More Law Grads Are Coming to Crash the Big Law Hiring Party

Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at whether Big Law can help absorb a large class of graduates in 2024. Sign up to receive this column in your Inbox on Thursday mornings.

The last few years have been a great time to graduate law school, but a report last week signals that the good times may soon come to an end.

The National Association for Law Placement is calling the latest crop of newly hired JDs likely the final group to benefit from the “talent wars” amid major law firms. That is a chilling prospect, not least because it comes from the group that’s the authority on law graduate job outcomes.

The class of 2024 “will have a more challenging employment market,” Nikia Gray, NALP’s executive director, said in an interview.

Still, there is a case to be made for longer-term optimism: other data suggest Big Law’s appetite for fresh JDs has grown over the past decade—even if the upcoming class of 2024 faces longer odds of landing a prime job.

Law grads in the class of 2023 hit a record rate of employment, 92.6%, according to NALP. The problem for the class of 2024 is that there are likely to be more people competing for jobs. It could be about 12% larger than the classes that bookend it, driven in part by a surge of interest in law school during the fall of 2021, when social justice movements swept the country, and some students delayed the start of law school during pandemic lockdowns the previous year.

This large class will need to source “several thousand” jobs in the coming months, Gray wrote. At the same time, she believes the market has turned soft, citing fewer offers made by Big Law firms to summer associates and small year-over-year increases in the number of 2023 graduates who became solo practitioners or took law school funded jobs—areas that grow in poor employment markets.

A longer-term trend paints a rosier picture.

Large law firms, those employing more than 500 attorneys by NALP’s own measure, have never hired more graduates than they did this year, more than 6,300.

That would be an easy figure to dismiss considering how many more firms employ 501 lawyers today (101, according to AmLaw data) compared to a decade ago (84). But there is evidence that as the number of large firms has grown, so too has their appetite for fresh JDs.

In 2013, firms with more than 500 lawyers employed nearly 87,000 lawyers in total, according to data from The American Lawyer. Last year, there were nearly 118,000 lawyers working at such firms. That is a roughly 50% increase.

Law grad hires by those firms have skyrocketed 75% over the same time period, up to to 6,300 in 2023.

Another way to look at that increased appetite is to divide the number of new graduates hired by firms with 501 lawyers by the number of those firms. The average number of new hires per firm has risen from 47 to 63 from 2013 to 2023.

To be sure, the data isn’t perfect. The AmLaw list likely does not capture every firm with 501 lawyers in the country, making it possible the growth in graduate hiring comes from elsewhere. But I’d consider it unlikely there are enough of those large, unknown firms to significantly alter the data.

It’s also not a surprising finding, especially if new lawyer hires are an expression of a firm’s view of its future. As law firms grow, they get more optimistic, feeding their search for fresh JDs. Everybody is in on the quest for scale, as I’ve written before. The simple truth is the largest firms have outperformed their smaller peers for years.

The pessimistic view of that longer-term trend is this: Law graduates have never been more reliant on Big Law continuing to grow their incoming associate ranks.

The share of new private practice lawyers hired by Big Law rose to a record 34% last year, up from around 16% in the wake of the Great Recession.

There is concern that future summer classes could shrink after the AmLaw 100 ramped up those classes in recent years.

AmLaw 100 summer class increased in size by 5.5% last year, on average, according to data from Wells Fargo’s Legal Specialty Group. At the Second Hundred largest firms, class sizes were up 9%.

With law firm attrition rates nearing historic lows, the upcoming summer associate class may be smaller than in previous years as firms go through an “adjustment period,” said Owen Burman, managing director at the Wells Fargo unit. But he doesn’t expect it to last.

“Even if it persists into 2025, it’s a short-term phenomenon,” Burman said. “It’s not a long-term change in trend.”

Law firms could still boost hiring if they see an increase in demand, and Burman said major firms are expected to report “really terrific” financial figures for the first half of the year. Those figures are likely to be reported this month.

If Big Law doesn’t grow its hiring for the Class of 2024, other employers might pick up the slack, Gray said, noting that employment at smaller firms often rises when the biggest firms pull back on hiring. And, importantly, the entire legal market is not looking at a jobs recession.

The lack of job openings for the 2024 “is unique to one sector,” she said, referring to large firms.

Worth Your Time

On M&A: Companies having second thoughts about going public are fueling a surge in go-private deals, Melissa Sawyer, global head of Sullivan & Cromwell’s mergers and acquisitions group, tells Mahira Dayal.

On Bankruptcy: Vinson & Elkins is seeking a new role in Enviva Inc.’s bankruptcy weeks after a judge rejected its bid to serve as debtor’s counsel, Evan Ochsner reports. Meanwhile, Paul Weiss is looking to step in as the company’s lead law firm.

On DOJ: Lawyers in the Justice Department’s Civil Rights Division have launched a union organizing campaign with an aggressive timeline to try to secure bargaining status ahead of the next presidential administration, Ben Penn reports.

That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.