eliminated a large base of employers that many headhunters depended on. There’s still a demand for in-house counsel at biotech and old-economy companies, but not nearly enough to make up for the dot-com drop-off, say headhunters. Meanwhile, the demand for associates, particularly corporate associates, at law firms has “dried up, shriveled to dust,” in the words of Major, Hagen & Africa’s Robert Major Jr. It’s a marked change from the late ’90s, when corporate associate hiring represented the bulk of headhunter activity. Back then, recalls recruiter Avis Caravello, job orders with multiple openings — firms asking for say, five securities associates and six intellectual property associates at once — were not uncommon. And the need for associates was so urgent that many law firms were willing to pay the suppliers dearly for them. “A year and a half ago, some law firms were putting me on retainer for associate hiring and giving me bonuses for associate hires,” says Caravello, principal of Avis Caravello Attorney Search Consultants. These days associate layoff announcements are more common than associate job orders. To make up for all of this lost business, headhunters are stalking other kinds of prey. When Solutus was founded in 2000 for instance, the firm focused on associate headhunting, says co-founder Qureshi. Given the current climate however, Solutus has begun shifting its attention to partner placements, a segment that’s still healthy. While partner-level searches carry a bigger bounty, they also require much more legwork. Since partner searches must be conducted in a shroud of secrecy, they’re inherently more complicated. What’s more, says Qureshi, issues relating to the partner’s book of business, such as how portable it is, need to be dealt with. And since a law firm’s entire partnership often needs to vote to approve a new partner, deals are much harder to complete. It’s not unusual, say headhunters, for partner searches to take more than a year to complete. Other headhunting firms are weathering the downturn by looking outside the Bay Area. According to Major, Hagen & Africa’s Major, Silicon Valley attorneys have a strong enough reputation that they’re still in demand in other parts of the country. “The Bay Area has turned into an export market when heretofore it was always an import market,” says Major. Major, Hagen & Africa’s Bay Area office, for instance, is working very closely with its offices in other cities, such as Chicago and Hong Kong. This should allow the Bay Area office to make up to 80 percent of whatever revenue is lost because of the Bay Area’s downturn in corporate associate hiring, says Major. Still, notes Major, this year’s revenues will be down compared to 2000. In spite of the tough times, most headhunters are not discouraged. Many survived the recession of the early 1990s and view this as just another temporary downturn to ride through. Law firms, explains Solutus’ Qureshi, “are hot and cold on headhunters. There are times when they say, ‘We’re not using headhunters now.’ It’s not like we lose clients and pick up clients. We’re always working with clients — it’s just a matter of what their needs are.”

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