In a recent study by the National Association of Women Lawyers (NAWL), research shows the percentage of entry-level female attorneys hired by large law firms decreased slightly for the first time since the annual survey’s inception in 2006. While the decrease from 48% to 47% is not by any means a sharp decline, it is still cause for concern. Only time will tell, but it may well indicate diminished opportunities for women to hold leadership roles within large firms in the years to come.
As quoted in an interview with The National Law Journal for Karen Sloan’s recent article, NAWL President Heather Giordanella maintains that “women lawyers already leave big-firm practice at a greater pace than their male counterparts, and this narrowing of the pipeline at the entry level, however slight, only further decreases the pool of women available for promotion.” The Journal also cited figures from the American Bar Association which indicate the percentage of women entering law schools has peaked and fallen, which may further contribute to the waning number of female associate hires. Thus, the concern now becomes whether these declines signal the start of a general downward trend for female lawyers in large, prominent firms.
In fact, women already face significant gaps in equity partnership, compensation and managerial roles. According to the National Law Journal, “although underrepresented in this year’s entering associate class, women were overrepresented in nonequity positions including staff attorney and counsel. Women represented a ‘dismally low’ 15 percent of equity partners” and “comprised 55 percent of staff attorneys. Similarly, women made up 34 percent of the of-counsel ranks.”
In the same vein, the report also found that only 5% of large firms have women as managing directors, likely directly correlated to the overrepresentation in nonequity and underrepresentation in equity. A substantial gap in male-female compensation also exists. As the Journal noted, the 2011 pay gap was “relatively small among associates, but increased at the higher ranks. For instance, women of counsel earned approximately 92 percent of what their male counterparts earned. Nonequity female attorneys earned 95 of what their male counterparts did, while that figure was 86 percent for female equity partners — a discrepancy of $70,000 at the typical firm.”
While the long run effects of these trends on women and the legal landscape remain to be seen, the short term message from the NAWL is clear. This past year marked a definite deviation from the norm, jeopardizing what had been positive trends for female advancement in the profession.
A November 20 New York Times article (“What They Don’t Teach Law Students: Lawyering” by David Segal) discusses how law schools are not teaching the practical aspects of practicing law. Law schools have long focused on the theoretical over the practical, but now among many top firms there is a growing cry for more applicable training.
The article goes on to elaborate that many corporate clients are now requiring that first and second year associates not appear on their bills, as they do not want to be the ones paying for legal training of new hires. Consequently, Philadelphia law firm Drinker Biddle & Reath actually requires its first year associates to take practical lessons on the practice of law from partners within the firm. The associates then spend four months getting a primer on corporate law and are paid at a lower rate than they are upon completion of the tutorial.
In the Times’ interview with Jeffrey Carr, General Counsel at FMC Technologies, Carr noted: “The fundamental issue is that law schools are producing people who are not capable of being good counselors. They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.”
Some law schools are trying to change this paradigm. Edward Rubin, a former Dean of Vanderbilt Law School implemented new courses aimed at teaching the basics of practicing law. Rubin also met with partners at various successful firms and asked what they were looking for in new hires, and what they wished they were taught.
As a result of his findings, new first-year classes were added and others adjusted to reflect hiring needs by teaching more real-world skills. In his interview with The Times, Rubin stated: “We should be teaching what is really going on in the legal system not what was going on in the 1870s, when much of the legal curriculum was put in place.”
While a theoretical base is still critical, today’s law school graduates should also be learning how to land a client, draft a contract and plea bargain in a litigation matter. These skills will be invaluable in making young J.D. associates successful long term practitioners.
The traditional law firm model of partners and associates is changing. The recession has caused firms to closer examine how they provide services to their clients, and how to maintain excellent service with responsible spending. One area of change is the recent use of project-based attorneys who are hired on a contract basis, as opposed to hiring full-time associates or partners.
Many firms have historically used temporary attorneys for routine tasks like discovery and document review for acquisitions. However, firms are now looking to also use contract attorneys who are specialized and have a niche skill to fill short-term needs. On the other side, the appeal for attorneys to go into contracted work is there as well, and growing. Contracted work makes a lot of sense for someone looking to use and hone their skills, build their resume and work for some of the top firms in the industry.
A recent survey of executives from a variety of businesses around the world (“Global Firms in 2020: The Next Decade of Change for Organizations and Workers” by the Economist Intelligence Unit and the Society for Human Resource Management) found that 67 percent say they will hire additional staff “cautiously” during the next decade, shifting their focus to contingent workers rather than full-time employees. The consensus was companies “must maintain leaner organizations, hiring on contract or outsourcing work rather than hiring full-time staff.”
Another recent study by Altman Weil found 39 percent of managing partners at 218 U.S. law firms used contract lawyers in 2009, 53 percent intended to do so in 2010, and 52 percent expect contract lawyers to become a permanent part of their staffing plans.
Part of the reason for the changing paradigm is industry-wide layoffs have left firms short staffed. Corporations are watching budgets more closely and challenging firms to change their traditional method of hourly billing. Moreover, temporary staffing makes sense for firms looking to cover for staff on leave, or to meet a specific need for a period of time.
Firms are also recognizing that hiring contract attorneys is a great way to determine if individuals are a good fit for the long term. Moreover, the supply of strong candidates for temporary positions is becoming more robust. Many women have left full-time positions to raise children (but could accommodate part-time work), talented private practice associates have lost jobs due to widespread layoffs, and a number of in-house attorneys have become disillusioned with life in Corporate America.
Thus, a ready and available talent pool is there, as is the demand for contracted lawyers. Accordingly, temporary assignment is an appealing option for both parties, and why increased numbers of firms are now contracting out work.
According to the 2011 HBR Law Department survey, corporations are now using more in-house attorneys than in years past in order to deal with the growing demand for legal services. The shift is primarily in effort to cut back on spend as the economy continues to recover, thus corporations are relying more heavily on larger in-house teams instead of on outside counsel. Consequently, increased numbers of attorneys that have traditionally worked in private practice are now transitioning to in-house positions.
In a statement released by HBR, they believe “law departments are recognizing that they can do more with less by building up their in-house capabilities. The Survey shows that the median fully-loaded inside hourly cost per lawyer is approximately 46 percent below the median average hourly rate of the company’s top three billing firms.” In a time of careful spending and close budget scrutiny, firms are finding numbers this compelling hard to deny.
At the same time, however, the legal profession is recovering more quickly than most. The survey highlights that more than 50 percent of respondents reported an increase in total number of legal staff worldwide between 2009 and 2010, while only 29 percent reported a decrease. Overall, 80 percent of respondents commented that their company’s legal needs are increasing, with the median expected increase in overall lawyer staffing at 10 percent. The growth also seems to be coming sooner rather than later, as 40 percent of those surveyed expect to hire more lawyers in the coming year. Additionally, more than 33 percent of corporations attach high importance to expanding in-house teams, compared to only 11 percent that are looking to increase the use of outside counsel.
HBR Senior Director and Survey Editor Lauren Chung added the following about the data gathered in the survey: “This finding serves as one of the important considerations in building a business case for adding more in-house counsel to handle the increasing workloads. We are hearing from our consulting clients across industries that they are limiting the use of outside counsel to high profile matters or specific areas of expertise rather than to support the growing volume of work. With the rising cost of outside counsel, we expect this trend will continue.”
This is just one of a few key industry shifts settling in as the recession ripples out and begins to rebound. Increased numbers of contract attorneys, mergers and lateral movements, along with growing in-house counsel teams look to be the way of the future. As firms continue to balance cutting costs with maintaining quality in order to spur growth, we will continue to see a rise of this same “do more with less” attitude.