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The Five Most Noteworthy Large Law Firm Recruiting Trends Plus Acrobat XI Deployment Guide

By Bruce MacEwen | Friday, March 1, 2013

Originally published on February 27, 2013 in our free BigLaw newsletter. Instead of reading BigLaw here after the fact, sign up now to receive future issues in realtime.

It has become popular to declare institutions "broken" without explaining what that means or how to fix it. Arguably, law school recruiting by large law firms is broken. In this issue of BigLaw, JD Match co-founder and Adam Smith, Esq. publisher Bruce MacEwen digs into the data he has accumulated to discuss the five most notable trends in recruiting and how to address the problems that have emerged. Also, don't miss the BigLaw Pick of the Week (email newsletter only) for the Acrobat XI Deployment Guide for Large Firms.

The Five Most Noteworthy Large Law Firm Recruiting Trends

As co-founder and President of JD Match, the first online platform designed to connect law firms with law students, I've seen firsthand some trends in large firm recruiting that would have seemed unusual — even unheard of — just a few years ago. In this issue of BigLaw, I'll offer my perspective.

But first, as economists, statisticians, and smart business managers know, "averages lie." In the limited space I have, I'm constrained to speak in terms of averages across the industry. If your firm's experience is at odds with what follows — for better or worse — don't say I didn't warn you.

1. Everything Is Smaller

Summer classes are smaller, summer programs are shorter, incoming first year classes are smaller, interview schedules at top law schools are both shorter and fewer in number, and the number of firms visiting less-than-elite law schools has shrunk. Overall, let's say a 50% contraction as a rule of thumb. Oh, and did I mention that offers have become more scarce?

This is Econ 101 (supply and demand) at work. For industries with excess capacity (which includes large firms the past few years), the last thing you need is to hire new and expensive talent. You might ask, why continue recruiting at all? For a solid reason actually — to keep the pipeline of talent fresh and to continually inject new blood into the firm.

I mentioned supply and demand for a reason. A firm's demand is obviously driven by its clients, whereas its supply consists of its lawyers. Law firms can't afford large gaps in their upcoming supply of talent even if they appear to have ample headcount for present purposes, any more than a Scotch distillery with a full warehouse can skip a few years of production. In both cases, a lack of investment will come back to haunt you down the road.

2. Each Hire Is More Valuable

Remember what scarcity does in a market — it raises the value of the scarce commodity. Because firms have fewer openings to dole out, each becomes more important, with less room for error. As the recruiting director of an AmLaw 20 firm memorably told us a few months ago, "in a summer class with 80 students, you can bury a few mistakes, but in a class of 30, there's nowhere to hide."

A related dynamic is in play. Law firms are acutely aware of the cost of their recruiting programs — everything from the opportunity cost of lost billable hours as partners fly all over the country conducting interviews to the hard costs of summer programs, cocktail hours, Yankees tickets, callbacks, and law school fees for each interview "schedule."

By our calculation — which any number of our member firms have confirmed — the all-in price tag on a starting first-year associate, the day he/she reports for work, is $250,000. In this economic environment, with serious growth in revenue hard to achieve, that kind of cost attracts attention in a way it didn't a few years ago. And the attention is not favorable.

3. Law Firms Want to Broaden Their Reach

The Great Reset has required firms to scrutinize their existing lawyers — from young associates to full equity partners — in rigorous and clear-eyed ways uncommon (because unnecessary) during the boom years.

In doing so, law firms have realized that many of the hiring criteria they relied on for decades don't seem to have any predictive value regarding lawyer performance, productivity, motivation, or work ethic. See, e.g., Theodore P. Seto, Where Do Partners Come From? Journal of Legal Education (November 2012).

We all know these "traditional" criteria — the best grades from the best law schools. Yet studies (like the above) show that the proportion of partners from "Tier 1" law schools is consistently lower than the proportion of associates from those schools. Not to be rude about it, but Tier 1 alumni wash out more than Tier 2 and below. And get this — being on a Law Review is negatively correlated with making partner.

Unsurprisingly, law firms are concluding they ought to give schools outside Tier 1 a second look. The problem is that attending on campus interviews at more schools in more locations cuts squarely against the imperative of making the recruiting process less costly and more efficient. As I noted above, large firms have reduced visits to law schools outside of the top tier. Which bring us to …

4. Law Firms Want Other Evaluative Tools

If "eliteness" of school, GPA, and Law Review are weak predictors of success in the law firm workplace, what else can firms use to evaluate candidates?

Actually, a few possibilities exist. One of the most powerful is simply mutual desire. No, it's not a marriage, but empirically students who want to work at the firm that gives them an offer — and don't consider it a second sister or a regrettable "safety" backup — perform better, stay longer, and get promoted further. Because they're happy, they want to succeed, work more hours, and are more curious about learning the ropes for the long run.

And the converse is true for law firms that land students they "really want" — they give these associates more and better assignments, partners who can really mentor, client exposure, and so forth. The problem is that in the real world this mutual matching can be hard to achieve, as honest preferences are often veiled behind strategic calculations.

Another tool that can be enormously valuable, deployed properly, is compatibility testing. Candidates willing to take a short and voluntary personality profiling test (we offer one at JD Match) can then be compared directly by firms to the characteristic of lawyers who succeeded or fell short at that firm (because every firm is different).

Every other sophisticated professional services industry — including the NFL — uses these powerful tools. Large law firms should be no exception. You should not lose a potential star partner because you make a candidate jump through an unnecessary extra hoop.

5. Law Firms Must Eliminate Friction

This sums up the essence and the implications of all the other trends put together. The days of being able to overlook deadweight losses and "taxes" imposed on the recruiting process by various bystander parties advancing their own interests at the expense of firms and students — well, those days will soon become history. Participants that don't contribute value must to find a way to do so or step aside. And economically irrational customs have no place in the post-reset legal world.

Putting data and tools online (as JD Match does) enables law firms to recruit when and where they want to without regard to a student or school's physical location at zero marginal expense. At long last, law firms can begin to devote resources towards informed, transparent, and efficient recruiting in ways that are effective — both in terms of costs and professional talent.

Bruce MacEwen is President of JD Match, an online recruiting service that connects law firms with law students. He's also a consultant to law firms on strategic and economic issues, and the publisher of Adam Smith, Esq., which provides insights on the economics of law firms.

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