Biglaw, Conferences / Symposia, Job Searches, Lateral Moves, NALP, National Association for Law Placement (NALP), No Offers, Partner Issues, Summer Associates

Homegrown or Not: Law Student Recruiting v. Lateral Hiring

Tampa is lovely this time of year.

Hello from Tampa, Florida, site of the 2013 annual education conference of the Association for Legal Career Professionals (aka NALP). Elie Mystal, Brian Dalton and I have been attending some excellent panels, catching up with old friends, and making new ones (although some law school folks here have given Elie the stink eye).

Yesterday I attended an interesting panel entitled “Homegrown or Not: Lateral Hiring vs. Law Student Recruiting.” The important topic drew a standing room only crowd….

I wondered: why was this panel so packed? Are law firms wondering if they can ditch their (expensive) summer programs and rely instead on recruiting lateral talent? The panelists:

(Kevyn Orr, former firmwide hiring partner of Jones Day, was also supposed to be on the panel, but he’s too busy trying to save Detroit.)

The discussion started by comparing the respective advantages of law student recruiting and lateral hiring. Law student recruiting — i.e., a traditional summer associate program — provides firms with access to top talent, the ability to train lawyers from the get-go, and the development of camaraderie within the class, which facilitates the building of a strong firm culture. Lateral hiring, in contrast, helps firms match their current needs. For example, a firm might have a gap in its talent pipeline because of attrition by lawyers in a particular practice area.

All three firms represented on the panel employ a mix of summer associate hiring and lateral recruiting. Skadden has the largest summer program of the three, with about 180 to 200 summer associates firm-wide — a drop of about 50 percent from the pre-recession glory days, but still a sizable class. When conducting callback interviews for summer associates, the firm schedules “Super Days,” in which it brings in as many as 120 students on the same day. This facilitates side-by-side comparison of many candidates, allowing for simultaneous consideration of them at the same meeting of the hiring committee, and the firm prefers it over the guesswork involved in making offers on a rolling basis.

On the other end of the spectrum, the summer class at Carlton Fields might amount to just 10 people. The firm has stopped doing on-campus interviews, which it found was not cost-effective, and instead obtains summer associates through résumés sent in directly by candidates or through law school career services offices with whom the firm communicates. Carlton Fields will also hire 1Ls from top 10 law schools who might overlook the firm during 2L OCI; these students, if they get to know the firm and like it, sometimes return to the firm for part of their 2L summers and even permanently.

Bingham falls in between Skadden and Carlton Fields. According to Mary Gail Gearns, Bingham has found that its summer program works better when it’s leaner. A small program allows the firm to give substantive legal work to summers and to integrate them better into projects. “We’ve found they’re happier when they work hard,” she said. Who says millennials are lazy?

Sprague, as moderator, raised the question of 3L hiring. I expected laughter but was surprised to learn that Skadden actually started on-campus recruiting of 3Ls about two years ago. It helps the firm fill undersubscribed practice areas. Now about 20 percent of the firm’s summer class consists of 3Ls. When hiring 3Ls, Skadden focuses on people with 2L experience at other law firms or government agencies (such as the Justice Department or the SEC).

Fall recruiting of 3Ls used to be more common before the Great Recession — which brought about several changes in the summer associate hiring process. First, and most notably, summer programs shrank in size, by 50 percent or more. As a result, high standards are even higher. “These days we’re looking for any reason not to hire a summer associate,” said Sprague. “You have to be the A-plus person to get a position these days.”

Second, student attitudes have changed — for the better. “Now students are willing to do anything,” said Gearns. “It’s refreshing.” She contrasted today with the early 2000s, when students were so picky about practice areas. (A tip for 2Ls: some practice area flexibility can be helpful for getting an offer. You might want to mention practice areas of the firm that hold specific interest for you, but saying you want to do “X and only X” can be dangerous.)

Third, there’s more client pressure on the cost front. As is widely known, some clients will say in the master engagement letter that they will not pay for first-year associates. But that can change, said Gearns, once clients meet the first-years working on their matters and see the high-quality work product they produce. If firms educate their clients about the value provided by junior associates, clients are more willing to pay.

Of course, some things can’t be changed. Many clients are outsourcing work that first-year associates used to do and requiring firms to use the company’s vendor — for example, an outfit that does document review in India. This might not be great for the law firm’s bottom line, but it can be a blessing for first-years, who get to do more substantive work.

Returning to the question I raised at the outset, would it be possible for firms to eliminate their summer programs in favor of total reliance on lateral hiring? I’ve seen this trend in some markets (e.g., New Jersey, the state I grew up in). But for large firms in major cities, it doesn’t seem to be in the cards. When Sprague asked for a show of hands from attendees as to who has a summer program and who does not, pretty much everyone indicated that they have a summer program.

For Biglaw, reliance on summer programs makes sense. Sprague said it would be impossible as a practical matter to hire 180 to 200 laterals a year, the rough size of Skadden’s incoming associate class, especially given the headhunter fees that would be involved ($40,000 per placement). She added that the summer program gives firms a ten-week look at the candidate, a chance to get to know the candidate’s personality and assess their work product.

I followed up on this observation during the question-and-answer session. Does the summer associate program perform any real screening function, in light of offer rates that hover near 100 percent?

Perhaps offer rates should be lower — but it’s hard to do anything about that, explained Sprague.

“If you no-offer someone in the New York market, they’re scarred for life. And it’s not usually the case that someone is no-offered because they’re not smart enough. They do these random other things,” Sprague said (to knowing laughter from the room).

Gearns said that even though Bingham has had fairly high offer rates — which a firm should, at least if it’s doing its hiring properly — it does use the summer program as an evaluation of opportunity. In the past five years, it has no-offered a handful of students. Bingham tells its summer associates at the start of the program that they need to earn the offer; it’s not theirs to lose.

As for lateral hiring, Sprague said Skadden finds candidates through a combination of personal referrals and outside recruiters (“although I wish we didn’t have to” — understandable, given the fees involved). All three firms on the panel provide financial incentives to associates who make successful referrals.

From an associate’s perspective, if you’re applying to a firm laterally without a recruiter — which can sometimes be to your advantage, because you are cheaper than recruiter-sourced talent (the firm doesn’t have to pay the headhunter fee) — how can you get noticed? Young recommended that you find someone already at the firm, perhaps a friend or law school classmate, who can flag your résumé for recruiting or the hiring partner. This can result in a win-win situation: you find a new job, the firm finds a new hire, and your friend gets a nice referral bonus.

On the whole, I was struck by how little recruiting has changed over the years. There have been a few changes at the margins — the earlier timetable, the “Super Days” for callbacks — but nothing revolutionary. The overall process is strikingly similar; the main difference is that far fewer people get to participate nowadays, thanks to the shrinking of summer programs and of Biglaw more generally.

Some innovators within the profession are proposing new approaches to the talent challenge. Examples include Bruce MacEwen and Janet Stanton of JD Match, or Bill Henderson of Lawyer Metrics. But most firms continue to follow the old model. Given what’s at stake for law firms in lawyer hiring, it’s surprising not to see more experimentation and innovation. For better or worse, that’s the legal profession for you: risk averse, wedded to tradition, and slow to change.

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