The news on almost every economic front has been . . .well, not good: abysmal housing starts and building permits, swelling unemployment claims, sagging manufacturing orders, bankruptcies and foreclosures, a credit crisis, toxic mortgages, the collapse of AIG and storied investment banking firms, sharp swings in oil prices. In the legal sector, we’ve witnessed the vaporization of such venerable law firms as Heller Ehrman, Thelen Reid, Wolf Block and Thacher Proffitt. The statistics are grim: 25,500 legal-sector jobs lost since 2007 and 15,000 in 2009 alone.
Without trying to put a Pollyanna spin on what is undoubtedly bad news and turbulent times, we need to place these numbers in context. First, they come against the biggest run-up in legal employment in history, including the fact that 92 percent of the J.D. class of 2007 was employed. By comparison, employment of the class of 1993 stood at just 83 percent. Second, the current economic tsunami has overwhelmingly affected large law firms – particularly those that worked in areas like structured finance. That disproportionate impact has called into question – and not for the first time, I should add – the sustainability of the strategy of mega-sized firms and their practice of hiring entering classes of 50-70 new lawyers (of which only seven or eight will make partner) with billing rates and $160,000 starting salaries to match.
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