NEW YORK, Aug 17 (Reuters) - Some economists are predicting a double-dip recession, but law firms hiring associates for 2012, say they are planning to make the same number of job offers as they did for the 2011 class -- and in some cases may even increase the number of positions.
While they are mindful of the fragile economy, firms are not expecting the kind of upheaval that forced them to gut their summer associate classes in the last recession. They don't forsee a freeze in banking or mergers and acquisitions work and are staffing accordingly. K&L Gates, which had approximately 80 summer associates in its offices in 2011, expects to have a group of similar or slightly larger size for 2012. Texas-based Vinson & Elkins, which had 88 second-year summer associates, and the world's largest firm, DLA Piper, which had 53, said they too would keep their numbers steady. White & Case, which hosted 60 associates this summer, also plans to have a similar class size in 2012.
Unsettling developments, like last week's stock market gyrations, are noted, said Peter Kalis, the hiring partner at K&L Gates. But they have functioned more as a moment to check-in rather than recalibrate. The firm's "assumptions will survive," he said.
There are a few reasons firms are confident about the hiring landscape. One is the lessons of the 2008 recession are still fresh. The severity and speed of the recession caught most firms by surprise, and many found that they had over-hired. That experience has led to more careful and leaner staffing. Firms also work more closely than before with practice groups firm-wide when assessing manpower needs. V&E, for instance, does not assign associates to practice groups until a month before their start date, hiring partner Tom Leatherbury said.
What's more, firms believe the country's economic picture today is very different from three years ago. Even if there is another recession, law firms don't expect it to involve implosions like Bear Stearns and Lehman Brothers. That in turn suggests that the lucrative work financial institutions generate will continue uninterrupted - in contrast to 2008 when that work, as well as merger and acquisition matters, came to a near standstill.
"I don't see anyone predicting that kind of collapse of the 21st century banking system," Kalis said. A double dip recession "will create its own challenges," he said, "but they are of a lesser degree than those challenges posed in late '08."
In light of the uncertainties, V&E for example, has revisited the issue of class size a number of times this month. In the end, partners decided that making between 85 and 90 offers, about the same as this year, was the right move. "We had that discussion, we had it again today, we will have it ongoing," said Leatherbury.
Law firms were hit particularly hard in 2008-2009. Thousands of associates lost their jobs -- nearly 200 from Latham & Watkins on one day in February 2009. Forty percent of 2009 summer associates had their permanent-position start dates deferred, some for more than a year, according to NALP, the Association for Legal Career Professionals. In 2010, summer associate programs withered to their lowest levels, with firms hiring 44 percent fewer students than in 2009, according to a survey conducted by The American Lawyer.
Firm economics, however, have improved since then. For the top 100 law firms, gross revenue rose 4 percent in 2010, after 2008's decline of 4.3 percent. Most indicators are the 2011 numbers will also rise. And while they are not hiring in prerecession numbers, there is work for the associates that are there.
"Despite what happened last week, (firms) are focusing on 2013 and expect to be busy," said the assistant dean of career services at Harvard Law School, Mark Weber, referring to the stock market. "Class sizes are, at a minimum, the same as . And some anticipate larger," Weber said. Students hired for the summer of 2012 will be begin their permanent positions in the fall 2013.
(By Erin Geiger Smith)
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