Northern New Jersey firms are among the most bottom-heavy with associates in the nation, a survey shows.
Large firms in the region have an average lawyer-to-partner ratio of 2.48 to one, behind only New York City (3.16) and the San Jose, Calif., area (2.83), according to a Jan. 18 report by the National Association for Law Placement.
The ratio – also known as “leverage” – is well above the national rate of 2.19 lawyers per partner.
NALP derived the numbers from statistics that law firms submitted for its annual Directory of Legal Employers.
Notably, while NALP found a close correlation between large firms and high leverage, the 27 New Jersey offices whose data made up Newark-Northern New Jersey market figures tended to be smaller than in most other areas for which breakdowns were given. Only 29.6 percent were part of firms of 251 lawyers or more. By contrast, in Los Angeles, San Diego, Philadelphia and Boston – all close behind New Jersey in their leverage rates – between 61 percent and 77 percent of the sampled firms had 251 lawyers or more.
Nationwide, at firms of 50 or fewer lawyers, the ratio of lawyers to partners is 1.86 to one, while at firms of 701 or more lawyers, the same ratio is 2.6 to one.
Leverage was lowest in the Midwest and South and in smaller cities. In Detroit there were 1.71 lawyers per partner, while Minneapolis-St. Paul and Tampa-St. Petersburg each had ratios of 1.73 to one.
The sampled New Jersey firms are in Newark, Livingston, Rochelle Park, Roseland, West Orange, Florham Park, Hackensack, Morristown, Parsippany, Short Hills, Westfield, Bridgewater, Somerset and Woodbridge. However, their names were not released.
NALP provided no historic data specific to New Jersey, but nationwide it found that leverage rates climbed steadily in the late 1990s before starting a decline. In 2000, the ratio of lawyers to partners nationwide was 2.47 to one, compared with the 2006 figure of 2.19 to one.
“On a national basis, these figures in the two most recent years have returned to levels of the mid 1990s, after experiencing an increase in the late 1990s and peaking in 2000. While the fluctuation in these figures is obvious, the reasons for the fluctuation are less so,” the report states.
Historically, large firms followed the pyramid scheme, whereby a small number of equity partners directed a large staff of associates with a middle-management structure of junior partners and senior associates. The simple economics were that a large number of salaried lawyers billing by the hour maximized profits.
However, firms started slimming down their associate ranks toward the end of the 1990s as corporate counsel became more insistent on leaner, partner-heavy staffing of cases. Reductions were also caused by alternate billing arrangements that depended less on hourly rates and by more hiring of lateral partners.
However, large firms in New Jersey more recently have bulked up in associates to compete with out-of-state firms in recruitment and retention efforts. Hiring a larger associate class is a way of ensuring that even with attrition and cherry-picking, a cadre of trained lawyers will remain.
Hildebrandt International’s Joseph Altonji, who advises law firms on strategic matters, points out that the NALP report does not distinguish between equity and nonequity partners, the latter of which is on the rise. The ratio of associates to equity partners has thus increased, says Altonji, who works in Chicago.