Latest recession victims: Laid-off lawyers

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Heather Conoboy, a tax lawyer, was promised more work than she could handle when she joined the Washington office of Wilson Sonsini as a senior associate in mergers and acquisitions last spring.

Today she has no work at all - and she isn’t alone.

The number of unemployed lawyers surged from a nationwide average of 20,000 last year to 31,000 in the first quarter, the highest in at least 15 years, according to the Bureau of Labor Statistics.

Three thousand lawyers lost their jobs in the first three months of the year.

The job market in the Washington - the lawyer capital of the nation with nearly 14 times more lawyers per capita than New York City - is faring better, but is far from immune. Legal-services employment, including support staff, totaled 35,500 in the city on March 31, down from 36,000 a year earlier, according to the Bureau of Labor Statistics.

“D.C. is holding up better than other cities, but we are part of the global legal market now,” said Jackie Finn of Finn and Associates, a legal recruiting firm in McLean.

David P. Landau, of Washington-based legal recruiting firm Klein, Landau and Romm, said younger lawyers who haven’t made partner are hit hardest.

“The associate market [in the Washington area] is just getting hammered,” he said. “This is as bad as I’ve seen it. The worst I’ve seen it before this was ‘91 to ‘92, and I suspect this is deeper and is going to last longer.

“Firms have been laying off at a regular pace. Up to 12 percent of their associate ranks have been laid off,” Mr. Landau said.

Law school students who expect to graduate next month are receiving far fewer job offers, and those who are accepted by firms often are asked to delay their start dates from September to December or even January.

Older partners and staff members are discovering that they are expendable, Ms. Finn said.

“A lot of firms are using this as an opportunity to let go staff they don’t need anymore, like legal secretaries,” she said.

“We’ve also seen firms using this as an opportunity to let go people who maybe were at the tail end of their careers. Maybe they were trying to hang on because their 401(k)s are down, but they’re not getting enough hours,” she said.

The legal profession has long been viewed as recession-proof, but after years of gorging on Wall Street’s excesses, the law industry’s ox is being gored.

“Firms were bidding up salaries to keep pace with investment-banking salaries,” said Jim Copland, director of the Center for Legal Policy at the Manhattan Institute, a business-friendly think tank that advocates limiting lawsuits.

“But the high-profit [corporate] transaction practices have really taken it on the chin,” he said.

Some transaction lawyers are now being “retooled” as bankruptcy lawyers, Mr. Landau said.

New York, San Francisco and Chicago are experiencing some of the most legal layoffs, Ms. Finn said.

Silicon Valley-based Wilson Sonsini, known for technology, biotechnology and venture-capital work, laid off 45 lawyers and 68 other staff members across the country in January.

That wave of layoffs included Ms. Conoboy in the Washington office. She thought a move to mergers and acquisitions would boost her resume and her career, but the financial meltdown has frozen the corporate deal market.

“They promised that l’d have more work than I could handle when I got there, but I never did get swamped,” said Ms. Conoboy, 36, a William & Mary School of Law graduate who now lives in Alexandria, La., but is looking for work nationally.

As a highly paid senior associate new to the firm and to mergers and acquisitions, “I was obviously the one they were going to pick” to let go, she said.

“People keep saying I should be more upset, but it wasn’t that surprising to me,” said Ms. Conoboy. “I like the firm, I like the people. What can you do, you know? I have a really good resume, and it’s not the end of the world.”

As the market imploded for complex securities known as collateralized debt obligations, capital-markets lawyers such as Sam Smith of Charlotte, N.C., found himself collateral damage.

Mr. Smith, 34, of Charlotte, N.C., started with Covington & Burling in Washington in 2004, fresh out of law school, before moving to Cadwalader, Wickersham & Taft in Charlotte.

Laid off in August, he started a Web site, www.rateapartner .com, to help younger lawyers evaluate the firms and partners who might hire them.

“Ultimately, what’s going to make or break their careers are the partners they are going to work for,” Mr. Smith said.

He is “still trying to figure out” his career alternatives and has been doing some pro bono legal work, but he knows one thing for sure: He doesn’t want to work for a partner who isn’t top-rated on his site.

Though the federal government is still hiring, in areas such as health care, food regulation and securities enforcement, the jobs are being overwhelmed by an army of lawyers.

“Many people are considering the government,” said Jessica Heywood, director of the career center at Catholic University’s Columbus School of Law. “But those jobs are getting increasingly competitive, and people are getting frustrated with the application process.”

In better times, a first-year law graduate could make $160,000 at a large firm and about half that at a smaller firm, but today’s graduates are fighting for government jobs paying $60,000, Ms. Heywood said.

To a greater extent than before, law firms and their clients are pinching pennies. Some firms are even freezing or cutting salaries, particularly for associates.

“The clients understand that they hold all the cards,” Ms. Heywood said. “They feel some firms have gone too far in starting salaries. Companies are saying they are not going to subsidize those pay levels.”

Mr. Landau agreed.

“[Clients] are also capping fees,” he said. “It is now very common for corporations to say to outside counsel, ‘Get this done for X dollars, I don’t care how many hours it takes you.’ ”

Workers in other industries that have been downsizing and cost-cutting for decades may hold limited sympathy for lawyers, who made an average of $114,036 last year, according to the Bureau of Labor Statistics.

For those still burdened with law school costs, Washington looks like the best place to be.

“The feeling out there is that D.C. will be the first city to recover,” said Ms. Finn, the legal recruiter. “Most D.C. firms have strong regulatory practices. Once the Obama administration starts gearing up, the D.C. firms will be the first to recoup.”

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