Jacob Wackerhausen/iStockphoto
Jacob Wackerhausen/iStockphoto ()

New associate hiring at the nation’s largest law firms offered a rare bright spot in an otherwise ho-hum 2016 entry level legal job market.

Firms with 500 or more lawyers increased their hiring by an impressive 6 percent, while smaller firms brought aboard fewer new associates and all other job sectors similarly contracted, according to the latest analysis from the National Association for Law Placement (NALP).

The largest law firms hired 4,238 members of the class of 2016, compared with 4,007 new graduates who landed in large firm jobs in 2015, NALP found. Associate gigs at firms with 500 or more attorneys accounted for 25 percent of all law firm jobs secured by 2016 law grads, up from 23 percent the previous year.

“Large law firm hiring has increased fairly steadily since 2011, adding nearly 1,400 jobs in five years,” wrote NALP Executive director James Leipold in his commentary on the latest findings.

Demand has held strong among many large firms, said Dallas-based Vinson & Elkins hiring partner Thomas Leatherbury, which in turn has helped fuel associate hiring. His firm increased summer associate hiring this year in anticipation of needing more new associates in 2018 thanks to increased demand. A bigger appetite for new lawyers among the largest firms also means stiffer competition on the associate recruiting front.

“I think it’s becoming much more competitive among the large firms,” Leatherbury said. “You have large firms entering more markets. We see that particularly in Houston. There is more competition for the top graduates.”

The judicial clerkship, government, and public interest sectors have proven far more predictable than law firms when it comes to new lawyer hiring, NALP found. Those three job categories have accounted for between 26 percent and 29 percent of all new lawyer jobs for the past 30 years, and 2016 was no different. Among the 2016 law graduates who found jobs within 10 months of leaving campus, 29.5 percent landed clerkships, government gigs, or public interest jobs.

Despite the recent increases in large firm associate hiring reported by NALP, hiring among those firms is hovering at about 82 percent of its 2007 pre-recession peak and it seems unlikely to fully recover. Summer associate hiring data from last fall indicate that the large firm hiring surge may be coming to an end. Half of those firms told NALP that they hired fewer summer associates from the class of 2018, meaning there will be fewer full-time associates in the pipeline next year.

“We would expect large firm hiring for the Class of 2017 to show additional gains, and we will likely see a leveling out in that sector for the Class of 2018,” Leipold wrote. “It is unlikely that large firm hiring will ever match the high reached by the Classes of 2007 and 2008 when more than 5,000 jobs at the largest firms were reported for two years in a row.”

Moreover, flat client demand, growing expenses, higher associate salaries and increasing technological efficiencies are likely to tamp down on demand for new associates, Leipold added.

Overall, the new lawyer employment rate rose for the third straight year, NALP found, yet that increase was due primarily to the fact that there were fewer 2016 law graduates competing for jobs. That finding jibes with new lawyer job numbers released by the American Bar Association in May. Nearly 68 percent of 2016 law graduates found jobs for which a J.D. is a requirement within 10 months of leaving campus. Another 15 percent landed jobs for which a J.D. offers an advantage. Ten percent of 2016 law graduates were unemployed after 10 months, down about one percent from the previous year.

While large firms boosted hiring, overall entry level law firm employment shrunk by 560 jobs, with much of that decline coming at small firms of 1 to 10 lawyers. Solo practices were particularly unpopular among the class of 2016, with just 1.5 percent of them hanging out their shingle—the lowest number in 15 years.

Even with that decline, solo and small firm jobs accounted for nearly 38 percent of all law firm jobs, NALP found, and significantly outnumber jobs at the largest law firms.