Despite the worst jobs report in NALP’s history when it came to jobs for 2011 law school graduates, Pennsylvania law firms have been hiring at increasingly higher rates for the last two years, with 2012 data compiled by The Legal showing double-digit growth in first-year associate hiring.
In looking at data gleaned from The Legal’s 2012 Pennsylvania First-Year Associates Survey, Pennsylvania firms saw a 10.6 percent increase in first-year associate hiring in their offices in the state between the 2011 class and the 2012 class. The firmwide hiring of associates for survey respondents grew at double that pace, with Pennsylvania firms hiring 20.5 percent more first-year associates firmwide in 2012 than they did in 2011.
There were 21 survey respondents that provided data for Pennsylvania-based first-year associates in both 2011 and 2012. Those firms collectively hired 123 first-year associates in 2011 and 136 in 2012, for an increase of 10.6 percent. That follows a 6.6 percent increase reported last year for the growth in hiring between 2010 and 2011.
There were 14 survey respondents this year for which firmwide hiring data was available for both 2011 and 2012. Those 14 firms hired a combined 185 first-year associates in 2011. That same group hired 223 first-years for this year’s starting class, making for a 20.5 percent jump in hiring across their offices.
Along with hiring more, the firms are also paying a bit more. While most respondents kept starting salaries for first-year associates the same, four firms have increased their entry-level pay. The average starting salary across the class rose 1.8 percent from $127,000 in 2011 to $129,250 in 2012.
Drinker Biddle & Reath pays its first-year associates $105,000 for the first four months while the associates focus on training as opposed to billing clients. That pay was increased to $130,000 for the remainder of the first year in 2011. But the firm has bumped that up to $140,000 for 2012.
Woodcock Washburn increased its starting salary from $130,000 to $140,000 and Pepper Hamilton raised its starting salary from $125,000 to $135,000, with former judicial clerks earning $140,000.
Saul Ewing increased its first-year associate class and its starting salary in 2012 in an effort to meet demand as well as fill the firm’s pipeline of associates. The firm increased salaries from $110,000 last year to $125,000 this year.
After not holding a summer program in 2010, Saul Ewing only had one first-year associate firmwide in 2011 and none in Pennsylvania. This year, the firm has nine first-year associates joining the firm, with six based in its Pennsylvania offices.
Saul Ewing hiring partner Erik Williams said the firm is seeing an increase in demand across all of its departments, including corporate. But the growth in its first-year class was also related to a perceived need to have more junior attorneys at the firm.
“We’ve been committed for years to our summer program and growing from the ground up. And when in 2010 we had no summer class, leading to no starting first-years in 2011, when you have that gap, all of a sudden you need to backfill to get your associate numbers and keep your balance throughout the firm,” Williams said.
Williams echoed a trend several recruiters have reported to The Legal in recent months — a dearth of fourth- and fifth-year associates in certain corporate practices like real estate. Firms weren’t training many corporate lawyers when the market turned in 2008 and now that they are looking to hire mid-level corporate attorneys, there are few places to look. The junior associates who were being hired were put into litigation practices, Williams said.
“That has created a gap in training,” he said, adding firms have more senior associates and no junior associates in certain practices.
“So in order to appropriately staff various matters and have lower-rate, more junior attorneys to do certain aspects of assignments, you need to continue to hire at that level and continue to train,” Williams said.
If firms don’t hire at the junior level, the alternative for clients is to pay higher rates for more senior attorneys doing the work a more junior lawyer could do for less, Williams said.
After several years of hearing that clients aren’t willing to pay for first-year associates and aren’t willing to pay for their on-the-job training — something that helped spawn Drinker Biddle’s training program — firms are apparently billing clients for the work their first-years are doing.
For the first time, The Legal asked survey respondents whether they were able to bill for first-year associate work or whether they were billing less of that work in favor of training the associates.
All of the 21 respondents said they were able to bill for their first-year associates. Four firms — DLA Piper, Drinker Biddle, Babst Calland and Schnader Harrison Segal & Lewis — also said they were billing less in favor of training junior associates.
“Clients are realizing that and accepting the fact that there are aspects of transactions where it’s cost-effective and makes sense for junior attorneys to work on matters,” Williams said.
Saul Ewing decided to increase its starting salary for first-years, Williams said, because the market and competition are picking back up. While several firms reduced starting salaries during the recession, the market rate has quickly rebounded and Saul Ewing wanted to stay competitive, Williams said.
Saul Ewing wasn’t the only firm that upped its first-year associate hiring. Reed Smith grew its first-year associate count in Pennsylvania from 11 associates last year to 14 this year. Even more noteworthy, however, is its firmwide hiring increase from 25 first-years in 2011 to 41 in 2012. While it increased its class size, Reed Smith was the only respondent that said it was deferring associates. The firm said it was deferring “some” associates until January 2013.
Cozen O’Connor grew its Pennsylvania first-year class from nine to 12, and increased its firmwide numbers from 13 to 20 year over year.
Not every firm grew its class size, however. Ballard Spahr shrunk its Pennsylvania first-year class from 14 in 2011 to five in 2012.
In total, the responding firms hired 136 first-year associates across their Pennsylvania offices. Morgan, Lewis & Bockius and Pepper Hamilton had the largest class sizes in Pennsylvania, each with 16 first-years.
Of those 136 associates, about 56 percent are men and 44 percent are women. That is a big shift from the 2011 first-year class in Pennsylvania, in which 59 percent of the class were women.
Minority associate hiring has remained basically steady year over year. In 2011, 19.4 percent of the first-year class were minorities and in 2012, 19.9 percent are minorities. Of the 136 first-years in Pennsylvania, 17 are black, four are Latino, four are Asian American and two fall into another minority category.
When it comes to where these first-years matriculated, area law firms are hiring the most from the University of Pennsylvania Law School, with 26 of the 136 first-years in Pennsylvania graduating from the university.
Temple University Beasley School of Law came in second, with 16 graduates represented among the first-year classes in Pennsylvania. That was followed by Villanova University School of Law at 15 and Rutgers University School of Law-Camden at 13.
Law schools from out of the area were also represented among this year’s first-year associate class. Eight of the class members were from George Washington University Law School.