Exit strategies?

For the first time since I have been doing this kind of work, I am hearing people talk about exit strategies. I don't mean finding another law job -- people always talk about that. In the past, though, people were willing to keep working in Temp Town because the money was good. But that was when the rate was $5 an hour higher than it is now, and 60-hour projects were the norm. There weren't any jobs short of associate at a big firm that paid that much, and nobody in Temp Town was landing an associate job. They either already had and for whatever reason lost it, or they never were going to land one. Sorry, hard fact, end of story. So, good money, low stress, lots of work, what's not to like?

Two of those three elements have largely disappeared. The money is no longer good -- a 15 percent drop in base pay is not part of the roadmap to prosperity. Neither is the complete disappearance of overtime, which is what always made this work lucrative to begin with. Occasionally projects will offer 10 hours of overtime, but it is becoming increasingly rare. The old days, when projects with 80, 90 or 100 hours a week were not common but nowhere near unheard of, are gone. So now what?

Well, people are talking about getting out. They're not sure where they would go or what they would do, but most are talking about leaving the area and leaving the legal profession (to the extent Temp Town actually is part of the legal profession.)

I think that might be premature, but it is hard to fault people for thinking that way. I plan to hang in for a few months, as I believe that there will be a lot more merger activity if Obama is not re-elected. Four years ago, I thought that merger activity would drop off, but be replaced by federal investigations of varying sorts. Alas, Barry's boys never really demonstrated the competence to generate investuigations in the volume that would keep our industry going. Spare me the ideological arguments, the cold facts are these: merger activity died, and investigations did not replace mergers as the prime source of work.

I think mergers will make a comeback if Romney wins, but I know a lot of people are not betting on it. The new business model seems to be more bodies, fewer hours. I recently was offered a project and when I asked about the hours, the response was, "Are you kidding? Nobody pays overtime anymore."

That's not quite true, but it's close enough. The question, then, is this: Will overtime as a routine matter ever return? I don't know.

Maybe not dying, but really sick

I guess by now folks have heard about the Boston law firm that posted an entry-level job at $10,000 a year. They've received 32 applications in the week the job's been posted. To put this in perspective, my first newspaper job paid $200 per week -- about $800 a year more than this gig. And that was 1985. In rural North Carolina, not Boston.

Sure, the gig pays a clothing allowance and has benefits. And the compensation is based on an estimate of time billed and collected for a first-year associate at a smallish domestic-law firm, so it could be more. A little, anyway. But still, this is depressing. Boston is not the cheapest city to live in. Considering that Boston College law students pay about $44,000 a year, this is making that kind of investment look foolish. To be fair, the entry-level salary for Big Law in Boston is about $160,000 a year. But are those jobs as numerous as in the past? Maybe not. Whatever the case, it makes me feel a little better about temp pay. But not much.

More trouble in the Big Law community

Those of you who drank yourselves insensate over the holiday weekend, or who ate so much hot dogs, hamburgers and potato salad that you found yourself unable to partake of any news, may not have known that Dewey & LaBoe was in trouble. Well, Reuters (among others) reports that Dewey filed for Chapter 11 bankruptcy Monday night. This means no reorganization, they're just going bye-bye.

The implications for Temp Town should be obvious and boil down to: we got trouble, yes trouble, right here in River City. Those troubles take several forms. First, there obviously will be one less firm to work for, and Dewey was a big one. According to Reuters:

The result of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae, Dewey & LeBoeuf had about 1,450 attorneys at its peak, according to The National Law Journal.

I don't care how you count it, 1,450 lawyers is big. That made them one of the largest in the world. If those guys can fail, we need to start wondering, who can't? Why'd they go away? Again, from Reuters:

But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession.

Oh, killed by the recession, just a one-off, no real long-term problems for Temp Town here, right? Dream on, Aerosmith. If one of the largest and most successful firms in the world has "excessive compensation and governance problems," do you think these kinds of issues might be more widespread than many realize? Most lawyers are not business gurus, and law firms are run by lawyers. Besides, it's not like Dewey is the first -- in the last year or so,
Coudert Brothers, Heller Ehrman and our beloved Howrey all went down, and those are just the big ones.

In addition to a potential source of work for temps disappearing, the demise of Dewey will inevitably dump at least a few associates into Temp Town, even if only temporarily. Big Law firms are not hiring associates the way they used to -- they cost too damn much.

Face it, Big Law's business model is changing, and Temp Town inevitably will be affected. We're already seeing a lot more use of predictive coding, ediscovery firms that use their own staff or a minimum of temps, and don't forget the growing popularity of direct hiring. Sure, it pays more, but it is a lot more work for temps to keep up with dozens of law firms than to maintain ties to a half-dozen or so agencies. (Yeah, yeah, most temps are registered with more than that, but they can't keep them all straight and they generally only actually do work for a few. That is changing, too, of course.)

What does all this mean? Hell if I know, but I suspect it resembles Woody Hayes' misgivings about the forward pass: only three things can happen, and two of them are bad.