No - bonuses will be cut before layoffs happen, unless you work at a firm with huge leverage and no morality. But there aren't any of those, right?

If the market really tanks, I think people should be less worried about their bonuses and just happy to have a job!

abandon all hope

Nothing is ever as good as it seems, but at the same time, nothing is ever as bad as it seems.

i know 2 ppl from good schools at solid firms, both of whom got cold offers. and these 2 ppl would have made really good associates.

Perhaps this is related to the previous post.

on the bright side, soon the bankruptcy practices will be thriving...

I know this one guy who was in the M&A dept at a V10 firm who would have made a totally sweet associate but instead he got no-offered and the recruiter eye-gouged him until he cried like a little bitch!

What does this mean for the litigation associates? Aren't they more immune to market downturns?

The associates should have been more careful about what they wished for. The parnters are going to love handing a pink slip to a second year making $170k.

This crunch is just about shaking out the chaff.

Sure corporate departments are slow but many have done in the first three quarters a year's worth of work. Further, the credit crunch is hurting the markets but not the larger economy - yet. If the economy stays strong the work will move from the corporate departments to the litigaton departments. Look for a massive upswing in litigation from all those who lost money on mortgage securities and the vehicles that invested in them.

At worst corporate departments will shrink through attrition. Don't expect layoffs or smaller bonuses.

Fried Frank recently sent out an email telling all incoming corp and lit associates that spots had opened up in bankruptcy...nudge nudge, wink wink.

Ahh, but will the bankruptcy practices thrive? The interesting thing about the current credit crunch is that it doesn't stem from rising defaults in corporate credits. In fact, the default rate for corporate credits is still at an historic low. Hedge funds are blowing up left and right, but does that really create work on the same scale as widespread corporate bankruptcies?

On the corporate side, let's hope this is a replay of October 1998, when LTCM and the Asian flu brought deals to a screeching halt for about six weeks. This disruption was long enough that some investment banks laid off bankers but no law firms laid off associates. Both issues worked themselves out in a few weeks and by December things were back to normal. Law firms maintained their staffing levels and paid normal bonus amounts.

What is more worrying, however, is that litigators (especially securities litigators) at some top firms have been slow this year. (See the NY Greedy Associates board). I can't recall a time when both litigators and corporate types have been slow at the same time. If both litigation and corporate are slow for any prolonged period of time, then things could get really ugly.

Watch for banker layoffs. If the bankers start getting laid off (and I mean more than the mortgage people who have been let go already), then it might be time to start worrying. Until then, just assume it's a short-term slowdown.

If a Democrat wins the Presidency and the Democrats retain control of Congress, then the securities, white collar, & antitrust litigators will be busy for YEARS.

EVERYBODY PANIC!!

I think this is being a bit exaggerated. Things may slow down a little but the blue-chip finance and private equity deals that get done by top firms are not going to stop. Money is still there and relatively cheap for serious credit-worthy borrowers. The effect is going to be more pronounced down the chain where mid-market conduit lenders are getting skittish and the more hand-to-mouth borrowers are feeling the effects.

However, the net effect of all of this is that finance and transactional lawyers may find themselves involved with more "workouts", which presumably won't mean layoffs.

Its interesting to see what happens, but it is not time to hit the panic button on this. I personally feel that we may see a little slowdown but nothing that will lead to layoffs. The more likely scenario is that bonuses stay flat - especially in light of the raises this year.

It is so funny to watch this blog's extremes. You guys will really run anything at all without exercising any editorial discretion.

I guess some people never understood that transactional work was driving salary increases. So yes, it being slow (and it is slow just now) does not bode well for salary increases, especially with fresh meat coming so soon.

That said, things will improve sooner than later. There have been defaults but most of the assets in the markets are still good. The banks would have had fire sales if it were otherwise.

Just hope the Fed lowers the discount rate again (and it will- it is committed now).

At worst, some incoming first years will get delayed or laid off (not that I think that will happen).

For whatever we lose it's always found in the sea.

but ee cummings would have written it lower case without any punctuation

Sallygrowler

I know at least 3 HLR M&A candidates who got no offered and instead the hiring partner peed on them. It was surreal. 3 different firms too. VAult top 10.

I was recently told by a management level type partner at my firm (AmLaw top 50) that at this point there are NO promises on this year's bonuses - due in part to uncertainty with the markets and (lack of) deals being done

but ee cummings would have written it lower case without any punctuation

1:14 - My apologies and thanks. I trust you'll not mind if I leave it as is?

When the Democrats win, the economy will go into the crapper, but I'm an employment lawyer, so no biggie.

Layoffs = discrimination complaints.

Plus, all those pro-employee/anti-employer laws in the hopper will create a new wage of employment litigation.

I can't wait.

Go Obama/Hillary/Edwards.

1:15 - yikes. Do you have any idea why? Do you think this portends a problem for corporate associates present and future?

The people who will be fired first in this mess will be the mortgage departments at banks, not associates at law firms.

our lit dept is swamped

so members of the incoming class with corp & finance wet dreams will wake up and start writing motions and doing doc review

but i don't see it affecting bonuses. at least it better not

Are any of you posters actual associates?

At my BigLaw shop we're still going on all cylinders. Yes, the really big PE deals have gone pencils down but all the action moved to mid-market deals.

My friends in litigation are crazy, too. So, WORKING attorneys out there: are your corporate folks really sitting around doing nothing?

1:11, you have it exactly wrong. The midmarket deals are getting done because there are no problems getting credit for those deals. It's the big ticket deals that are having problems closing because the credit markets have clamped shut for them, or want significantly better terms.

Bollocks.

The reason that there will be a raise in January is because NYC has to offer grads (and potential laterals) more than they can make elsewhere, to compensate for the higher CoL and greater hours expectations. I don't care if the current market fluctuations is a replay of black Friday 1929, the only thing that will get in the way of the pending raises in NYC is a rollback of the raises elsewhere in the country, which ain't gonna happen.

The lights just went off here, and someone locked my door from the outside.

Then I heard someone say, "this is much better than another pay raise...I can't believe we didn't think of this earlier!"

...and then just maniacal laughter...

razor clams and yellow corn nuggets

this is ridiculous; some partner at a V20 firm made this up so that they can induce others not to raise salaries.

Come on top 5, do what's right.

Well, we are working in different universes 1:20, because the middle of the road conduit-type lenders we work for are all sitting on the sidelines at the moment. We do still have plenty of mid-market life company loans for instance, but they are more conservative to begin with, so are seeing an slight uptick in demand and opportunities where the others are slower. And, maybe not indicative of the full effect of the current cycle having hit yet, but our PE and Real Estate have been going crazy with huge deals all summer. That's just my experience though, I know it's not the same everywhere for every player in the market....

*snickers*

I work in a 150 lawyer tri-state area firm. We have 12 openings for laterals and are about to get 12 new first years in a few weeks. Hiring for SA's is proceeding as normal. We are fine. If we are fine, then you are fine. Relax.

Ever since the firm started hosting a free Happy Hour and encouraging napping, business has been a bit off.

12:57: What is a "cold offer"?

As a litigator, I pray for the market to tank. Maybe then I can afford a decent studio in NYC (or even bloody Brooklyn).

Still gets plenty of M&A action, also still tastes like sh**.

1:20: We are busier than any August in recent memory at my big Chicago shop in all transactional groups.

1:43-

A cold offer is where the firm gives you an offer letter so that you can lie to other potential employers and say that they invited you back as a real associate but, if you actually excercise it, the firm will have you quietly killed by a large man named Vince.

I'm in a Vault top 10 firm and have more litigation work than I know what to do with.

Employment in law firms is a lagging economic indicator. No one will start to lay off or not hire until after the economy goes into the tank for a while. This is also why it took a while for law firms to beef up in hiring after the economy bounced back after the 2001 downturn. I-banks, on the other hand, are a leading economic indicator. They'll lay off people before it gets really bad.

If the first tipsters firm is in the Amlaw top 5, that means it could be Baker & McKenzie, Jones Day or Skadden. If the first 2, I'm not worried, because they are not top level firms, no matter how big they are. If Skadden, I am not worried, because those guys staff the living shit out of everything. If Sidley or Latham is that slow, I would be surprised and worried.

What is a hot steamer?

L2L: Careful now. If the all-mighty Biglaw associates lose their jobs in Biglaw, they are going to flood your prospects and leave you homeless. If you aren't homeless already.

At my V8 firm our entire summer class was juiced about getting offers, but since we no longer have any work they all had to be liquidated. This was accomplished at our annual Bloody Mary event. There were survivors but they are all vegetables.

These all sound like rumors started by the big law firms to counter people's expectations of getting a raise - and its working! Look at how most of you suddenly lost raise expectations and are now just glad to being worked to death for a fraction of what you deserve to be paid.

These all sound like rumors started by the big law firms to counter people's expectations of getting a raise - and its working! Look at how most of you suddenly lost raise expectations and are now just glad to being worked to death for a fraction of what you deserve to be paid.

The fear party is over. If you know any traders or hedgies, you'll know that the last few weeks were scary. Now, things are looking up. The palpable sense of angst is over. Cramer's table pounding (what a dork) seemed to get to Bernanke, and credit will once again flow like a Super Tuscan at Otto: cheap and plentiful.

Best yet, the shakeup will provide work for litigation and bankruptcy, and the hot credit injection will provide new work for the transactional side. Yippee!

Of course, all your worrying about layoffs only give the partners an excuse not to go to 190, and even to cut bonuses. Damn, I hate lawyers.

Most of the biglaw associates couldn't cut it in the real world so they need to be fearful -- most would need a staff member to explain where to sit in a courtroom much less what happens after that.

2:07 said "hot credit injection"

*stares and smiles*

We have happy hour every other Friday here at the office. It's lame and barely attended.

The sky is falling! The sky is falling!

Litigators can look forward to litigating whether an MAE occurred...

1:20 (the third):

you're wrong about why salaries would increase

2:27:

Bollocks.

LITIGATION FOR THE WIN!!!!!

We might not get the boom years (with exceptions) like M&A and PE, but the work is, for the most part, stable. I have tons of work because corps will continue to sue eath other and the plaintiff's bar is alive and well.

LITIGATION FOR THE WIN!!!!!

We might not get the boom years (with exceptions) like M&A and PE, but the work is, for the most part, stable. I have tons of work because corps will continue to sue each other and the plaintiff's bar is alive and well.

2:13 - and most of us wouldn't know how to reload the paper tape in the cash register at Wal-Mart either. What's your point?

fewer billable hours! rejoice!

atlanta to government cheese!

Don't expect to make it big in plaintiff's law either, downsized biglaw. your top school pedigrees mean nothing in our world. Loyola dominates LA plaintiff's law.

WELCOME TO MY TURF!

If only associates had the sense to UNIONIZE!!! Then salaries would be higher and it would be harder for firms to lay people off. May also get more real work (not doc review) passed down the ranks. Equity partners can easily afford to lose a little to spread the wealth etc - but they'll only do it if we force them.

If only associates had the sense to UNIONIZE!!! Then salaries would be higher and it would be harder for firms to lay people off. May also get more real work (not doc review) passed down the ranks. Equity partners can easily afford to lose a little to spread the wealth etc - but they'll only do it if we force them.

"If only associates had the sense to UNIONIZE!!!"

rofl. You guys are getting desperate and irrational. Hilarious.

Perhaps I am remembering law school ethics course incorrectly, but isn't it a violation of the professional standards to unionize?

3:08: You, sir, are a dumbass.

NYC to a 35-hour workweek!!

1:43 and 3:10: Why isn't a cold offer an ethics violation? Doesn't it promote lying?

They didn't do this in my day (late 80s). On the other hand, the job market was very strong until the early 90s.

Litigation isn't completely immune to these types of downturns---corporate depts often "subsidize" the litigtion side...we might not get laid off, but bonuses and salary increases might fall to the wayside for a while.

Whats a cold offer? And also, whats a dirty sanchez?

UMMMM...IT'S AUGUST!!!! It's always slow now...simmer the hell down

Lat, i didnt know you were having partners guest post on this blog. Next time you shouldnt fall for partner propaganda.

Most things I've heard from people in my Vault 5 firm suggest that it's actually less slow than it normally gets in August. I routinely heard stories about Augusts where people literally had NOTHING to do and would just go to the movies in the middle of the day. And again, this is at a firm that is not having business difficulties.

If things stay the same and/or if they get worse, banking, finance, and real estate (at least those with heavy finance practices) will all be busy with workouts. More importantly, when bankruptcy departments really start to go crazy, they are going to send plenty of work to their transactional departments.

And because corporations aren't going to just vanish, so senior associates and partners in corporate will provide unavoidable (if perhaps temporarily more cost conscious) "on-going" services (e.g. governance, etc.). Juniors in corporate will help out the bankruptcy and transactional departments.

Also, to echo what a poster above said about the effects of a Democrat taking over the White House: it will mean lots of new work. Yes, a high tax, anti-corporation Democrat could be bad news, but such will only occur if Denny K were to win (or if Edwards were to actually follow through on his rants, which is unlikely). What will be most exciting is the boom that major environmental departments will experience. Think about it: 8 years of no environmental enforcement, a relaxing of rules, and no new rules. Whereas a given firm's large clients may have loved the past 8 years, that same firm's environmental group has been waiting (resting, in fact) for a return to a pro-environmental regime. As with bankruptcy, the environmental groups will send plenty of hours over to real estate and corporate, to say nothing of the "toxic tort" work the lit folks will see.

Silly L2L, pretending you don't want Biglaw. I thought you couldn't even find a job, let alone aquire "turf." Go back to the corner, curl into the fetal position, and resume crying. We Biglaw elitists will survive.

"aquire"

lol. Not a good day for losers pretending to be biglaw lawyers.

249 Touche....i am no match for Big law super-intelect types.

Securities lit is definitely slow, across several firms I know of. It was even documented in a wsj law blog.

I can't say anything about life at the law firms but I recruit in-house and I've seen a DEFINITE downturn in hiring from banks both big and small. Good luck to all the CDO guys and gals who thought about moving to one of the banks. Unless something unexpected happens I wouldn't expect a wealth of options come Jan 1 either.

I'm at a Fortune 5 Co. in NYC that has consistently generated 8 figure bills from litigation departments at five V15 firms for the last several years - with no end in sight.

Although it's tumbleweeds DEAD right now, just as it is every August, things always pick up after Labor Day. Enough with the antichrist doomesday predictions. Just pay the $190k and go back to your corner office.

Yes, unions have done such a great job of preventing jobs from being outsourced to other countries... oh, wait. Never mind.

Stay out of structured finance.

So, for those of you who don't know, a "cold offer" is an "offer" that you're discouraged from accepting. (i.e., you can come work here, but you're going to spend your first years in a warehouse with mold-infested boxes until you decide to quit.)

But it's not a sign of a slowdown necessarily - I've seen associates get cold offers because they suck and no one in the firm wants to have to see them every morning when they walk into the office.

The idea is that 1) the firm doesn't want to sink the person's potential interviewing for OCI at the start of the 3L year (e.g., "I got an offer, but I'm looking at other firms because...") and 2) the firm doesn't want to look bad in the NALP guide for not giving every summer a job/doesn't want to alienate career advisors/and so on.

I have a hard time believing that even a firm that's slowing down is going to give a cold/no offer to a quality summer associate - certainly, they're going to knock down the summer associates that they don't want to hire anyway.

(and, trust me, given the superficial OCI vetting process, every firm ends up with a couple that they wouldn't mind doing without!)

Its August. This is the month bankers go on holiday. Of COURSE corporate groups are slow. If the CP market recovers some sanity and banks like Citi manage to syndicate all those private equity loans they're holding things will be fine. It'll slow down, and yeah, the people doing CDOs and private equity may actually have a sane fall quarter. Banks still need to get loans off balance sheet and the "credit" crunch is overexaggerated.
Firms will be fine. And litigation will start picking up some of the slack. When the economy turns, that's when clients start suing.

How bad is structured finance going to get?

6:01 is correct -- late August is typically vacation time for Wall Street. Though what is unusual is that deals that were scheduled to close have been postponed... sucks for those w/ vacations planned way in advance.

jim cramer said (NY Mag cover last week) that the subprime fallout is going to cost a lot of jobs in NYC. if he is right, it will eventually get to biglaw. it doesn't happen often but when it does, growth in bankruptcy practice does not make up the difference.

"jim cramer said (NY Mag cover last week) that the subprime fallout is going to cost a lot of jobs in NYC. if he is right, it will eventually get to biglaw."

*snickers*

My penis is gainfully employed.

I'm a litigator in a Vault top 15 firm and we're crazy busy.

Are things going to be as crazy-busy as they have been over the past 9 months? --- No.

Are things going to go back to where they were in 05-early 06? --- Yes.

Relax everybody, the last 9 months were not sustainable. Enjoy the break, get some sun, and we'll see everyone after labor day.

Oh, and as for compensation? Bonus level will likely stay steady this year, like it did last year. The bonus level is high, and law firms are moving more towards a high salary level and not a high bonus level. We are not as subject to cyclical ups and downs as bankers are, and that is reflected in our pay.

Salaries will likely go up again at the start of the year. Probably 175 - 180 for first years.

This is exactly how the layoffs started in 2000 and 2001. First whispers about slowdowns in work and then whispers about layoffs. Soon we will hear rumors about layoffs but the Firms will claim they are performance related.

11:04 - This is much more 97/98 than 2001.

Maybe it would be scary if Accredited Home Lending had built up enough capital to buy oh, say, Time Warner.

The credit crunch is contained .. liquidity is flowing back into the system, and people will begin taking risks ... maybe not at the level they were before, but let's face it, when there is money to be made, someone is going to step in.

What makes an offer "cold?" do they literally say "you can come back if you want"?

This is why I got of M&A work (mostly) and moved my practice to more regulatory work. While it might not be considered as "sexy", I never understood why so many people got excited about having their lives taken away for weeks/months, only to sit around worrying about the next deal coming in. M&A lawyers seemed most happy when they were miserable, i.e., when they were going on multiple sleepless nights, and knew once this deal closed, the next one had to get started. Yes, I realize as the partner it's lucrative, but ultimately, all of these deals need to meet regulatory requirements, and that's where my practice comes in. I did have to switch from a BIGLAW (1500) to a kind of MIDLAW (200) because regulatory doesn't always get you to partner in BIGLAW (especially if you try to avoid M&A), but I'm much happier, have consistent work (very busy now helping beef up disclosures, etc.), and get to see my family on a regular basis.

I'm willing to admit I work to live, not the reverse. Law pays well, and I actually enjoy the academic side, but in practice, it's not so much fun (for me, at least). But there are ways to make the profession match up with your wants. As an added bonus, with a training in M&A, but a current focus on regulatory matters, I get a good number of in-house offers. Unfortunately, the salary hikes have put some golden handcuffs on me for now, but in-house is probably where I see my future. The idea of trolling for clients doesn't appeal to me.

Sorry didn't mean to rant on for so long, but I'm too lazy to revise.

Yet another reason to leave NYC. My admin law group here in DC is running at full steam -- I've set billing records 3 weeks in a row!

public service lawyers often unionize, so I can't imagine it being against any ethics rules.

Nalp lists Kaye Scholer at $160K in DC. I guess they raised. Is it lock step?