Blog

Local Job Market Offers Hope

Employment is available for new lawyers and seasoned professionals thanks to an upward swing in the local legal field. According to Lynne Berkowitz, a partner with Berkowitz & Associates located in Shadyside, as long as a new lawyer is willing to learn and work hard, jobs will come her or his way. “Firms are continuing to use their own resources to recruit new associates like through a summer internship,” she said. “There is also a trend to hire more laterals and people with more experience.”

“There’s a need for people to walk right in and do the job and spend less time training,” continued Berkowitz who has been a partner with her firm for 13 years. Karl Schieneman, director of The Legal Network, agrees with Berkowitz’s assessment. “The use of contract attorneys for law firms is a way to bring in an experienced attorney to match a project,” he continued. “It eliminates the overhead of trying to find work for people. Also, when the staff is at an all-time low, firms can bring in people on a contract basis. It’s a substantial trend we’re seeing in Pittsburgh.”
According to an article that appeared in the April edition of the National Law Journal, many employers routinely farm out systematic tasks such as document review to armies of temps. Today, lawyer temping may be the hottest segment of the staffing industry. Analysts peg the market at $300 million to $500 million a year, with an annual growth rate of 25%-40%.

“The use of temporary employment is a strong trend. It’s the fastest growing (trend) at 35%-40% a year,” explained Schieneman who, in addition to being director of The Legal Network, has also been a practicing contract attorney in Pittsburgh since 1995. At small firms, the trend is more dramatic, especially when the market for new lawyers is soft, and where the small firms pay new hires by the hour. This employment practice lets them try out lawyers and to adjust their labor costs and their needs. The temp attorney trend is partly reflected in the National Law Journal’s 1998 survey of the nation’s 250 biggest firms. Eleven respondents listed 5% of their attorneys as temps. At three firms, they exceeded 10% of the total.

“Things go in cycles,” explained Berkowitz. “The better the economy, the better the chance to find a job. We tell kids to focus on what they love. “While the hiring of contract law is on the uprise, areas such as litigation, corporate law, securities, labor, environmental law, intellectual property, and employment law are the hottest areas for lawyers in all stages of practice to find employment. “I think the Pittsburgh legal market has picked up in the last 18 months. In the past two years, hiring has picked up,” said Nora Barry Fischer, an administrative partner at Pietragallo, Bosick and Gordon, a law firm located in downtown Pittsburgh.

“It was difficult for people to find jobs but now the job market has become bigger and better. Local law firms are expanding and younger people have an advantage because younger attorneys are more in tune to computerized research,” she continued.

Fischer believes another reason jobs are proving to be more plentiful for young people is because they are learning to do more with their law degree.

“People have discovered that with a law degree you can do other things,” she revealed. “People are leaving law firms and starting their own businesses. When we hire, we like people to know something about litigation because they will spend a lot of time [litigating] and doing research.”

According to John T. Rago, Associate Dean of Duquesne’s Law School, in the late Œ80s and early Œ90s, hiring practices had come close to an all-time low. Summer associate classes, which once held 25 aspiring lawyers, dropped drastically to ten students per class. Despite the statistics, Rago believes that hiring is on the upward spiral.
“Between 1993, 1994 and now, a number of firms said they had an upward swing in hiring in environmental, litigation, and labor,” he explained. “A lot of people don’t hire people directly out of law school; some hire the best and brightest students. Starting salaries run the gamut and lateral employment is on the increase.”

Rago also said that Allegheny County is unique because 25 or 30 decent-sized law firms have four or five full-time lawyers or fewer. Allegheny County is second for lawyers per capita only to Washington D.C.

“More and more students are able to migrate to other parts of the county 38% of the entering class is from out of the state,” continued Rago. “We encourage students that law schools don’t want to train people in one genre.”
Rago also went on to say that a lot of lateral hiring is occurring because firms don’t want to train new lawyers directly out of law school.

“Hiring laterals brings in business and that’s something that lawyers with three to five years experience can do,” he insisted.

“A person fresh out of law school can not do that, but they are energetic and ready to do the work. I’m optimistic that law will continue to be strong and there will be entry-level jobs for people to get into. Some firms are top heavy with partners and some are not,” Rago continued. “You have to make the decision based on the individual firm. I think everything in this business is in cycles and when they are too lean, don’t be too sad and when times are happy don’t be too happy. We have to prepare our students for that.”

Schieneman believes that the trend of hiring contract attorneys will continue to flourish and temping will be one of types of employment that new lawyers may choose.

“The use of temporary employment is a strong trend. It’s a way to bring in an experienced attorney to do one project as opposed to several lawyers doing it,” explained Schieneman. “The Pittsburgh marketplace is stable to declining and law is a service industry and contract work allows them to better control their costs.”
Mark Nowalk, a partner at Thorpe, Reed and Armstrong and head of the firm’s recruiting committee, revealed that his firm has hired laterals in every department.

“We look to fill any needs that we have in specialty areas. We hire both laterally and through our summer program. Salaries have risen for people out of law school and that makes it competitive.”
The competitive salaries combined with various levels of experience have given new hires the edge needed to further their careers.

Mary Austin, a member of Eckert, Seamans, and Mellot, has noticed a lot of trends in her nine years with the firm.
“People seem to be carrying different titles for whatever reason. You see more contract and part-time lawyers and that includes men and women,” she said. “Most of the larger firms are hiring people out of law school and summer programs.”

According to a Wall Street Journal article published May 19, 1997, clients don’t want associates reviewing documents with the meter going at $150 an hour. When a temp can do it for less than a third of that amount, the firm has revenue of about $3 million in its first year.

The article also said that law school graduation rates have stayed high, while the growth of law partnerships has slowed in the 1990s. Combine that with the exodus from big firms of people fed up with the profit-maximizing grind, you end up with a lot of incredibly talented people on the temp market.

In addition to seeing employees carrying several titles, Austin has also noticed a lot of employee movement. “Each year you have attorneys moving to different firms and now you have people who have worked at different firms. Employers are looking for excellence and hard workers,” Austin predicted. “There seems to be an amount of willingness and some firms are more flexible than they used to be. If someone has the skills, then [the firm is] more flexible.”

“There’s a lot more movement on all levels and I think it’s based on economy. When demand is greater than supply, then the market is favorable and the firms can be more demanding and rigid over what they want, ” she continued. “Firms are also trying to be more diverse. I think that new graduates are finding jobs in both smaller firms and larger firms depending on what the firm needs.”

Berkowitz disagrees. She feels that over saturation of the market combined with contract hiring makes finding a job a hard task. “It’s harder now,” she insisted. “You have to have done better in law school and undergrad. There has been an excess number of attorneys turned out than there are positions to fill,” she said. Although he strongly condones contract lawyers, Schieneman is quick to say that people are still making partner in firms, no matter how hard the road is to that goal. “If the market isn’t growing and people are making partners already, you are dividing a shrinking pie. People know that they can do other things and still practice law,” he said. There are people still making partner, but you have to be good at drawing business and not just at law.

“I hope that the new generation of lawyers will become successful,” continued Schieneman. “I think people should understand that it’s not easy to make partner and if you enjoy practicing law, then partnering doesn’t have to be a goal.” Although partnering may not be a goal of all students coming out of law school, many do hope to be given a full-time job in a respected firm. They also hope to be able to advance in the firm and strengthen their career by working hard and remaining dedicated to the firm. Fischer feels that even though finding full-time employment at a firm may be a dream of new lawyers, she warned that part-time employment may be an option. “Part-time employment is another trend,” she said. “We see the benefit of it in our firm. There are people in our firm who have gone part-time. We get [the benefit] of people’s expertise and training, and we see it as a win-win situation.”
Michael Lynch, a partner at Kirkpatrick & Lockhart, agrees with Fischer but cites that Pittsburgh was not always the hottest city in which to find legal jobs.

“When I first got out of law school, most people looked at finding jobs in New York, Washington D.C. and Los Angeles. In the late Œ80s people became more interested in cities like Pittsburgh because of families,” shared Lynch who is also chairman of the firm’s Pittsburgh hiring committee. Since becoming a partner with Kirkpatrick & Lockhart in 1986, Lynch has seen a number of employment trend changes and developments. Lynch asserted that law firms don’t just gravitate towards hiring people who have earned a law degree, but they tend to hire people who possess a well-rounded education.

“At our firm we hire lateral candidates but most are hired out of law school and some are hired through the summer program,” explained Lynch, who has been chairman of the firm’s Pittsburgh hiring committee for the past 2-_ years. “We are very open to lateral candidates, but we do like to bring in law students. We also like to bring in people who have a history of strong academics and who are very articulate and who have good analytical skills.”
“For those who are already out, in addition to having the same qualities [as new hires], we look for someone who specializes in certain areas, and someone who has spent a few years learning the specific area so they can hit the ground running in that area,” he continued.

“Recently, there’s been significantly more lateral movement in the firms,” surmised Lisa Pupo Lenihan, former managing partner and founder of Burns White and Hickton, a Pittsburgh-based firm. “When I first got out of law school and started [in the profession] you got with one firm and you stayed there,” she recalled. “Now, there’s more movement and it’s easier for lawyers to find jobs.”

Lenihan, like many other lawyers, feels that the hiring of contract lawyers is a hot trend right now. “There’s a much heavier concentration on bringing in business,” she said. “When I first started, you worked for six or seven years and then you became partner. Now, people are looking at your skills and at what type of business you can bring to the table.” “I think people are still making partner, but they have to work harder at it. I think that lawyers are finding jobs in both smaller and larger firms, but the larger firms are hiring more,” continued Lenihan who helped to start the firm in 1987. In addition to noticing the rapid movement of lawyers from firm to firm compared to earlier years, Lenihan has also noticed changes in the hot areas where prospective employees are finding jobs.
Although her firm mainly deals with litigation, she also sees employment law as a growing area right now along with litigation.

Whether they have been in the legal profession for two years or 25 years, most lawyers agree that hiring trends in law are constantly changing and those changes bring about different needs for employers. In addition to leaving employers with a bevy of demands, the ever-changing market places a burden on law schools, who must try to predict changes and how to produce well-educated individuals to meet the needs of the legal community.

Overstaffed? How to Fight the Battle of the Bulge and Increase Utilization

In today’s competitive legal marketplace, legal organizations can no longer prosper by just raising billing rates. Finding sustainable growth has become more challenging. In addition to providing quality legal services, law firms must provide value and cater to clients who are increasingly monitoring how they spend their financial resources. Law firm service providers, who 18 months ago were questioning if they had enough staff to generate more profits, now must question if overstaffing is causing profits to sag. This impact can be seen in other service industries such as advertising, accounting, engineering, investment banking, consulting, banking, to name a few examples. These same industries have been laying off professionals and reducing hiring over the past year. This article will explore the costs to a law firm of carrying under-utilized professionals as well the role temporary staffing can play in improving sagging profits.

To analyze the costs of excess workers, we have run several analyzes based on the average cost structure of large and small law firms compiled by national legal consultants Altman Weil and modeled by Legal Network in StaffRite and ParaStaff software packages. Legal Network developed these tools, with the support of national legal consultants Altman Weil to assist law firms in evaluating appropriate staffing levels.

In the chart below, the StaffRite model shows that law firms with professionals who are only billing 1,000 hours to 1,200 hours a year are ALL generating substantial losses when salaries, benefits and overhead are factored in.

The size of these losses might surprise some lawyers, but they are no surprise to the effective law firm administrator. This explains why law firms, just like other professional services firms described above, have been cutting staff in reaction to diminishing work needs. However, by cutting employees too quickly, law firms lose the institutional knowledge of past experiences which the displaced workers take with them. Further, the same law firms may lose the ability to quickly staff up when a large project materializes or sustainable growth prospects return.

Instead of maintaining a staff level necessary to handle these peak loads, the law firm which deploys interim staffing solutions can handle those peak periods while improving profitability. Temporary professionals in many scenarios can be a very effective strategy to obtain profit opportunities without adding costly overhead, benefits or underutilized salaries. A StaffRite analysis shows that law firms with 600 – 800 hours of work over the next five months could generate anywhere from $30,734 to $98,267 in profits with interim attorneys and $10,820 to $43,776 with interim paralegals. The ultimate profits depend on the size of the firm involved and how a law firm wants to bill for interim personnel.

II) Paralegals

There is no doubt that paralegals represent an integral part of any cost containment strategy. In addition to having lower salaries and benefit packages than attorneys, according to ParaStaff, paralegals at larger firms can generate $45,000 in profits by billing 1,800 hours annually. But can paralegal staffing on an interim basis work as well as interim attorney staffing? The answer is a qualified yes, but there are some things clients should consider with interim paralegals.

SPECIAL SHORT TERM PROJECTS

For smaller projects, it is not difficult for a staffing agency to identify a skilled paralegal to fill a staffing gap caused by increased workload. Interim paralegals on specialized projects have a strong track record for success for a number of reasons. Because this work can be more specialized, these assignments offer more interesting work for the interim worker than pure document review type projects. Another benefit in the use of interim paralegals is with a paralegal placement, temp to perm arrangements are an effective way to profitably hire new paralegals. This is because not only can the law firm evaluate the cultural fit of the candidate, they have the chance to evaluate the work product and amount of workflow in the pipeline before making a hiring decision while making a profit with the paralegal. The opportunity to be hired becomes an effective motivating factor which a law firm can use to get an interim paralegal to do the best job they can. As a result, this is an area where interim hiring makes complete sense.

LARGE DOCUMENT REVIEWS

The use of interim paralegals on larger projects can sometimes present issues for some. First, it is often hard to find a large team of interim paralegals who can maintain uniform levels of quality when compared to teams of interim attorneys on a large project. This is because paralegal projects compete with the general job market including full-time positions which give interim paralegals more job opportunities to consider. Therefore turnover can be higher. In contrast, interim attorneys are generally not as interested or distracted by positions listed in the general job market. Secondly, contract attorneys have more legal training and being licensed professionals can perform not substantive reviews. As a result, while interim attorney rates might be 30% – 50% higher than interim paralegals, the contract attorney can perform more types of reviews on documents at higher quality levels and create more value for the client. However, not all projects require higher levels of professional staffing. For instance, projects such as objective data coding and database entry, preparing filings for submission, and sorting and retrieving documents represent excellent projects for the interim paralegal. Here support staff can be very effective to control costs and boost a law firm’s profits. Further quality issues on interim paralegal projects can be minimized by (i) evaluating the coding process being followed by the coders, (ii) providing some form of quality checking and performance monitoring, (iii) considering a reward system based on the type of outcome sought, and (iv) providing a promotion path for longer projects to encourage higher levels of performance. Of course, some staff turnover should be expected as well as encouraged as these types of tasks are sometimes painfully monotonous and one disgruntled paralegal can spoil team morale and performance on these types of projects. In conclusion, while there are some risks with larger interim paralegal projects, effective project management can limit these risks and keep the project very economically successful.

II) Legal Secretaries

While legal secretaries do not generally directly add profits to a law firm, they are in many cases indispensable for law firms. Secretaries enable written work to be typed quicker, answer phones for attorneys and to help attorneys manage their time effectively. However, just like attorneys and paralegals, underutilized legal secretaries can cost a law firm money as their salaries, benefits and overhead costs can create a drag on law firm profits. Therefore, can Legal Secretaries be hired in interim positions to control a law firms expenditures? The answer is it depends but there are challenges here. For years there has been a shortage of quality legal secretaries. Consequently this has reduced the pool of available interim legal secretaries. Some firms managed the shortage of secretaries by becoming more efficient with technology and secretary sharing ratios to deal with the legal secretary shortage. Further, as a result of the recent economic slow down fewer firms have hired new attorneys and paralegals. Consequently the downsizing that has occurred may have helped some firms deal with the shortage of legal secretaries.

Based on the above, is there a need for interim legal secretaries? The answer is a qualified yes. Peaks in workflow that require periods of intense typing, staff absences and training secretaries for a position create a market for interim legal secretaries. Firms that do a good job at this can see some financial improvements that flow to their bottom line. Agencies can help if the agency has a pool of quality legal secretaries available. However, for a strong experienced legal secretary, who can work with senior partners, the more practical avenue for hiring is still traditional permanent placement which can involve hiring an agency to try and attract a top legal secretary away from an existing position.

The economic analysis, as illustrated by StaffRite for attorneys, and ParaStaff for paralegals, demonstrates a real value in the use of more interim staff. It just costs too much money for law firms to carry full-time staff in areas where the staff is underutilized when interim personnel can quickly add substantial profits.

* Karl Schieneman, Esq. Managing Director and Karen Catanzaro, Support Staff Recruiting Director for Legal Network, a Pittsburgh based legal staffing and consulting company.

The Case For Using Contract Attorneys in Pittsburgh

The Current Legal Marketplace

It is no secret that practicing law in the 1990’s has become more challenging than perhaps any other time period. The competitive business climate of Corporate America forced service providers, including law firms, to provide more for less. This economic pressure has caused many law firms to downsize, limit growth, and/or stretch out partnership tracks for many associates. Adding tension to this environment is the growing population of practicing lawyers. Recently, several articles in the Pittsburgh Business Times have observed similar difficulties exist in the Pittsburgh legal marketplace . This article, however, will not focus on the problems illuminated in the other articles, but will suggest an opportunity for law firms to acquire a competitive advantage in the current market place.

Contract Attorneys as Part of the Solution

A partial solution to the competitive demands on Pennsylvania law firms suggested in Pennsylvania Law 1994: the State of the Profession, is that “law firms will need to innovate in order to compete and survive, let alone succeed, in this new environment. The first “Innovative Solution” suggested by this analysis is to use outsourcing to reduce costs. The article states:

Costs will need to be controlled as never before. Staffing ratios must be revisited, benefits packages streamlined, part-time and temporary employment and “outsourcing” explored, with the concomitant reductions in space requirements and, therefore, occupancy costs, through heralded “virtual corporation.”

In fact, one might argue that the solution of “contract attorneys” is no longer an innovation; it is commonplace in most large metropolitan centers across the country with some of the largest law firms and Fortune 500 companies using contract attorneys. Currently there are established contract attorney services in Boston, New York, Philadelphia/Wilmington, Baltimore, Hartford, Northern New Jersey, Washington D.C., Chicago, Milwaukee, New Orleans, Houston, Dallas, San Francisco, and Los Angeles. Pittsburgh now through Legal Network Ltd joins the growing list of metropolitan areas in offering such a solution.

The Benefits of Contract Attorneys

The following is a list of documented benefits realized by organizations which utilize contract attorneys:

Enhances Profitability: The economic benefits of using contract attorneys are easily observable. The costs of contract attorneys, including service fees, is often less expensive than hiring a full-time attorney. They do not carry overhead costs such as taxes, benefits and staff support. In addition, the cost of paying attorneys for nonchargeable hours does not exist because contract attorneys are matched directly with work needs. Furthermore, unlike some associates who respond to competing demands in a law firm, contract attorneys can stay focused on completing assigned projects. Then when the work is completed, the attorney leaves with no hard feelings. The result is that law firms become more profitable and often improve client service by passing on the savings.

Quick Response: With the use of contract attorneys, it is unnecessary to turn down projects when current staffing is insufficient to handle a sudden increase in work. Contract attorney agencies can quickly identify skilled and experienced attorneys to meet staffing needs.

Fill Gaps: The staffing difficulties most firms experience when faced with a maternity leave or illness can be easily solved with contract attorneys.

Leverage Core Competencies of Partners: Attorneys who are experts in their fields sometimes struggle with how to market the their expertise, yet still get the work done. Contract attorneys free up partners’ time to review work-in-progress and concentrate on attracting additional projects. Many times a significant portion of a legal project can be delegated to a contract attorney while the partner performs the more technical aspects of the project.

Professional Concerns of Using Contract Attorneys

Quality: Similar to the national trend, the Pittsburgh legal marketplace has experienced the impact of downsizing and the desire for more free time for all attorneys. As a result, a high number of experienced and specialized attorneys seek temporary assignments as a full-time career. In fact, Pittsburgh has the second highest percentage of attorneys to the general population next to Washington D.C. In many cases these attorneys are specialized sole practitioners or members of small firms who look to contract assignments to fill out their schedules. Finally, the feedback from clients in other cities where contract attorneys have been rigorously tested is very positive.

Conflicts of Interest, Confidentiality of Information and Disclosure to the Client: Importantly, these concerns in the context of temporary attorneys have been addressed by the American Bar Association in Formal Opinion 88-356, Temporary Lawyers. The opinion observes that the use of temporary attorneys is growing and provides guidance on these issues. The opinion notes that:

The use of a lawyer placement agency to obtain temporary lawyer services where the agency’s fee is a proportion of the lawyer’s compensation does not violate the Model Rules or predecessor Model Code as long as the professional independence of the lawyer is maintained without interference by the agency, the total fee paid by each client to the law firm is reasonable, and the arrangement otherwise is in accord with the guidelines in this opinion.

Why Use an Outside Organization to Identify Contract Attorneys?

With the marketplace indicating that contract attorneys play an important strategic role for law firms to increase profitability, the final issue is how to locate contract attorneys. The possibilities are for the law firm to seek contract attorneys on their own or use an organization specialized in the area. The latter method provides several advantages. First, continuous recruitment efforts and computerized database In addition, there are tax reasons for using an agency. The employment status of contract attorneys , has been analyzed by many in the private sector who have concluded that the manner in which law is performed makes it appropriate to categorize contract attorneys as independent contractors. These arguments are enhanced when a law firm uses an agency to find contract attorneys as opposed to ad hoc individual hiring because the agencys allow outside agencies to quickly find experienced and skilled attorneys from a larger candidate pool. Furthermore, agencies pre-screen and categorize applicants based on their skill level. This essentially eliminates the concern that a contract attorney will mold his/her background to a law firm’s advertised position. Agencies have also been successful when there is an immediate demand to locate several attorneys for sudden large projects. Something many law firms would likely be unable to accomplish. In a nutshell, the agency in most cases, will find the more qualified attorney in less time.

In addition, there are tax reasons for using an agency. The employment status of contract attorneys , has been analyzed by many in the private sector who have concluded that the manner in which law is performed makes it appropriate to categorize contract attorneys as independent contractors. These arguments are enhanced when a law firm uses an agency to find contract attorneys as opposed to ad hoc individual hiring because the agency’sattorneys are clearly making themselves available to work for the general public.

Conclusion Contract attorneys and the agencies which supply them are a fast growing tool utilized profitably by many law firms. The trends which have driven the emergence of this field are projected to be long term factors in the legal marketplace in Pittsburgh. Therefore, law firms should expect their use to proliferate. Consequently, the law firm which learns to use contract lawyers most effectively, will clearly have a cost advantage over those which do not.