What class years are safest in a recession? Forum

[Anonymous User]

Are there any class years that are more safe than others? It seems like the threads on here suggest juniors aren't particularly safe because they're brand new, there's a lot of them, and they don't add much value yet. But also seniors don't seem that safe because they're the most expensive. Does that make midlevels slightly safer than others since they're almost able to function like a senior (and in a downturn presumably partners have more time available for some additional hand-holding) but for less money? Or are seniors safer than midlevels since there's usually less of them and you'll need them again as soon as the recession ends?

[Anonymous User]

Competent and well-regarded 2nd, 3rd and 4th years are safest.

[Lacepiece23]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

[Anonymous User]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

How does a firm go about firing an equity partner? Does it require some sort of vote or something. I figure their positions are much stickier than associates so probably involve something special to get rid of.

[Anonymous User]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I assume these were all non-equity / income partners? If you're at a one-tier firm I assume it's pretty hard to get rid of partners.

[Anonymous User]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I am 2015 as well, still in biglaw, and I disagree. I think that 6-9th years (if not equity partner) are too valuable to let go. Work will start to not trickle down and a 7th year is going to be much more efficient than a 4th year. I actually think juniors are in a worse spot because a lot of the "bad" ones will still be there (whereas "bad ones" don't really last until the 7+ year range) and its easier to cut the fat than fire good soldiers. As long as you don't have equity, you aren't that expensive - for example if you are a 7th year making $400k, billing at $1000/hour, it only takes 400 hours to cover that cost (and overhead like office space, benefits, etc. are materially the same for all levels). So I think that "senior associates" or non-equity partners are probably the safest spot to be.

[Lacepiece23]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I am 2015 as well, still in biglaw, and I disagree. I think that 6-9th years (if not equity partner) are too valuable to let go. Work will start to not trickle down and a 7th year is going to be much more efficient than a 4th year. I actually think juniors are in a worse spot because a lot of the "bad" ones will still be there (whereas "bad ones" don't really last until the 7+ year range) and its easier to cut the fat than fire good soldiers. As long as you don't have equity, you aren't that expensive - for example if you are a 7th year making $400k, billing at $1000/hour, it only takes 400 hours to cover that cost (and overhead like office space, benefits, etc. are materially the same for all levels). So I think that "senior associates" or non-equity partners are probably the safest spot to be.

We were probably at different types of firms. My firm was low leverage. I noticed all the junior partners started taking work from the seniors when things got slow. The seniors then tried to do the same but some clients didn't want seniors drafting answers and such.

[Lacepiece23]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I assume these were all non-equity / income partners? If you're at a one-tier firm I assume it's pretty hard to get rid of partners.

The firm wasn't getting rid of EPs for the most part. But there were some EPs that should not be or have been EPs in the first place that were on the hot seat.

[Anonymous User]

I have no source for this but I think we'll see a combo of all levels just trimming the fat. Eg super seniors won't be kept around at 500k if there's not enough work and instead 5th years can do the work. A lot of the hires that didn't pull their weight but were useful bodies when things were really busy will be eased out. Juniors who prioritize personal space (and you know what I'm referring to, we've had these conversations).

And then in 2 years work will pick up again and firms will wonder where everyone is.

[Anonymous User]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I assume these were all non-equity / income partners? If you're at a one-tier firm I assume it's pretty hard to get rid of partners.

Does happen. There were sudden de-equitizations at v5 firms (that at the time claimed to be single tier partnerships) up to 2013/14; some partners also just left what seemed like overnight.

[Anonymous User]

People need to think about this from the perspective of the equity partnership, which is where these decisions are made (and even more so the leadership committee of the firm). Partners care about two things: Money and Reputation.

Productive super seniors / income partners aren't getting cut. They run cases and are competent and bring in a huge amount of profit for the equity partners. They're the last group that they'd want to push out.

Firms don't want to fire first years because it causes reputational / OCI / optics hits. You end up in Amlaw. You become the next Latham. Also, in the scheme of things, first years are cheap. A rounding error at a per attorney level. Etc.

Which puts the pressure on your mid-level associates. They're not super competent or super profitable yet. You haven't invested too much in them. They're sort of expensive relative to the revenue they bring in. They have less mouthpiece than a 1st year (paradoxically but a feature of this industry). To echo one of the comments above, it's your 3rd year laterals who were brought on to do COVID M&A who are your biggest targets right now.

[existentialcrisis]

People need to think about this from the perspective of the equity partnership, which is where these decisions are made (and even more so the leadership committee of the firm). Partners care about two things: Money and Reputation.

Productive super seniors / income partners aren't getting cut. They run cases and are competent and bring in a huge amount of profit for the equity partners. They're the last group that they'd want to push out.

Firms don't want to fire first years because it causes reputational / OCI / optics hits. You end up in Amlaw. You become the next Latham. Also, in the scheme of things, first years are cheap. A rounding error at a per attorney level. Etc.

Which puts the pressure on your mid-level associates. They're not super competent or super profitable yet. You haven't invested too much in them. They're sort of expensive relative to the revenue they bring in. They have less mouthpiece than a 1st year (paradoxically but a feature of this industry). To echo one of the comments above, it's your 3rd year laterals who were brought on to do COVID M&A who are your biggest targets right now.

Hmmm.

I suppose this makes sense to a certain extent, but it’s also been my experience that midlevels, particularly decent ones, are pretty valued/in demand at firms, especially because they’re senior enough that they can start leaving (faltering economy obviously impacts this).

Midlevels are the ones who do a lot of the actual work/drafting on deals and you can count on them to be efficient in a way that you can’t for the most junior folks when it comes to the simple stuff.

I won’t opine on the bit about firms who over hired for work that’s now dried up because that definitely does sound precarious, but I don’t see why that would hit midlevels the hardest.

[Anonymous User]

I have no source for this but I think we'll see a combo of all levels just trimming the fat. Eg super seniors won't be kept around at 500k if there's not enough work and instead 5th years can do the work. A lot of the hires that didn't pull their weight but were useful bodies when things were really busy will be eased out. Juniors who prioritize personal space (and you know what I'm referring to, we've had these conversations).

And then in 2 years work will pick up again and firms will wonder where everyone is.

This is the answer right here.

[hdr]

Once your hours drop to a certain level, you're not safe regardless of your level of seniority. Senior associates without a clear path forward at the firm tend to be the most vulnerable, but when a firm decides to make cuts, no one with low billables escapes consideration. Sometimes there's an advantage to being junior because you can do more low-level work like doc review and potentially even switch to a busier group like bankruptcy. On the other hand, senior associates may have more control over various matters and keep can more work to themselves, at the expense of the attorneys beneath them. Whatever your position, you should be doing everything possible to get staffed on as many matters as possible and bill as many hours as you can.

As long as you don't have equity, you aren't that expensive - for example if you are a 7th year making $400k, billing at $1000/hour, it only takes 400 hours to cover that cost (and overhead like office space, benefits, etc. are materially the same for all levels).

This is flat-out wrong. If there are two 7th year associates billing 400 hours, then the firm can eliminate one of them, make the other bill 800 hours, and save $400k. It's extremely expensive to keep around anyone billing less than half of a normal 2000 hour workload. In my experience, once you're on target for <1000 hours, you're well into the danger zone and should not be surprised at a layoff.

[Anonymous User]

People need to think about this from the perspective of the equity partnership, which is where these decisions are made (and even more so the leadership committee of the firm). Partners care about two things: Money and Reputation.

Productive super seniors / income partners aren't getting cut. They run cases and are competent and bring in a huge amount of profit for the equity partners. They're the last group that they'd want to push out.

Firms don't want to fire first years because it causes reputational / OCI / optics hits. You end up in Amlaw. You become the next Latham. Also, in the scheme of things, first years are cheap. A rounding error at a per attorney level. Etc.

Which puts the pressure on your mid-level associates. They're not super competent or super profitable yet. You haven't invested too much in them. They're sort of expensive relative to the revenue they bring in. They have less mouthpiece than a 1st year (paradoxically but a feature of this industry). To echo one of the comments above, it's your 3rd year laterals who were brought on to do COVID M&A who are your biggest targets right now.

What does "they have less mouthpiece" mean?

[Anonymous User]

People need to think about this from the perspective of the equity partnership, which is where these decisions are made (and even more so the leadership committee of the firm). Partners care about two things: Money and Reputation.

Productive super seniors / income partners aren't getting cut. They run cases and are competent and bring in a huge amount of profit for the equity partners. They're the last group that they'd want to push out.

Firms don't want to fire first years because it causes reputational / OCI / optics hits. You end up in Amlaw. You become the next Latham. Also, in the scheme of things, first years are cheap. A rounding error at a per attorney level. Etc.

Which puts the pressure on your mid-level associates. They're not super competent or super profitable yet. You haven't invested too much in them. They're sort of expensive relative to the revenue they bring in. They have less mouthpiece than a 1st year (paradoxically but a feature of this industry). To echo one of the comments above, it's your 3rd year laterals who were brought on to do COVID M&A who are your biggest targets right now.

What does "they have less mouthpiece" mean?

It's much easier for it to get out that a firm has fucked over a large group of first years who still have a foot in the door of their law school w/ its relationship w/ the firm, are watched by industry observers / media as a barometer for the health of firms and the industry (how's the summer program doing, how's the incoming class doing, any no offers, etc. -- look at the obsession over the Cooley summer class in the other thread), are at a very fragile stage in their careers coming out of school etc. It's much easier for a firm to sweep under the rug decimating a group of 3rd / 4th / 5th years who have been sucked into the dregs of the legal world, maybe have already lateraled once or twice, are more likely to land on their feet at some other place (and so less likely to call things out to ATL or on Twitter) and so on. First years are weird; they're simultaneously the lowest rung on the attorney ladder and a group that we're all very careful about.

[Anonymous User]

Also it's very rare for a 1st year to get fired for cause -- they are usually given slack to be useless for a year or two. So it gets noticed when they get fired. And they (esp the KJDs) probably haven't learned the art of pretending you didn't get fired (or don't want to pretend since as noted it's not norm to fire a first year). So a first year will come here or fishbowl or ATL etc; or will just post under real name on social media saying I was fired and I didn't deserve it. Maybe they will maybe they won't but firms are afraid they will.

Whereas a 4th year will go quietly and instead negotiate more website time and think about how to move on with nobody knowing that when it came time to trim the fat, he was the fat.

[objctnyrhnr]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I am 2015 as well, still in biglaw, and I disagree. I think that 6-9th years (if not equity partner) are too valuable to let go. Work will start to not trickle down and a 7th year is going to be much more efficient than a 4th year. I actually think juniors are in a worse spot because a lot of the "bad" ones will still be there (whereas "bad ones" don't really last until the 7+ year range) and its easier to cut the fat than fire good soldiers. As long as you don't have equity, you aren't that expensive - for example if you are a 7th year making $400k, billing at $1000/hour, it only takes 400 hours to cover that cost (and overhead like office space, benefits, etc. are materially the same for all levels). So I think that "senior associates" or non-equity partners are probably the safest spot to be.

We were probably at different types of firms. My firm was low leverage. I noticed all the junior partners started taking work from the seniors when things got slow. The seniors then tried to do the same but some clients didn't want seniors drafting answers and such.

Sorry what? You’re saying that drafting answers is a senior associate or partnership job at your firm? Like answers to complaints in lit?

[Anonymous User]

I agree that fat is being cut at all levels but likely more concentrated at the top especially at level 6+ who did not have a powerful partner looking out for them.

[Anonymous User]

I think this is going to be group dependent. The midlevels in my group are not going to be cut. The partners depend on them heavily. We’re already seeing juniors with no work and partners explicitly not reaching out to juniors in favor of midlevels. From the perspective of my group, I think class of 2020 and 2021 are very vulnerable.

[Lacepiece23]

I'm 2015 and here is what I saw happen as we were just getting out of the GFC and the firm wasn't doing so hot.

Sixth year down was pretty safe. I did not see the firm get rid of juniors. Junior partners and senior associates were where the cuts were made. Basically, if you did not have a huge equity partner that expressed a need for you, then you were on the chopping block. Even more so if you were billing low hours.

I am 2015 as well, still in biglaw, and I disagree. I think that 6-9th years (if not equity partner) are too valuable to let go. Work will start to not trickle down and a 7th year is going to be much more efficient than a 4th year. I actually think juniors are in a worse spot because a lot of the "bad" ones will still be there (whereas "bad ones" don't really last until the 7+ year range) and its easier to cut the fat than fire good soldiers. As long as you don't have equity, you aren't that expensive - for example if you are a 7th year making $400k, billing at $1000/hour, it only takes 400 hours to cover that cost (and overhead like office space, benefits, etc. are materially the same for all levels). So I think that "senior associates" or non-equity partners are probably the safest spot to be.

We were probably at different types of firms. My firm was low leverage. I noticed all the junior partners started taking work from the seniors when things got slow. The seniors then tried to do the same but some clients didn't want seniors drafting answers and such.

Sorry what? You’re saying that drafting answers is a senior associate or partnership job at your firm? Like answers to complaints in lit?

No, it’s not. I’m just saying in bad times I’ve seen seniors/partners take this work for themselves if they have nothing to do.

Basically, they would hoard hours from mid levels and juniors to protect their jobs.

[Anonymous User]

Are we talking about corporate here? I assume lit associates are “safer” during recessions.

[Anonymous User]

Are we talking about corporate here? I assume lit associates are “safer” during recessions.

I tried looking at the AMLAW data to determine whether firms that are predominately lit did better during the GFC. But, I couldn't draw a conclusion because firms have different mixes of lit v. corp. I did notice that, except for Quinn, almost all of the lit-heavy firms I looked at had at least some kind of slowdown or contraction. Not sure if they did better than corp-dominant firms. I can speculate on a few reasons why Corp defense lit wouldn't be safer: reduced legal budgets, reduced legal risk tolerance by GCs, reduced transactions that "cause" litigation (i.e. less M&A so less anti-trust and Del lit and securities lit; less Capital market transactions so fewer securities lit actions).

[Lacepiece23]

Are we talking about corporate here? I assume lit associates are “safer” during recessions.

I tried looking at the AMLAW data to determine whether firms that are predominately lit did better during the GFC. But, I couldn't draw a conclusion because firms have different mixes of lit v. corp. I did notice that, except for Quinn, almost all of the lit-heavy firms I looked at had at least some kind of slowdown or contraction. Not sure if they did better than corp-dominant firms. I can speculate on a few reasons why Corp defense lit wouldn't be safer: reduced legal budgets, reduced legal risk tolerance by GCs, reduced transactions that "cause" litigation (i.e. less M&A so less anti-trust and Del lit and securities lit; less Capital market transactions so fewer securities lit actions).

My lower V100 lit heavy firm was like this. Everyone did mortgage back security work for a period of years. But GCs started slashing bills left and right for everything else and everyone felt the pain.

[Anonymous User]

Also it's very rare for a 1st year to get fired for cause -- they are usually given slack to be useless for a year or two. So it gets noticed when they get fired. And they (esp the KJDs) probably haven't learned the art of pretending you didn't get fired (or don't want to pretend since as noted it's not norm to fire a first year). So a first year will come here or fishbowl or ATL etc; or will just post under real name on social media saying I was fired and I didn't deserve it. Maybe they will maybe they won't but firms are afraid they will.

Whereas a 4th year will go quietly and instead negotiate more website time and think about how to move on with nobody knowing that when it came time to trim the fat, he was the fat.

Regardless of the “protection”, first years should still be hustling because otherwise they’ll fall behind skillset wise as a second year. People also will remember first years who push back this year because it’s not like the first years are as busy as 2020 or 2021.