US leaders adapt to New Normal as clients reject high leverage 

Some of New York's leading law firms have taken steps to reposition their business in response to falling client demand and pressure on fees for the most junior US lawyers. 

Figures for 2012 show that while some top US firms have brought hiring back up to peak levels, others are continuing to hold back recruitment of their most junior associates. 

Paul Weiss Rifkind Wharton & Garrison and Cleary Gottlieb Steen & Hamilton are among those that increased the number of summer associates joining them this year and last following a dip in 2010. Firms generally tend to recruit a large number of their summer associates to join as first year lawyers one or two years later.

Paul Weiss took on its largest group of associates over the summer for five years at 125, having dropped to 83 in 2010, while Cleary's number rose to 115 this year, having temporarily fallen to 75 in 2010. 

Cleary finance partner and business development head Steven Wilner said: "We like to take the long-term view with respect to our hiring, so that we are investing for the future. We slightly adjusted the size of our summer class during the height of the financial crisis, but realised it was unnecessary because the firm was busier than anticipated during that period. Our subsequent summer class sizes have returned to our usual levels."

In contrast, others such as Shearman & Sterling, White & Case and Skadden Arps Slate Meagher & Flom are keeping the numbers down in new associate classes. Shearman's US first-year associate class stands at 41 for those joining last month, compared with an equivalent figure of 89 in 2008 – down 54%; while White & Case's new US associate class has fallen from 90 in 2008 to around 60 in 2012. 

Meanwhile, Skadden has also roughly halved its new associate numbers from a peak of around 300, the bulk of which are in America. 

Skadden executive partner Eric Friedman (pictured above) commented: "One of the things we're seeing is that the leverage model has changed. The kind of work you can push down to juniors has changed. That doesn't mean it's all bad for the industry, but it does mean the hiring approach has shifted as there's less demand for high-volume lower-expertise work."

creighton-condonShearman senior partner Creighton Condon added (pictured right): "It is a fundamental change in the model. Clients want more partners active on their deals. Class intake numbers will go back when activity increases, but we are unlikely to return to the higher numbers that were so common in the past."

The recruitment changes come as firms also grapple with clients being unwilling to pay for first and second-year associates on deals because of their lack of work experience. This also takes the form of specific requests to staff deals with more senior lawyers. 

Several US firms have launched training initiatives to combat this, with Cleary starting a two-week full-time 'mini-MBA' programme for all new associates in 2012 focused on business and finance, while Milbank Tweed Hadley & McCloy teamed up with Harvard Law School last autumn to provide an additional training programme for junior lawyers.

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