Recruitment trends: interview with NALP's Jim Leipold

Interview with Jim Leipold, executive director at NALP

Jim Leipold

Chambers Associate: Last year we discussed a ‘leveling off’ in legal recruitment – has this trend continued in 2018?

James Leipold: I’d say we’ve seen the trend continue for another year, although I don’t want to overstate it as BigLaw’s still a robust market. It’s not where it was before the recession – we’re still about 1,000 summer associate positions shy of peak volume – but in intensity and competition it’s close. This year 43% of large law firms said they made fewer offers for summer positions and last year 50% said they made fewer offers. That’s the first time since the recession we have had large numbers of firms saying they were making fewer offers. Again, I don’t want to overstate this but it does demonstrate that the growth in summer programs has tapered.

New York and Silicon Valley were the markets that led the recovery in many ways, and we’ve seen those two markets slow down a little bit in particular. The fact that they’ve built back the fastest and have now peaked contributes to this leveling out. In terms of offer rates, we have also seen that the offer rate following callback interviews has tapered off over the last two years and that curve is beginning to head in the other direction. At the largest law firms the median number of offers extended to 2Ls had been 30 before the recession and fell to just 8 in 2008. In 2015/16 it was back to 20, but during this last cycle it dipped back down to 16. We also ask law firms if they’ve been recruiting 3Ls, and the percentage that said they did so has also come down over the last two years.

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CA: How is artificial intelligence affecting the legal profession?

JL: I think we are seeing adoption most quickly in large in-house departments. Law firms are also trying to figure out of to create value and efficiencies with this rapidly evolving technology. Using it for document review is now standard in the industry even for law firms, and in-house departments are using AI for contract management, E-billing and E-signature. And Blockchain is rapidly becoming part of the landscape. Individual law firms are having a hard time balancing the development costs of implementing AI and finding the right return when it comes to creating efficiencies. Law firms are trying to figure out when they need to become technology providers for their corporate clients and when they should be buyers of technology, so you see firms taking different tacks.

CA: How has the Trump administration affected the legal market and profession so far?

JL: I would prefer not to comment specifically on the Trump administration. It’s hard to know what the real impact is. We have seen an increase in law school applications after a seven year slide, and that’s important, and we’ve seen the applications go up disproportionately among the highest LSAT bands, which is encouraging. There are people in the industry who attribute that to a ‘Trump bump’ in light of current affairs, and I don’t doubt that’s a part of it but we don’t have any data to prove that. Law school application volume over time is a series of peaks and valleys and there had to be an upturn somewhere, and the job market for law school graduates has improved considerably since the recession. In terms of the business climate, somewhat counter-intuitively, the market has been strong despite all of the political uncertainty. The current administration has been deregulating and the tax law changes have been very favorable for businesses so we have seen a very healthy marketplace. Certainly it was a very profitable year for many large law firms despite the political climate.

CA: Last year we asked about diversity in BigLaw, and from looking at the stats we haven’t seen a major improvement. What’s behind this?

JL: There are two reasons behind this. Law firms continue to make modest gains, but they are so modest that you and I will be long dead before we reach parity with women or ethnic minorities. Pay and equity issues have risen in importance in light of the #MeToo movement, the Weinstein scandal and the Hollywood pay gap. The news about the UK requiring companies to report their pay gap has been widely publicized in the US and that’s shone a light on the issue. We continue to see women of color being the most underrepresented demographic, and most of the recent diversity gains among associates can be attributed to a rise in the number of Asian associates. In aggregate, however, Asian associates convert to partnership at the lowest rate, in part because they tend to move in-house or into other private sector work. African Americans are actually less well-represented among associates than before the recession. That’s where we are at this point.

We could deconstruct all of the societal inequities and talk about how the pipeline shows leaks before children even reach elementary school, and we disproportionately lose Latino and African Americans at every stage of the pipeline by failing them at school. Law firms are actually very good at recruiting when it comes to diversity. The percentage of summer associate classes that’s diverse exceeds that of the graduating class, so they are recruiting well. The challenges law firms face are more about retention and development, and creating an inclusive environment. At every year after the first year diverse attorneys are leaving law firms at a disproportionately high rate.

CA: Do you see flexible working becoming the norm in the future?

JL: I do think that law firms understand that the millennial generation has different expectations about things like face time and work/life balance. Nowadays you can work from anywhere, and young attorneys don’t understand why they should stay in one place. An area where we’ve seen the most progress is in family leave policies which aren’t gender specific, so you see young fathers taking paternity leave alongside women taking maternity leave, which signals a cultural change. You get firms offering it and young men taking it without worrying about any stigma.

'The thing that’s the hardest to do – and law firms don’t make it easy – is to actually distinguish between firms.'

You do see some flexible working arrangements but management and leadership still have the expectation of face time. It’s great to work from home or from Starbucks, but when work is doled out in a free-market way if you’re not there you won’t get the project. I think firms understand the generational shift and are trying to implement more progressive policies, but family leave is the area where we’ve seen the most cultural change recently.

CA: Do you think law firms will ever consider offering associates less money for fewer billable hours?

JL:  No. Not partnership track associates. But we do see firms offering different kinds of jobs for fewer hours and experimenting with practice-specific staff attorney positions without the same upward career path. Some progressive firms have a career development matrix where associates can step off into a staff attorney role with some opportunity to return later to a partnership track, but they’re careful to state that’s an exception rather than a rule. As for associates on a partner track: until the partnership structure disappears and firms adopt a more corporate-style ownership structure, billable hour expectations will stay high.

CA: Given how competitive the recruitment process is, how important do you think it is for students to know which specific area of law they’d like to practice in?

JL: I think that depends. For the most part law firms aren’t looking for specialization and want flexibility for staffing on the fly. There are exceptions and certainly in intellectual property – which is super important – they do want people to know ahead of time and have STEM (science, technology, engineering and mathematics) backgrounds. I think that is another factor in the LSAT vs. GRE debate that’s going on. One of the reasons schools are accepting GRE results is because it brings in more people who have experience in the STEM fields.

'I think it’s important to take time out between undergrad and law school and do two years of work experience for example.'

This crops up during ‘pre-cruiting’ where firms try to get to certain kinds of candidates early, and we certainly see more and more early outreach to candidates with STEM backgrounds. That’s where specialization is important, and in tax as well there are courses that are important if you want to become an associate in that area. But even if you just make a decision between litigation and transactional work the lines are still blurry and people still have to be flexible.

CA: Do you have any words of wisdom for people thinking about pursuing a career in BigLaw?

JL: I think it’s important to take time out between undergrad and law school and do two years of work experience for example. I think that makes you a more fully formed professional and spending time in the job market gives you an advantage that really shows. People who go straight through to law school from university without working are at a disadvantage. Another rule is borrowing as little money as you can so you’re not locked into having to take the BigLaw job. There is a lot of tuition discounting at present because competition for the smaller group of applicants has been so keen, so the net cost at many law schools has actually come down over the last five years even though the sticker price is higher.

The thing that’s the hardest to do – and law firms don’t make it easy – is to actually distinguish between firms. Websites and lawyer bios often look the same but they’re actually very different culturally. Spend as much time in the pre-offer/acceptance phase making distinctions between firms and ask yourself: ‘Will I fit in here? Are there people that I could work with every day and want to get out of bed and spend 18 hours a day working with them?’ A lot of people wind up at a law firm without having done that, so I think that’s important.

CA: Are there any other issues that you think our readers should be aware of?

JL: There’s an issue that’s bubbled up here recently, where a firm was flagged up for having all of its associates sign mandatory arbitration and nondisclosure agreements regarding sexual harassment. The firm has rescinded the policy but it’s an issue we’re keeping an eye on. Some associates have said they don’t want to interview with firms that have similar policies and it’s something that the board will be monitoring. Some people think it’s perhaps more of an issue in California because of state laws there, but we expect more firms to come forward and say they’re rescinding that policy. It’ll be interesting in recruitment to see whether firms change policy or whether they were widely in place, but we’re going to be keeping an eye on it.

April 2018