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I'm a corporate attorney at a law firm. Over the past few years I've talked to a number of recruiters and they have consistently said that, unless I am a bankruptcy attorney or a real estate attorney, it will be hard for me to find a new job. What should I do?
First, if you are a transaction attorney at a law firm in the United States, take a deep breath and take stock of the hard work that has kept you employed in a terrible legal market. Then, if you are considering moving firms, dust off your résumé, because market indicators are signaling that the legal market is gearing up and more lateral associates will be hired as firms become busier.
I think nearly every attorney in the United States would agree that the past few years have been hard times for many associates in the legal profession, especially transactional attorneys. Since the transaction market peaked in 2000 there has been a steady decline in jobs as the size of law firms that galvanized the legal market in the late 1990's dwindled. Initially, firms quietly informed attorneys that they should leave, as they were no longer producing at the level expected. In an unprecedented move, many large firms announced that they would lay off large numbers of attorneys - sometimes entire class years - because the firm didn't have work. Other firms assessed the fallout, but as more firms laid off junior and mid-level associates, the floodgates opened and a large number of transaction attorneys were without jobs. In some cases the firms actually folded. Many firms that didn't announce plans to downsize used more subtle techniques: attorneys were informed at their review that they were performing below class levels, and were asked to quietly leave. Consequently, a large number of qualified transaction attorneys have been available to the legal market for a limited number of positions, making a lateral move difficult.
Although it might appear that the legal market has been stagnant over the past few years, it has been incredibly dynamic as a whole and there has been a lot of growth in some areas. Associates have often been asked to assist with busier areas, or to move to busier locations. Law firms have opened offices in a variety of locations, often absorbing practices from local offices that were in difficulty or, in some cases, completely disappearing. I believe this merger activity demonstrated that law firms are bullish on their legal markets, as law firms are businesses and do not go to the considerable expense of opening offices without a strong expectation of growth and profit.
One robust practice area has been bankruptcy and its supporting areas, as companies withered due to economic and other pressures, including bad management. Supporting practice areas have included corporate finance as companies have restructured debt. Corporate finance attorneys have also been busy as their clients have raised debt as other capital-raising avenues have closed. There has also been a strong demand for securities litigators, commercial litigators, and real estate transactional attorneys. During the past few years, attorneys in these areas have frequently worked 2,500-plus hours each year.
"So what?" you may well ask yourself. Well let's get to the good news. My fellow recruiters and I have noticed a sharp change in the current legal market within the past few months. We have seen much more activity and a larger appetite for transaction attorneys than we have seen in the previous two years. Recruiters with my agency have seen an increased number of transactional attorneys receiving interviews with many larger firms for an ever-widening number of practice areas. Many of these areas haven't had a job opening for a number of years. For example, a number of major firms have recently interviewed and hired licensing attorneys, a niche specialty offering very few opportunities until recently.
News sources have continuously indicated the United States economy is picking up steam for a recovery. This is important because a service industry such as the legal market is in constant flux as it responds to clients' needs. There will, of course, be further cycles when the market is booming and transactional attorneys are busy while their bankruptcy brethren are less busy. In fact, many new corporate partners have been forced to remember the recession that existed when they started their careers in the early 1990's.
Current indicators of a robust economy include:
- A growing U.S. economy in the first nine months of 2003 with a 7.2 percent annual growth rate - the highest growth rate since 1984 - with consumer spending accounting for two-thirds of this growth;
- Labor Department figures for first-time claims for state unemployment benefits have continued to drop - November 2003 had the lowest number of such claims since before the economy slipped into recession in January 2001;
- Commerce Department estimates that new orders for costly and long-lasting manufactured goods climbed 3.3 percent, far ahead of the 0.8 percent gain forecast by Wall Street economists;
- Signals that firms are loosening their purse strings: notably "non-defense capital goods orders, excluding aircraft" - economist speak for the tendency for businesses to expand -has shown consistent gains;
- The improving job market, which has buoyed consumer spirits with a number of consumer indices consistently rising;
- And, although there are some cautionary signs including the weak Christmas season and a decrease in personal spending, many analysts conclude that a sustained pickup in the United States economy is imminent.
How will this affect attorneys? With a rebounding stock market, the capital markets are ready to free their financial resources and it is often the capital markets and M&A areas that recruiters see get busy at first. Many companies need robust credit ratings or cash income streams or an increase in their stock price before assets can be purchased. Additionally, companies would rather wait for an improved market so that they can generate higher prices for assets to be sold. With increased flexibility in the capital markets, companies will consider a sale of assets because acquiring companies can more easily raise the capital to fund purchases. Consequently attorneys who service these markets are the first to see their work load increase.
Other indications come from the public securities markets. Although only 69 companies went public in 2003 (one of the lowest tallies in nearly 30 years), 2004 has considerable promise as a year where some large issues of stock will occur. Companies to watch include Google and Genworth Financial - the insurance division of General Electric. In addition, December 2003 had a significant increase in the number of registration statements filed with the Securities and Exchange Commission. Hence, we anticipate an increased need for securities associates, especially those associates with Sarbanes-Oxley experience. Other areas of the law in which we anticipate to see growth include areas that support the increasingly busy capital markets, private equity and M&A areas, such as tax attorneys, ERISA and employment attorneys.
One advantage of the increase in hiring is that it will create a robust lateral market for associates. Many attorneys believe that they have been stuck at their current firm because the opportunity to move has been limited. As associates begin to move laterally between firms and in-house, additional lateral opportunities will be created. If the economy continues to improve, we anticipate that this will be a busy year for law firms and consequently for lateral associates.
So now that you're ready to move and the market for laterals in your practice area has improved, what should you do? My first piece of advice to anyone considering changing jobs is to start looking and apply broadly. If you can, contact a recruiter and have them assist you in honing your resume. Make sure your resume is perfect. Find a recruiter who can review your resume critically and one who understands your market. Next understand that a job search is a process and takes time. Realize that you may need to stay where you are for the time being.
Finally if you have been laid off, or are unemployed, your chances for finding work are increasing, too. There is generally a stigma associated with attorneys who have been laid off because the legal market perceives them negatively because, the logic goes stars are never laid off, therefore the lateral candidate must not be a star. Frankly, I disagree. However, being laid off is now part of your résumé, akin to the law school you attended -remember that everyone did not attend a top five law school. I also believe that firms are more likely to look beyond such experiences than they have in the past because the economy has been so bad.
Consequently, procuring new employment is frequently a matter of reorienting your job search. Of course, if you were asked to leave a firm after a period of reviews that say you were unsatisfactory, then perhaps you should take a long look at whether you fit into a law firm environment, or whether you even want to be an attorney.
All in all, I anticipate a robust lateral associate market, so now is the time to start looking for that position you have always wanted! Best wishes for a successful search.
Eamonn Markham is a recruiter for BCG Attorney Search based in New York City, and he can be reached by calling (212) 232-0400 or by e-mail at firstname.lastname@example.org