Just as the recession caused more large companies to turn their attentions toward smaller firms, it had a similar effect on lawyers who traditionally might have been thought of as "big firm material."
Slashes in compensation and questionable job stability at megafirms sent more top-tier law school graduates to midsize and small shops.
Similarly, increasing rate pressure drove some big firm partners to smaller firms.
Still, while the number of young, well-pedigreed job candidates has remained high at small and midsize firms over the past few years, the number of big firm laterals migrating to smaller firms has not reached the heights many first predicted.
But some in the legal community believe the apex of large-to-small lateral market activity is still on the horizon, along with a shift back to big firms for many young lawyers.
LATERAL MOVEMENT? NOT YET
It was widely predicted that the recession would cause a number of large firm partners to jump ship for smaller firms.
The logic was simple: General counsel at big companies would be operating with tighter budgets and big firm lawyers would find it more and more difficult to justify their high rates, so they'd move to smaller shops where there's less overhead.
But some in the legal community reported that, so far, this scenario has played out more in theory than in practice.
Peter R. Spirgel, managing shareholder of Flaster Greenberg in Cherry Hill, N.J., said he's been "surprised" by the lack of big firm lateral interest his firm has experienced over the past few years.
"I'm trying to figure out why and I've called some placement firms we've used and asked, 'Is it me?,'" he said. "But they said no. In fact, they see that partners with nice-sized portable books are less likely to move in troubled economic times. It's just another risk factor they don't want to bear."
Recruiter Frank D'Amore of Attorney Career Catalysts agreed that's part of it.
"Some people have decided, I think, that because of the uncertainties associated with the recession, 'If I can hold my own where I am, maybe now is not the time to take a risk,'" he said.
Both Spirgel and D'Amore said that much of the big-to-smaller firm movement that has occurred over the past few years has involved attorneys who were forced out of big firms because their practices couldn't be supported in tough economic times.
Big firm partners with solid books of business, however, have largely stayed put, according to D'Amore.
Those lawyers, he said, have recently been "protected in a cocoon" in which they've been allowed to offer their clients significant discounts and creative alternative fee arrangements as their firms fought to maintain business and weather the economic storm.
But a healing economy may prove to be worse news for big firms than an ailing one when it comes to losing partners, D'Amore said.
As the economy begins its upswing, he said, megafirms will likely try to return to something resembling their pre-recession selves by scaling back discounts and other client concessions and eventually increasing rates again.
General counsel, however, aren't likely to be as eager to go back to "normal."
If that happens, D'Amore said, partners who stuck it out with their firms over the last few years will have to decide whether they'd be better off somewhere smaller.
"Decision day will come for people who have kind of been in abeyance," he said.
In addition, he said, the recession forced many large firms to define their identities, leading to a market where international, national and regional firms are more clearly demarcated.
Because of this, according to D'Amore, partners with more rate-sensitive practices may increasingly begin feeling like they no longer belong at a firm whose overhead includes, for example, an office overseas.
Partners in certain practice areas may also begin to feel out of place at megafirms.
Patent prosecution and trusts and estates, as well as labor and employment work focusing on the public sector, employment practices liability insurance and individual cases are a few examples D'Amore gave of practices that may become harder to sustain at large firms.
BIG LAW BECKONS AGAIN
While the lateral partner movement has been sluggish, a number of midsize and small firms across Pennsylvania said the last few years have brought a wave of resumes from the type of highly credentialed young lawyers big firms typically scoop up first.
"In this year's summer class of 2010, we had representatives of the University of Virginia, Penn, Duke and George Mason," said David M. Kleppinger, chairman of Harrisburg-based McNees Wallace & Nurick. "In a typical year, we may have seen one or two from those types of schools. This year, it was the entire class."
Spirgel said he's had a similar experience.
"We were always very particular about who we hired," he said, explaining that his firm has long strived to hire attorneys who did well at top-ranked law schools.
The difference now, Spirgel said, is the firm has been hearing from "way more" young lawyers who fit that criteria.
Spirgel attributed this phenomenon to two factors: The shrinking compensation gap and the widening job-security gap between megafirms and smaller firms.
But as the economy begins to recover and large firms become more comfortable, D'Amore said, an increasing number of young lawyers may once again find themselves drawn to big firm life.
D'Amore said a number of large firms are beginning to "wade cautiously" into hiring again, planning summer programs with the hopes of bringing on new attorneys in the fall of 2011 and the fall of 2012.
Likewise, compensation may start to rise again, catching the eyes of both new graduates and young associates currently working at smaller firms, he said.
"When people have been [at a smaller firm] for three or four years and they graduated with a lot of loans and obligations and the market starts to go back, maybe firms won't be going crazy with starting salaries but the edge up will become very attractive," he said.
Kleppinger, however, was reluctant to solely credit the recession with the uptick in well-qualified hiring candidates at smaller firms.
Another component of it, he said, is generational.
"People know that the work requirements in some of the larger city firms are a lot larger than they are here in terms of time commitments and more and more young people are coming out of law school saying, 'I don't want that, I don't need that,'" Kleppinger said.
But D'Amore said that while this can be true, the workloads at midsize firms and large firms are not always that different.
For example, he said, while an attorney at a megafirm may be obligated to bill significantly more hours than a smaller firm counterpart, it will often be easier for the large firm attorney to find time to bill.
So the amount of effort required by each attorney in that scenario is basically equal, according to D'Amore.
More solid selling points for smaller shops hoping to sway young lawyers from going to big firms, he said, are the ability to offer more hands-on experience, a faster partnership track and greater flexibility in terms of work schedules.
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