Growth in the legal industry continues to hold steady and move slowly, but surely. Experts agree that recovery from the down market has been gradual, but is certainly happening. In 2010, attorney salaries have increased an estimated 2.5% and a 3.0% increase is anticipated for 2011. The associate lateral market has been picking up, based on specific practice area and need. Eighteen months ago, our firm simply had no associate job orders/positions available. Prior to market decline in the fall of 2008, we had five or six positions for associates being pursued on a regular basis. Today, we steadily have one or two associate positions that we are working on at any given time. This trend evidences the slow, but gradual movement in the legal market. Associates are now very strategically chosen by firms and companies, who are much more risk averse on hiring decisions than was the case in the past.

Another interesting fact is that in 2009, 70% of lateral partner moves were from higher profitability firms to ones with lower profitability. This may be evidence that for many attorneys, the focus has moved away from the profits and prestige of a larger outfit. The focus for many lateral partners seems to be now geared more towards maintaining a stable client base with the more flexible support that might come with a lower profit, smaller law firm.

The unfortunate reality for law students today is that law school applications have been increasing, but unemployment levels seem to be holding steady. In 2009, law school applications increased by 9%. LSAT takers were up 12% in June and 19% in October! Unfortunately, summer associate programs were down by 35% this summer. In 2007, the average firm offered fifteen positions to summer associates. In 2008, the number moved down to ten and in 2009, the average firm only offered seven such positions. There are valid concerns for recent and upcoming law school graduates. The best advice we offer to law students is to stay focused and keep their academics up because we still do see attorneys with top academics finding positions after graduation.

All of these facts tie together. For example, one major practice area affected by the economy is commercial real estate. Part of the reason commercial real estate has remained relatively stagnant is because employment growth is crucial to drive the demand for space. We expect that until the employment rate makes a comfortable increase, commercial real estate will remain slow, law school applications will stay up, and associate movement and hiring will remain steady and gradual. We expect to continue to see more lateral partners shifting towards firms with more flexibility on fees and lower profitability, with a focus on stability and a good environment with which to grow their client base.