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The winter holidays may be around the corner, but law firms are already making warm-weather plans as they finalize their rosters of summer associates. And for many Bay Area lawyers, the law school students who will spend next summer working at their firms represent the first rays of light of what they hope will be a brighter business climate. After years of paring down their summer associate ranks, a number of Bay Area firms are starting to raise their quotas once again. The increases, though relatively modest, reveal the bullish economic outlook within some firms and represent the first concrete steps in preparation for a pickup in corporate work. “I just filed my first IPO of the year, I’ve got a secondary on file, and I’ve got another two IPOs in the pipe. If you extrapolate over the year, your head count needs to start to go up,” says Jorge del Calvo, a corporate partner in Pillsbury Winthrop’s Palo Alto office. Pillsbury’s 80-attorney Silicon Valley office plans to host a larger number of law school students this summer. Instead of the three summer associates the office had last year, del Calvo expects to end up with between seven and 10 law school students this summer. Like most firms, Pillsbury won’t have exact numbers for some time, as Monday was the date by which students must accept or reject summer job offers. But based on the number of offers the firm has made, and its historical acceptance rate, Pillsbury attorneys expect to have more law school students roaming the halls of the Palo Alto office this summer than in the past couple of years. “The tendency is to think you’ll be growing again,” says del Calvo. The extra bodies are not on order for an influx of work come June, but rather so that the firm isn’t caught shorthanded two years from now. The second-year law school students who spend the weeks between June and August working for law firms are barometers of each firm’s economic outlook. The size of a firm’s summer associate class is based on how much legal work the firm anticipates when the students graduate from law school and are hired as first-year associates at the firm. Legal consultant Peter Zeughauser says a number of the Bay Area firms he’s familiar with are beginning to enlarge their summer associate class sizes. “It’s an indication that firms are optimistic about the economy, and that’s based on signs that they’re seeing in deals, and a continued strong litigation environment,” says Zeughauser. “But most of all it’s an indication that firms are optimistic about the economic outlook over the next year or two.” In some cases, the change in the forecast has caught firms almost by surprise. “I would say that the feeling that we need to take a hard look at those numbers has really arisen in the past couple of months,” says Matthew Sonsini, who heads up hiring at Wilson Sonsini Goodrich & Rosati. “Just looking at our current activity level, people are looking around and thinking that we may have been too conservative in setting our initial [summer associate] targets.” Sonsini says he wouldn’t be surprised if the firm’s 2004 summer class is 30 percent larger than last summer’s class, which counted 32 students. Wilson Sonsini sets the target number for its summer associate class based on activity levels in its various practices, the size of its client base and the firm’s view of its prospects. Right now, activity in the firm’s three key corporate practices — mergers and acquisitions, venture capital and initial public offerings — is gaining momentum, says Sonsini. “You look at all of those indicia and they’re pointing in the right direction,” Sonsini says. Fenwick & West, which had 17 summer associates last year, projects that it will have a slightly larger 2004 summer class, from 20 to 25 people, says Shawna Swanson, the firm’s hiring partner. Of course, planning two years into the future is risky business. And no one knows this better than Valley firms, where the memory of recent staffing reversals is still fresh. At the height of the dot-com boom, summer associate programs swelled as Bay Area firms played host to record numbers of law school students. Wilson Sonsini had 56 summer associates in 1999. Fenwick & West had about 70 summer associates at its peak, as did Cooley Godward, compared with about 44 last year. This left many firms facing a glut of incoming first-year associates when the bottom fell out of the tech market. Venture Law Group, Pillsbury Winthrop and Gray Cary Ware & Freidenrich are just a few of the firms that were forced to push back the start dates for their first-year associates or offer incoming associates buyout packages. In a few cases, firms actually rescinded job offers to first-year associates, as Fenwick & West did with a half-dozen of its recruits in November 2002. As if chastened by these events, some firms are now moving cautiously, and holding the line on their summer associate class sizes. Partners at Cooley Godward expect the 2004 summer class to be about the same size as the year before. “I don’t think it has to do with anticipating where the economy is, so much as just looking where our needs are down the road,” says Christopher Sundermeier, the chair of Cooley’s summer program. If the firm ends up having more work than it planned for, Sundermeier says, then Cooley will simply hire lateral associates or third-year law students. But while filling holes with third-year law students is a low-risk tactic that virtually all firms rely upon to some degree, some say it is no substitute for an aggressive summer program that draws from the pool of second-year students, where the best and brightest are presumably to be found. “The good candidates get snatched up early in the game, no question about it,” says Sonsini. Of course, what the best candidates think of Bay Area firms is unclear. Even with the recent signs of life in corporate practices, the specter of the technology industry crash still colors the region’s reputation. How this plays out in the student acceptance rate for summer associate programs this year is something that many attorneys in the Valley will be paying close attention to. “As we start aiming for larger classes again, that’s the test of whether the Valley is interesting again,” says Pillsbury’s del Calvo. “Whether we’ve regained our luster.”

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