- The law firm Heller Ehrman was founded in San Francisco in 1890. At the firm’s peak, it had almost 750 lawyers and offices in 15 states. In 2008, the firm collapsed when several of its litigation cases settled in rapid succession, causing them to lose 15 intellectual property litigation partners to Covington & Burling and more to other firms. The sudden lack of litigation fees caused the law firm to default on a credit line, and it went out of business.
- Dewey Ballantyne, a law firm founded in 1909, closed more than a century later in 2012 when it could no longer pay guaranteed compensation to partners. The reason for the shortfall was largely due to a major decline in corporate work.
Whether it is litigation, corporate, or another practice area, work dries up in various practice areas all the time, and this often results in layoffs and dramatically damaged or ruined careers for attorneys. Law firms usually do not close completely because of a slowdown in work. Instead, they may lay people off, or keep people idle for some time—until they lay them off. If your practice area slows down, you could even have your position as a first-year attorney withdrawn by a law firm and have no job to go to when you graduate from law school.
At the outset, it is important to understand one thing: Law firms, companies, and other employers are extremely reluctant to hire unemployed attorneys. If there is a slowdown in your practice area and it looks like you might lose your job, it is extremely important that you do whatever you can to ensure that you remain employed. If you are unable to, try to find a position as quickly as possible. The longer you are unemployed, the harder and harder it will be for you to find a new position—and the more likely it is that you will stop practicing law altogether.
I see the resumes of attorneys on a daily basis who lost their jobs during recessions, tried something else for a few years, and then tried to come back to practicing law. You went to law school for a reason and should do your best to continue practicing law. If you decide to take action, there are numerous things you can do to protect yourself from recessionary-related conditions.
If it looks like your practice area is slowing down, or even falling off a cliff, here are some actions you may need to take.
1. Determine If the Slowdown in Your Legal Practice Area Is Isolated to Your Firm or Occurring on a Broader Scale
You first need to understand if the slowdown in work is only occurring in your law firm, or all over.
At our legal placement firm, we used to keep a giant calendar on the wall that showed all of the interviews taking place each week and each month of the year. Throughout the year 2000, this calendar showed multiple interviews on most days. The majority of these attorneys were corporate, patent, trademark, and technology transaction attorneys. All of the sudden, in the third week of October 2000, all of the interviews stopped—and it would take months before there was any significant activity again. The few interviews that were scheduled suddenly started getting canceled. Clearly something was going on in the economy. It turned out to be the “dot-com bust—tons of new Internet companies (Pets.com, Webvan, etc.) suddenly found all of their funding drying up, and legal work stopped.
Certain practice areas are very dependent on the economy doing well.
If you are in one of these practice areas, your response should be guided by whether or not the slowdown you are seeing is part of a broader trend:
- When the Economy Slows Down, So Does Corporate Work.
Corporate is generally very active when the economy is strong. When there is a lot of business activity, law firms typically do very well and have lots of deals going on. Attorneys that do capital markets, mergers and acquisitions, finance, and more are often very busy. But when the economy slows down, things can get very difficult for these attorneys. Capital markets work may come to a complete stop in many cases, and other branches of corporate law will slow down as well.
The effect of recessions on corporate work typically hits new and younger attorneys the hardest. When the economy is active, law firms in New York and other major cities start hiring attorneys aggressively to staff their matters. They often have huge summer classes and will beef up their firms with attorneys from all over the country. This hiring spree results in very large corporate departments and scores of new hires coming out of law school. In these cases, the law firms are staffed with so many attorneys that there are far more people willing to do the work than there is actual work. Eventually, there are scores of attorney layoffs or people sitting around with nothing to do. These attorneys often lose their jobs, and new associate classes are often put on hold until the economy improves.
I’ve experienced several corporate-related slowdowns over the past few decades, and they are never good. Very highly-qualified attorneys from the best law firms often lose their jobs, and it is the biggest career disappointment they have ever had. Partners and associates at all levels are let go as part of cost-cutting measures. Many spend months or years trying to find new employment again.
- Litigation Tends to Slow Down When the Economy Is Doing Well and Be Active When It’s Not.
Litigation seems to go in fits and starts. When the economy is doing well, it always seems like there is less litigation than when it is not. When the economy slows down, companies tend to start looking around for (more) money and finding people who may owe them money and going after them. Also, when the economy is doing poorly, the new summer classes and other lateral hiring is most often done in litigation—not in corporate, where there is not a lot of work. This creates an “overcapacity” of litigation when the economy improves. Finally, I believe that law firms increase their litigation and billing to get through recessions—so much that their clients become exhausted by these major expenses and become more “litigation shy” in the future.
Intellectual property litigation was active for several years. By 2015, the work had settled down a great deal after the Supreme Court’s decision in Alice Corp. v. CLS Bank International (2014), which made it much more difficult for patent trolls to survive quick disposition of their cases. There may have been other factors that led to the slowdown, such as people becoming more hesitant to file suits after years of expense and poor results from prior suits. But since 2015, IP litigation has been much slower across the country than it was before. As cases are settled, many law firms are not able to bring in new work to replace the work that was lost. This has resulted in attorneys at all levels not having much work to do and countless attorneys losing their jobs.
Many law firms such as Goodwin Proctor had mass layoffs of their patent litigation attorneys after 2015. These layoffs included Harvard and other Ivy League-educated attorneys who never found comparable jobs again. Because cases take time to work their way through the system, the slowdown in litigation has not been sudden—but over the past several years, it has certainly felt that way.
General litigation has been hit particularly hard in the past several years in major legal markets around the United States. This is mainly because 1) the economy has been good, and 2) there was huge overcapacity, especially in IP litigation. When IP litigation slowed down, law firms began transitioning many of their IP litigators to general commercial litigation if they could.
Litigation can also slow down when a major case that was keeping lots of attorneys busy goes away. I have seen many law firms lay off attorneys after a big case is resolved. There is always a danger when law firms become overly dependent on one major case.
- Patent Prosecution Seems to Have Permanently Slowed Down in Large Law Firms Due to Economic Forces.
Patent prosecution was busy for a long period of time. However, this too has slowed down in recent years, especially at large law firms. There used to be a literal dearth of prosecutors in the market, and those that were in the market could expect to be very marketable—often regardless of their law school, the quality of the firm they were in, or even the amount of business they had. This resulted in many would-be prosecutors going to law school and entering the market which, over time, created a situation where there are many more candidates than there are jobs.
This slowdown in prosecution-related work has occurred not just because of an oversupply of prosecutors, but because clients are not willing to pay large law firm rates for patent prosecution. Many smaller law firms are willing to do prosecution-related work at a fixed cost, which ends up being a much lower effective hourly rate than large law firms charge. Also, many law firms are even assisted by foreign companies and law firms in India and other overseas locations that assist in getting prosecution work done at a lower cost. The move toward fixed-fee patent prosecution and lower-priced providers has created an atmosphere where prosecution is now difficult for most large law firms to perform competitively anymore.
- Trademark Law Is Active During a Good Economy, But Inactive During a Poor to Average Economy.
No practice area seems to follow the rise and fall of the economy more than trademark law.
When the economy is going well, there are lots of trademark attorney openings because there are so many people starting new companies amid the increase of business activity. In contrast, when there are economic slowdowns, there is a fraction of new business activity and hardly any trademark work. Not only are trademark attorneys laid off, but there are also hardly any new positions for them.
- Real Estate Law Tends to be the Most Active During Easy Lending Environments with Low-Interest Rates.
When I got started in the legal recruiting industry during the late 1990s and early 2000s, interest rates were high and there was not a lot of work for real estate attorneys at all. Any time that interest rates are high and the lending environment is tight, real estate law tends to do very poorly. In recent years, with interest rates low and the lending environment robust, real estate law has been doing well. When times are tight for real estate attorneys, the market can be extremely tough for them. When there is a lot of demand for real estate attorneys, attorneys at all levels tend to be quite marketable.
- Technology Transactions Mimic the Economy.
Technology transactions tend to do well in good economies and poorly in bad economies. You can generally measure the strength of the economy relative to the number of technology transaction positions and how widespread they are.
- Bankruptcy Is More Active in a Bad Economy, but It Never Goes Away.
As a general rule, bankruptcy is far more active in bad economies than in good ones. However, it should be noted that even in good economies, there are bankruptcies occurring all the time. Major bankruptcies can also take a long time to work their way through the legal system.
2. If the Slowdown in Work in Your Practice Area is Part of a Broader Trend, Take Action Now
If the slowdown you are seeing is part of a broader trend—and it often is—you likely have a problem that can be solved, but it needs to be addressed immediately.
- Understand Your Standing in Your Own Firm: If You Have Good Standing You Might be Safe (Even During Very Serious Recessions), and if Are Not in Good Standing You Will Likely Lose Your Job
- If the economy slows down dramatically, but you are still busy—and your law firm is continually giving you work.
- If everyone around you is slow, but you still are busy.
- If you work closely with a powerful partner with a huge book of business, and they are still busy.
- If you have very rare skills that make you extremely hard to replace, and which the law firm still needs.
Despite these sorts of reassurances, recessions and slowdowns in various groups can often last a long time. Moreover, just because a law firm wants to keep you around does not mean they will—law firms are businesses, which means they think and act like businesses. They will factor in things like the cost of replacing you after a recession, the damage to the morale of the others in the firm if they lay you off, and how much they like (or do not like) you. Even if someone tells you that your job is safe, it is not wise to believe them—lawyers lie all the time, they can always say they did not remember their promise to you or are simply “sorry” and cannot do anything now.
Regardless of how safe you believe you are, you should watch astutely for signals that you could lose your job. You should also make sure that you keep your ear to the ground and stay aware of opportunities. You always need a contingency plan.
It is important to note that most people who make partner in firms of all sizes have endured (and survived) at least one recession and work slowdown there. If you endure a recession and are still there when others are jumping ship, this display of loyalty has real value. Your show of commitment during tough times will endear you to the firm’s leadership later on.
If a law firm does not like you, you will most likely lose your job during the first signs of trouble in the economy. When the market slows down, the law firm will use this as a pretext to get rid of you. Poor working hours in a good economy will suddenly be used against you. If you are the sort of person they see as spreading negative gossip, undermining peers, or not being supportive of others—or you are not close to (or well-liked) by people with a lot of decision-making power—you will most likely be let go.
- If You Feel You Are Going to Lose Your Job You Should Immediately Look for a New One and Don’t Leave Your Options Too Narrow
If your job is in danger due to macro trends in the economy, you should start looking. Layoffs can be swift and ruthless, and you never know when they are coming. If you and others are sitting around without a lot of work to do, you need to realize that this is unlikely to last very long—law firms do not spend money they do not have to.
At a minimum, you should:
- Watch Job Sites Like LawCrossing for Openings. LawCrossing consolidates all of the current job openings in the legal market. Watching this site to find openings and applying to ones that are a good match are two tasks that will quickly give you a good sense of the availability of opportunities and your marketability. If you don’t believe you need a job site to find openings, you are wrong. LawCrossing monitors over 50,000 law firm websites and 100,000+ company websites, government websites, and more to provide the most comprehensive database of legal job openings.
- Speak with Legal Recruiters. Legal recruiters can give you a good idea of your marketability and the availability of openings. You should speak to them without delay. If you don’t believe a legal recruiter can help, you are wrong. Legal recruiters understand the market, and they often have individual relationships with hiring personnel that can be tremendously valuable to you. It is important that you speak with and work with legal recruiters in your search.
- Network with Colleagues and Others. You should speak with people you know who may have open positions and explain your particular situation. Every potential contact or new connection can help. Learning how to network will be crucial to a successful job search.
- Speak with Clients (if Appropriate). If you have considered going in-house in the past, it may make sense for you to speak with your clients.
- Investigate Opportunities Outside of Law Firms. You should investigate jobs in-house, with the government, or in another practice setting that may interest you—just to be safe.
- Apply to Jobs Outside of Your Current Market. In past recessions and market slowdowns, the attorneys who did the best were always those who were willing to be geographically flexible. I’ve written quite a bit about the importance of considering other markets in your job search.
For more information see:
- Look at Firms and Employers of All Sizes. During a recession, you should be looking at law firms of all sizes—not just the firms that you think you SHOULD be working at. Your objective is to stay employed. You need to put any preconceptions aside and apply to work with firms of all sizes. For example, boutique law firms can be an excellent choice for many attorneys.
For another perspective see:
In the 2008 and 2009 recessions, legal recruiters all over the United States noticed major slowdowns. However, when the market slows down, not every area of the country slows down. What ends up happening is that a lot of legal work moves from the most expensive law firms in major markets to smaller law firms outside of major markets. Companies place their work with smaller law firms that are less expensive. For example, work in Chicago moves to suburban law firms. Work in New York City moves to upstate New York, Long Island, and other areas where billing rates are lower. Smaller law firms often end up getting more work, and they use the recession to grab talented attorneys from markets where there is an oversupply of them. During the last recession, the number of placements our recruiters made actually increased because of this trend.
The key is to be flexible, considering new markets and firm sizes, while searching and networking for open positions to the best of your ability.
- Protect Your Resume by Doing Whatever You Can to Avoid Gaps
Keeping in mind how dangerous any gap in your resume is, here are some actions you can take if you are having a difficult time finding a law firm position:
- Litigators can do a judicial clerkship. This will generally make it not too difficult for you to get back into a law firm when the recession is over. Attorneys do clerkships all the time, which can help their careers a great deal.
- Corporate attorneys can go to business school. A business degree is a useful thing for corporate attorneys. Getting a business degree is often quite helpful when attorneys return to law firms, and they seem to be quite employable after doing so.
- Corporate attorneys can get positions with law firms overseas. This is a successful strategy—and something that I have helped many corporate attorneys do before.
- Patent attorneys can get another degree. I’ve seen mechanical engineers get degrees in electrical engineering, which makes them even more employable when the recession ends. Attorneys with undergraduate degrees in a scientific discipline can get master's degrees and so forth. This makes them more employable later on.
- Patent attorneys can work for the USPTO. This option does not prevent the patent attorney from being employable in a law firm in the future.
- Real estate attorneys can go in-house with a developer or other real estate-related company. Real estate attorneys have an easier time returning to law firms after working in-house for some time.
- Any attorney can go get an LLM. An LLM can be beneficial in many practice areas, including ERISA, healthcare, tax, and certain other practice areas. Getting an LLM is often a great move for attorneys during a recession and can make them better attorneys when they return to the practice of law.
- You can start a family. While taking too long of a break is never a great idea, a recession can be a good time to start a family. From a job standpoint, this is probably the least desirable of the actions listed above. However, some law firms are understanding and do welcome attorneys back who take a break to start families.
Any of these actions can be effective and will fill potential gaps in your resume, especially during an economic downtown.
3. If the Slowdown Is Only in Your Firm, Find Out if These Problems Will Require You to Leave
Every law firm is an economic microcosm that requires certain conditions to operate effectively. While individual law firms operate differently, there are several common red flags that should cause you concern about your law firm’s financial health:
- The most powerful lawyers in the firm are leaving. A law firm often experiences mass partner defections, typically because of compensation issues. Unfortunately, these defections create conditions where the work dries up. When this occurs, those who are left will often be let go if it does not look like the firm will recover. Firms will always say they are fine up until the minute they close their doors—so you should never take anything your firm is saying at face value. If the work flow at your firm is too slow, this is an issue.
- The law firm is a specialty law firm in a practice area that is slowing down. Recently many law firms that did nothing but intellectual properly work have closed. As their IP litigation work started to go away, these firms had a difficult time being competitive. There has also been downward pricing on patent prosecution work as more and more IP clients have started to seek flat rate fee structures. Because these firms are often a dying breed, the attorneys who work there are likely to be living on borrowed time. The same thing can occur in many specialty law firms when their practice areas slow down. If you work in one of these practice areas, you should be aware that your law firm could go away.
- The law firm cannot be competitive in its market. Many law firms open branch offices in various markets and have billing rates that are too high for the market. This could be a New York law firm in Los Angeles, or something similar. Regardless, many law firms use billing and compensation structures that create issues with them generating work in their market—and then these firms close. Other firms open branch offices in markets and pay too little to associates and partners to be competitive. One example is insurance defense firms that have attempted to branch into corporate-related practices in major cities. They typically fail at this and end up losing partners. Because the partners leave, associates lose their positions as well.
- The law firm is overly dependent on too few clients and loses (or is in danger of losing these clients. This is a very dangerous place to be for partners and associates. I have seen many law firms go out of business for this reason.
- The law firm was overly dependent on a few large matters and these matters go away. Law firms may staff up to do large litigation cases and, when the cases settle, they lay off scores of attorneys. I know one law firm that laid off over 30 patent litigators after a case settled. Incredibly, these attorneys had worked 2,500 to 3,000 hours a year for years while the case was going on. But within a few weeks of the case settling, the firm let them go because it did not have any more work for them. This sort of thing happens all the time—another reason why you should always be aware of what is going on in the market.
These are just a few of the issues which can occur inside of law firms that may make them dangerous places to remain.
- Identify Anyone in Your Firm Who Can Protect You or Take You with Them.
If you are getting more work than the other attorneys in the firm, you may be safe. But if not, you may need an exit strategy.
- Look for a New Position.
If it looks like there are problems in your firm that the firm may not recover from, you should most certainly look for a position immediately by taking the actions above.
You need to realize that no one cares if you are a victim of a recession or a slowdown in your firm—they care whether you survived it and remained employed. The market will continue to pass judgment on your legal skills regardless of recessions and slowdowns. Will other attorneys keep you around, take you with them, or protect you due to the quality of your legal skills, hard work, and commitment—or will they not? Will you put in the effort required to stay employed and prove your commitment? A good attorney should be able to claw their way out of any difficult situation, but also knows when the best answer is to leave.
About Harrison Barnes
Harrison Barnes is the founder of BCG Attorney Search and a successful legal recruiter. His most recent contribution to the legal community is Outplacement Attorney Resources (OAR.com), which directly teaches attorneys and law students the best ways to find legal jobs. Harrison is extremely committed to and passionate about the profession of legal placement. His firm BCG Attorney Search has placed thousands of attorneys. BCG Attorney Search works with attorneys to dramatically improve their careers by leaving no stone unturned in job searches and bringing out the very best in them. Harrison has placed the leaders of the nation’s top law firms, and countless associates who have gone on to lead the nation’s top law firms. There are very few firms Harrison has not made placements with. Harrison’s writings about attorney careers and placements attract millions of reads each year. He coaches and consults with law firms about how to dramatically improve their recruiting and retention efforts. His company LawCrossing has been ranked on the Inc. 500 twice. For more information, please visit Harrison Barnes’ bio.
About BCG Attorney Search
BCG Attorney Search matches attorneys and law firms with unparalleled expertise and drive, while achieving results. Known globally for its success in locating and placing attorneys in law firms of all sizes, BCG Attorney Search has placed thousands of attorneys in law firms in thousands of different law firms around the country. Unlike other legal placement firms, BCG Attorney Search brings massive resources of over 150 employees to its placement efforts locating positions and opportunities its competitors simply cannot. Every legal recruiter at BCG Attorney Search is a former successful attorney who attended a top law school, worked in top law firms and brought massive drive and commitment to their work. BCG Attorney Search legal recruiters take your legal career seriously and understand attorneys. For more information, please visit www.BCGSearch.com.