Amid the euphoria of ever-increasing law firm salaries, a country club atmosphere in summer programs, and student attitudes
that future positions were theirs to lose, the pragmatists were taking pause, wondering how long the ride could last. That
seller's market came to an end last fall, and it's hard to say when the recovery will occur or what
it will look like.
Life with thousands of dollars a week for a summer gig is not the domain of the majority of students at the Indiana University Maurer School of Law, but fallout from the economic downturn has had a ripple effect on most of the legal industry. Although impacts on recent graduates have not been as dramatic as expected, the worst may be yet to come.
Employment figures for the IU Maurer class of 2008 were down about 2.5 percent from the previous year; for the class of 2009, the figures are down less than 10 percent compared with those employed in the class of 2008 at the same time last year.
Considering the state of the legal economy, the story could be much worse. The rate of increase in employment on a month-to-month basis has been consistent with past years. Starting salaries, another indicator, have changed only slightly for the class of 2009 compared with the class of 2008.
Prospects for the 2009 class and beyond, however, are a bit less favorable.
Some IU Maurer 2009 graduates are experiencing deferments that have hit many of the largest national firms and even regional players in Indiana and elsewhere. This has resulted in starting delays of two months to a year, but luckily no one has seen their offer canceled.
Compensation for deferrals runs from 10 percent to 20 percent of starting salaries for the shorter delays, to 20 percent to 50 percent of annual compensation for year-long delays.
Certain one-year-delay packages are tied to expectations that the associate will work for a public interest organization while being paid by the firm. The flush of those graduates into public-interest arenas has tightened that market as well.
This exacerbates already-difficult prospects for hiring, since state and local government agencies have been forced to cut or freeze staff due to budget constraints, and legal aid agencies have lost money in trust accounts.
Several of the largest national law firms, which offered $160,000 starting salaries, have started announcing salary reductions of 10 percent to 30 percent for new hires, and lowering pay for associates with one to three years of experience.
This trend of cutting salaries hasn't affected any new Maurer graduates, but could.
Additionally, growing numbers of displaced experienced attorneys are competing for jobs, and some of them are willing to start with entry-level salaries.
Finally, even though layoff announcements in the media are trailing off, attrition in the legal market is down as attorneys hold on tight to their jobs. This is the case for the lateral market and for attorneys on the verge of retirement who have seen their nest eggs drop in value.
The impact on students may increase for the next couple of classes at law schools across the country.
Deferments for the class of 2009 already have forced some law firms to announce that 2010 graduates currently in summer programs will not start until sometime in 2011. If future deferrals are fed into government or legal aid jobs, it will again affect students whose primary focus all along was to work as public-interest attorneys.
More than 90 percent of IU Maurer students take a summer position in a legal setting, but summer programs for the 2010 and 2011 classes have seen more students accepting unpaid legal internships. Those in paid positions are seeing the length of their experience shortened and the size of the program reduced substantially.
In addition, law schools are seeing a dramatic decline in summer 2010 recruiting.
All these factors point to fewer summer opportunities leading to full-time permanent offers, making the future uncertain.
When things get back to "normal" and what that will mean is anyone's guess.
Keller is assistant dean in the Office of Career and Professional Development at the Maurer School of Law at Indiana University. Views expressed are the writer's.