Rifkin Consulting Report

No industry has escaped unscathed from the perilous effects of the economic slump. The biggest economic crisis since the great depression has left the legal sector gasping for breath. With layoffs and salary freezes rampant in the industry, young lawyers have been compelled to take a hard look at the compensation that they can expect from current or future positions in the sector. Here is a look at how times have changed since 2007 which was considered to be one of the best years of the decade for law. 

Hopes were ripe, and most legal firms went on a hiring frenzy expecting the economic growth to prevail; however, things took a turn for the worst and in a mere three years most jobs have dried up for new lawyers just out of school while those with a job under their belt live under constant threat that they may not be able to hold on to their employment too long. 

Needless to say, the volatility has not only created an exodus of legal professionals but also a mentality of “anything is acceptable’ in terms of compensation. While fresh attorneys are willing to take a salary cut of almost 25% to 75% over what was being offered in 2007; some eminent firms have dropped the salary of associates to $100,000 from $165,000. 

However, as opposed to the popular view that these cuts are temporary and simply reflective of the economic scenario and that the situation will eventually change, some industry experts believe that although the economic crisis may have led to the transition; the correction in lawyer compensation was long due and certainly reasonable. Some industry watchers go so far as to suggest that legal firms should revert to the salary structure that was being used in 1998 under which an associate made $73,000 per annum. 

Experts also suggest that even if the clouds of economic doom dissipate several other factors such as a reduced demand for legal services, a plethora of other legal resources for clients such as offshore providers, virtual law forms and contract attorneys will continue to impact the salary structure. 

Unfortunately, the pay cuts have left most fresh lawyers in a lurch with massive student’s debts that often run into the range of $100,000 and above; some of these young attorneys are forced to take on just about any job that will pay the bills.

Another conspicuous trend that has emerged since the economic meltdown and the employment quandary that followed in its wake is the shift of more and more young lawyers into the public sector. This is where help is needed the most and young lawyers are not averse to the idea of working for government and private agencies that have more jobs that the corporate sector. 

As far as the pay scale is concerned, many law firms are not only reducing the overall pay package, but are also shifting to a semi or complete case based compensation package. 

However, the scenario looks particularly gloomy for associates because not only does the firm have to incur the cost of salary when using the services of associates but also they need to dish out more for training them. This has decreased their appetite for offering higher pay scales to first and second year associates. Another factor in the equation is that they can get the same value from experienced lawyers who would cost them as much as the associates. 

It is safe to suggest that 2010 is going to be another year full of salary and job cuts; perhaps the economic scenario may turn next year but the same cannot be said emphatically about the salary structure in the legal sector.

RESPONSIVE.  RESOURCEFUL. RESULTS.

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RIFKIN CONSULTING is an attorney search firm that works with clients who want to hire top attorneys, and candidates seeking to work for highly-respected law firms. 

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