Managing Partner &
General Counsel Panels
Talk Change at NALSC 2009
by Amanda C. Ellis, Esq
.
I attended the National Association of Legal Search Consultants' (NALSC) 2009 Annual Conference in Philadelphia at the beginning of May. I thought it was worth sharing comments from two of the panel discussions at the conference, especially since there have been developments in the weeks following the conference that illustrate some of the changes the panelists predicted.
Before reviewing the two panels, you should probably know a little about NALSC. I think most law firm recruiting professionals are familiar with the organization but many attorneys don't realize the organization exists and why it's important to use a recruiter who is a member of NALSC or, at a minimum, abides by the NALSC Code of Ethics�.
Overview of NALSC
NALSC is the national professional organization for the legal search profession; it is the only professional organization for legal recruiters and search professionals.
NALSC's primary goal is to elevate the professionalism of the legal recruiting field through its Code of Ethics�; all NALSC members agree to abide by the NALSC Code of Ethics�. Some notable provisions include:
� 6 month No Recruit Period: No search firm shall recruit any attorney from the office of an employer in which it has made a placement for a six-month period following that placement, unless the search firm reasonably believes such a restriction is not required by the employer.
� Prohibition from Recruiting Placed Candidates while Employed by Client: No search firm shall recruit a candidate it has placed while that candidate remains with the employer that paid the recruiting fee.
� Candidates' Consent Required Prior to Submitting Resume: Candidates shall be referred to employers only with the candidates' express prior consent.
NALSC also provides an educational forum for members and for the legal and business community, and allows NALSC members to learn and socialize together. The organization hosts an annual conference every spring and usually a social gathering in the fall. Members interact on a daily basis through a list serve and email. A directory of NALSC members is located on the NALSC website.
Managing Partner Panel
The Managing Partner Panel was comprised of leaders from several large Philadelphia firms, including Pepper Hamilton, Ballard Spahr Andrews & Ingersoll, Fox Rothschild and Duane Morris. It is interesting to see that several of the changes predicted by this panel have actually taken place in less than a month following the conference.
Three topics the Managing Partner Panel covered include: (1) lateral partner hiring; (2) first-year associate hiring; and (3) salary cuts.
Topic 1: Lateral partner hiring - firms actively hiring but selective
In today's market, large firms seek lateral partners who already have business rather than the mere potential to develop business. For most firms represented on the panel, the minimum amount of portable business varies by practice area.
One comment that sparked discussion was one firm representative's revelation that the firm calls a partner candidate's clients for references. The hiring firm asks the clients two questions: (1) Are you currently working with Partner A; and (2) do you plan to continue to use Partner A this year? Obviously, the point is to confirm that Partner A is actually bringing the business he has outlined to the hiring firm. Other firm representatives on the panel expressed concern with this approach and said they expect their partner candidates to be honest when asked about the business they will bring.
While the fact that most firms are seeking partners with business is not surprising, I thought it was worth noting the steps some firms take to confirm a partner's book of business; it certainly surprised many of the attendees.
Recent Developments
Note to Partners: Beware an Attack of Unqualified Recruiters appeared on Law.com the week following the NALSC Conference and further illustrates the increase in lateral partner hiring. The article also reinforces the need to use experienced, qualified recruiters; NALSC is a great organization to which you may turn to find qualified recruiters.
Topic 2: First-year Associates - fewer first year associates and more training
The consensus of the panel was that large firms will continue to hire first-year associates, though probably not as many. While one partner commented that his firm's large clients don't want to pay for first-year associates, the other partners on the panel commented that first-year associates are valuable if priced properly. All partners agreed that more training is required for recent law school graduates/first-year associates. One partner advocated for law schools to remove classes from the 3L year and implement training programs instead. Perhaps another alternative is for large firms to add more training (and, less billing) to the associates' first year? Based on developments after the conference, at least one large firm is moving in that direction.
Recent Developments
The week following the NALSC Conference, Drinker Biddle announced its new 6 month training program for first-year associates, which is based on an apprenticeship model. Will the first-year training program become a trend among large law firms?
Topic 3: Salary Cuts - yes and no; Corresponding Hourly Rate Cuts - ???
Most people in the legal field are familiar with the salary increases of 2007 where the base salary for first-year associates at large firms in major markets was increased to $160,000. One panel member was with a firm that did not follow the trend and did not increase associate salaries in 2007; this partner was quite confident that his firm would not need to decrease associate salaries in 2009. The partner thought the firm might be more conservative with future increases or perhaps abandon the lock-step model in favor of a performance-based model but he was confident salaries would not be lowered.
Another partner, however, predicted salary cuts for all non-partner level lawyers and the other panelists appeared to agree that we would see more associate salary cuts at the associate level.
Interestingly, one partner who predicted salary cuts expressed that he did not expect the corresponding hourly bill rates for these attorneys to decrease.
Recent Developments
Drinker Biddle has announced that it will cut associates' salaries and bill rates in conjunction with its new first-year training program but it is not clear if other firms will follow. At least 10 large firms have reduced salaries since April 2009 (Above the Law tracks the firms cutting salaries here). It is not clear, however, whether these firms have also decreased associates' bill rates. The partner who predicted that he did not expect the associates' bill rates to decrease could be right - unless all firms adopt the Drinker Biddle training model or something comparable.
General Counsel Panel
The General Counsel Panel at the NALSC Conference offered insight into hiring within corporate legal departments. Panelists included General Counsel from Comcast Cable, Sunoco, Inc., Waste Management/Eastern Division, and Tasty Baking Co. The panelists focused on two topics: (1) hiring; and (2) contract attorneys.
Topic 1: Hiring
No company represented on the General Counsel panel was hiring for corporate legal positions and some of the companies had even laid off attorneys.
However, one panelist discussed opportunities available for attorneys in corporations in a non-attorney role, such as Compliance, Government Affairs and Human Resources. The panelist predicted an increase in the number of Compliance positions - especially in the financial services industry. If your goal is to move to a corporate legal department this year, a non-attorney role might be your best option.
Recent Developments
You should note, however, that several recruiters at the conference indicated they have seen an increase in the number of corporations seeking attorneys -- primarily in the areas of FDA and Compliance. Even in my own practice, I've received several requests over the last two weeks for in-house bankruptcy counsel - and, I rarely place attorneys in corporate legal departments.
Topic 2: Opportunity for Contract Attorneys ... Secondments and Alternative Law Firms
All but one of the companies represented acknowledged using contract attorneys; in fact, one company that had recently laid off attorneys actually added two full-time positions to manage contract attorneys. Another company discussed how it engages a former GC on a contract basis and considers that contract attorney a vital part of the company's legal department.
Recent Developments
While the panel did not specifically address using secondments or alternative/virtual law firms, it appears both methods are gaining ground (probably for the same reason that corporations find contract attorneys attractive -- cost-effectiveness). The AmLaw Daily recently discussed secondments, which refers to firms sending under-worked associates out to work for corporate clients for a period of time. Most associates in this situation continue to earn their full salary. According to the article, firms are sending out more associates to work as secondees.
At least one firm, Mayer Brown, has taken a similar step with associates it laid off earlier this year and, according to this week's Texas Lawyer, has placed nine laid-off associates with corporate clients and five laid-off associates with pro bono organizations. According to the article, the firm will keep the attorneys on payroll and pay a $60,000 annual salary, plus benefits.
Finally, the panelist who engages a former GC on a contract basis exemplifies why the alternative/virtual law firm approach is attractive to corporations - the corporations have access to top experience and talent at a reduced cost. Since I initially discussed the alternative law firms in my February 2009 newsletter, there have been several articles discussing the increasing popularity of this model:
Conclusion
The economic challenges of 2008-2009 are leading to revolutionary thoughts, discussions and changes in the legal profession which I find refreshing and exciting. I applaud the firms, individuals and law schools that have implemented something different, such as training programs, compensation systems, and approaches for placing laid-off or underutilized attorneys. Great things will come from these innovative changes!
