Industry Overview: Law

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Posted by The Editors on December 3, 2012
Overview

Law is the way society regulates its behavior. The intent of law is to create rules of conduct that are widely understood and respected throughout the jurisdiction in which they were written and to create normalized processes for adjudicating disputes. Because law is a fairly technical profession not necessarily easily comprehended by the untrained, individuals and companies hire professionals-lawyers-to help them understand it and follow the procedures it defines.

Most of what lawyers do is research and paperwork. They read about legal precedents, spending hours or months in law libraries or with online databases. They prepare contracts, briefs, and other documents, assembling boilerplate paragraphs or writing text from scratch. They plan and conduct depositions, which in complicated cases can generate thousands of pages of testimony, all of which has to be read, analyzed, and refined into usable information. Sometimes, especially if they are litigation specialists, lawyers actually argue cases before judges or juries.

To practice law, you must pass the bar exam in the state in which you want to practice. Almost all lawyers earn their JD degree after three years of law school, and then take the bar exam in the state in which they wish to practice. In general, the better the law school you graduate from, and the higher your class rank, the better your job prospects once you graduate.

You can find lawyers everywhere. There are about 165,000 law offices in the U.S. generating $180 billion in annual revenue. And that's not including corporate law offices. That's not surprising, when you consider how complex federal, state and local laws can be. It takes all kinds of lawyers with all kinds of specialties, ranging from criminal defense to contract law to tax law to intellectual property to real estate and so on.

Many lawyers work for big, corporate law firms, but there are many who are employed at mid-sized regional firms and even in one- and two-person offices. At law firms, corporations account for a full 45 percent of revenue, and it generally takes more than one large firm with multiple specialties to service a corporation like IBM or Coca-Cola. At smaller firms, mid-sized companies are likely to be their bread and butter. These firms need advice on everything from employment law to contracts to acquisitions-and may even have to defend a lawsuit against a disgruntled employee or unhappy customer. Local firms often make their money in residential and small commercial real estate transactions; family law issues, like divorce and child custody; personal bankruptcies; estate planning; and the like.

Corporate lawyers, on the other hand, spend their days monitoring their own company's business transactions, and advising on operational issues that may be governed by law. These in-house legal consultants may be involved with everything from acquiring new companies to supervising an external law firm that's been hired for extra legal muscle or to shore up other areas of expertise. Because you're not in a competition to bill hours, as attorneys at many large and mid-size firms are, corporate jobs can be more stable and have less pressure.

Apart from lawyers, law firms also employ paralegals, high-caliber support people who do everything from word processing to legal research. Paralegals sometimes decide that they enjoy the field so much that they end up going to law school themselves. Although popular wisdom has it that there are too many lawyers, the increasing complexity and number of transactions going on in the world means there will always be a need for lawyers.

Consolidation
Like companies in other industries, many law firms are coming to the conclusion that bigger is better: both more cost-efficient and more powerful. Merger and acquisition activity has been strong in recent years, as more companies are demanding increased global capabilities. The first half of 2007 saw 37 mergers between January 1 and June 30, ahead of the 33 mergers that took place in the same time period the previous year, according to the consulting firm Hildebrandt International. In addition, at least seven mergers involving U.S. firms were scheduled to be completed in the second half of the year.

Clients Push Back on Billing Rates
As corporate spending fell and the number and size of corporate transactions dropped in the first years of the new millennium, the number of hours billed by firms handling corporate law followed suit. In response, many firms jacked up the billing rates. In recent times, corporate clients have begun pushing back. Some have entered into fixed project-fee contracts with firms. Some have gotten firms to agree to rate-increase caps. And others have gotten firms to agree to discounts for larger amounts of work. Of course, it's the biggest clients who have the clout to really affect the rates they pay. General Electric actually began hiring firms through an online auction, which keeps rates down. The result for associates in most of these cases? More pressure to increase the number of hours they bill.

Rising Compensation for (Some) Associates
It's not all doom and gloom for associates these days. Sure, as an associate at a big firm, you have to work a ton of hours. But there's a payoff: Already sizable compensation packages are getting even better. Earlier this year, headlines screamed that a number of big firms were scrambling to keep their top associates, bumping entry-level salaries to an eye-popping $160,000. Still, unless you're graduating near the top of your class from a top school, you might not see those numbers. Once you get below the top third of the class or to a law school with a less-than-excellent reputation, the law of supply and demand kicks in. Some entry-level associates are making as little as $50,000 or $60,000, while carrying $80,000 or more in law school student loan debt. The lesson here? Study hard.

Decentralization
Decentralization of major firms means that attorneys can choose from a greater variety of geographic locations when conducting their job search. It used to be that major firms limited themselves to offices in legal hubs like New York, Washington, D.C., and Chicago. While these remain prominent locations, other hotspots are emerging. For example, many large firms have set up satellite offices so they can be closer to the action in industries in which they have clients, while some regional firms have risen to national prominence by expanding outward from their local bases of operation.

Meanwhile, many large national firms have been migrating away from middle-market clients, creating opportunities at mid-size firms (50 to 100 lawyers) that provide legal services at a lower cost than national counterparts. Experts suggest that these small- and medium-sized firms are the smartest bets for new attorneys who didn't graduate at the top of their classes.

Globalization
Like most other industries, the legal services industry is globalizing at a breakneck pace. Increasingly, bigger firms are setting up offices in foreign countries, beefing up existing foreign offices, and merging or partnering with local firms to handle legal aspects of international trade and other issues. This growth has created jobs for lawyers with expertise in international relations and cross-border transactions.

Lawyers can specialize in a wide range of practice areas. Two main categories of private sector law are transactional (corporate) law and litigation.

Transactional lawyers deal with a wide range of business issues: corporate financing, contracts, mergers & acquisitions, bankruptcy, and the like. The goal of this work is to get deals done and avoid future legal problems. Transaction-law centers include New York, Boston, Chicago, Los Angeles, San Francisco, and Silicon Valley.

Litigators, by contrast, deal with legal problems after they occur. Litigators handle issues that could land their clients in court: breaches of contract, securities-law breaches, class-action lawsuits, antitrust actions, employment-related problems, white-collar crime, and the like. They are found in every city, but especially in New York and Washington, D.C.

Other legal specialties include intellectual property, tax, real estate, labor and employment, environmental, personal injury, and family law, to name a few.

So, how do you decide what kind of law you want to practice? And just as importantly, how do you find the firm that's right for you?

First of all, keep in mind that you don't actually have to join a firm if you want to practice law. Many recent law graduates take on clerkships or government positions, as well as jobs as in-house counsel for a variety of companies and nonprofits. However, the most coveted entry-level positions are at large private firms with 100 or more lawyers. The impressive compensation levels (up to $160,000 a year plus bonuses for most new associates-and as much as $3.5 million per year for partners at the biggest firms), the chance to work on high-profile cases, the prestige that comes with jobs at these firms, and the campus recruiting presence of large firms make them extremely attractive. Many experienced lawyers are also drawn to large firms because they tend to have a greater diversity of practice areas, as well as offer greater job security and opportunities for professional development.

Of course, there are drawbacks to big-firm work. For one thing, you'll work hard for that big salary. Ten- to 14-hour days are the norm for associates at many big firms. And in most cases, you'll spend most of those hours doing tedious grunt work as you climb your way up the ladder. Then there are the clients to consider; large law firms are essentially married to Corporate America, for better or worse-which means your career may focus on representing Big Tobacco, for example, or other ethically questionable clients. Whoever your clients are, you'll be expected to defend them with zest, regardless of your personal moral compass.

Big-City Power Firms
There are more than 100 big-city power firms in the country. Typically, these firms offer clients a full range of services or nationally recognized expertise in a specific area. They have anywhere from 150 to 2,000-plus attorneys on staff, often operate offices in cities and countries other than their headquarters location, and serve blue-chip clients that may spend millions of dollars on their services in a typical year. These firms tend to pay the highest salaries and have highly competitive hiring processes that focus on top-ranked law schools around the country. They also require their associates to work long, hard hours and show exceptional brilliance in order to move up the partner track. Some have a single partnership level, whose members share in the firm's equity. Others have two or three levels of partnership, with only those in the top level getting an equity stake in the firm. Although turnover is quite high at these firms, just having one of these firms' names on your resume can open a lot of doors, whether within the legal community, in government, or in Corporate America. Most of these firms are based in major legal centers like New York; Washington, D.C.; Los Angeles; San Francisco; Dallas; Chicago; and Atlanta.

Regional and Specialized Firms
In addition to the big-city power firms, there are a number of middle-tier firms that employ 80 to 100 attorneys each and provide legal services to local businesses and organizations: restaurants, hospitals, schools, insurance companies, department stores, mom-and-pop stores, startups, and public agencies. In some cases, these firms offer a relatively complete menu of services; in other cases, they may specialize in a certain type of client or practice (e.g., intellectual property, employment, health, or environmental law). Often they include partners who left a big-city firm en masse, taking some clients with them. Regional firms offer slightly lower compensation than the power firms, but they typically grant equity partnerships after eight or ten years. They also typically give associates a lot more client contact at an earlier stage in their careers.

Corporate In-House Counsel
The same companies that hire law firms usually also have their own cadres of in-house lawyers, which advise them on day-to-day business activities. Typically, but not always, companies prefer to hire transactional attorneys with three or more years of specialized experience in, for example, securities law or contracts. The salaries here are usually fairly competitive, but the hours are far better than at the big corporate law firms. One other key difference is that in these positions, you have only one client. So if you're working for a company like General Motors, you might be handling a number of different types of issues (labor negotiations, hiring issues, contracts, a class-action lawsuit by an investor group), but they will all relate to General Motors.

Government Law
Federal, state, and local governments employ thousands of lawyers. One major employer is the Department of Justice, which hires lawyers to prosecute cases on behalf of the federal government.

The most common entry point for those seeking to become government attorneys is a job as an assistant U.S. attorney (AUSA). These positions are appointments; in many cases, to get one, you must have connections as well as relevant legal experience. Virtually every other cabinet-level agency also hires legions of lawyers. Opportunities exist within the regulatory agencies, such as the Securities and Exchange Commission and the Commodities Futures Exchange Commission, as well as in the military, in the Judge Advocate General Corps.

A slight variation on government work is a judicial clerkship. Each year judges hire a number of top graduating law students as law clerks. These clerkships, while not high-paying, provide aspiring attorneys with the opportunity to see the judicial process firsthand-and to make valuable contacts in the process. The main attractions of working in government law are job security, great benefits, and decent hours: unlike their friends who go to work for big firms, clerks do not have to worry constantly about stuffing as many billable hours as possible into their workdays.

Public Defenders and Legal Aid
Public defenders are appointed by the court to defend those who don't have their own lawyers. Federal defenders are located in most major cities; the most important office is in Washington, D.C., but the offices in San Francisco and New York are also widely respected. In addition, states and counties provide publicly funded defense lawyers for those charged in nonfederal cases. Although the salaries for these positions are lower than those of most private-sector lawyers' jobs, they are often not as low as people think. The jobs are, however, extremely difficult to get due to the competition for them. The legal-aid lawyer provides assistance to the indigent in civil cases, as the public defender does in criminal cases. Funded primarily by the federal Legal Services Corporation and some states, salaries are quite low, but the work can be both frustrating and immensely satisfying.

Public Interest
Among the most prestigious jobs for lawyers are positions with impact-litigation advocacy organizations. These include the American Civil Liberties Union, the National Center for Youth Law, NOW, NARAL, the Lambda Legal Defense and Education Fund, MALDEF, the NAACP Legal Defense Fund, and the Environmental Defense Fund. Competition for these positions is fierce, and the pay is relatively low-with the exception of positions at environmental law organizations, which tend to be better funded. The advantage of these positions is that they're both intellectually stimulating and socially meaningful. The work usually consists of a lot of brief writing and advocacy, and in some cases there is a great deal of client contact, too.

The Bureau of Labor Statistics projects that jobs for lawyers will grow at the same rate as the average for all occupations in coming years; growth will be fastest in areas like intellectual property (think of all the debates about the legality of downloading MP3s or movies), health care, antitrust, and environmental law. The growth of the U.S. population and the expansion of corporate America will mean an ongoing need for legal services, but there will also be large numbers of newly minted lawyers getting out of school and passing their states' bar exams each year; the result will be no change in the current stiff competition for jobs.

Lawyers wishing to set up private practice will likely do better in smaller towns, free from the competition and pressure of the big-name firms. Salaried positions will always be available in the larger firms and in in-house corporate legal departments, but increasingly law grads are using their training to secure positions in tangentially related fields such as real estate and investment banking. Legal temp firms offer an alternative to employment in an established law firm and allow lawyers to garner experience and knowledge in the field while looking for a permanent position.

Meanwhile over in paralegal land, jobs are expected to grow at a much faster rate than the norm in coming years, as law firms, community legal services, insurance companies, real estate firms, and banks look to lower costs. Competition for positions, however, is expected to remain stiff, though highly skilled and formally trained paralegals should have excellent employment potential.

Just Rewards
While being a lawyer can be extremely challenging, it can also be quite rewarding. Lawyers have the satisfaction of providing a vital service to the business world and to individuals. They serve as protectors, advisers, and advocates. And they are considered experts in communication, analysis, and persuasion, giving them a certain prestige in society, despite all of the bigger jokes.

A Sweet Paycheck
If you play your cards right, you can make a good living as a lawyer. Most lawyers will never enter the ranks of the super-rich; but by the same token, they'll find it easier than most to buy a house or send their kids to the right college. After they pay off their own student loans, that is.

Job Security
Corporate lawyers have substantially more job security than the clients they work for. Once you've snagged your corporate job, you'll be much less likely to be fired during economic slowdowns than businesspeople or bankers; after all, legal advice is required as much during the down times as during the up. Sure, you may not make partner, but in the seven or eight years before that point, as you move up the associates' ladder in your firm, it's unlikely that you'll lose your job. An added bonus: Lawyers are considered highly retrainable, so if you do lose your job, you may find it easier to change firms (or careers) than many people in other industries.

Hell and Back Again
Private litigation hell: You sit in a windowless room for 12 billable hours a day, dividing documents into piles marked "privileged" and "nonprivileged," while the paralegal sitting next to you does exactly the same thing.

Corporate hell: You sit in a windowless room for 12 billable hours a day, reading documents and noting points that should be disclosed; every couple of days, you discuss your points with a senior associate or partner, who dismisses all of them as "immaterial." Even though you went through seven years of higher education to begin practicing law, you generally start at the bottom, doing the most tedious tasks.

For Better or Worse
Large law firms are essentially married to Corporate America, for better or for worse. These companies can include everything from baby food manufacturers to Big Tobacco, and lawyers are expected to defend both with equal enthusiasm, regardless of personal ethics.

The Hours
Many large firms require a minimum of 2,000 billable hours annually. That could mean a 10- to 14-hour day for you, depending on your workload. And all of those exciting cases you've heard about won't free you from what may be years of tedious grunt work as you climb your way up the ladder.

Firm Associate
Associates do the bulk of the work in a law firm-from producing documents and performing due diligence to writing briefs and running deals. Because of the carrot of partnership dangling before them, people in these spots tend to work very long hours. A note for would-be litigators: It is extremely rare for associates in large firms ever to enter a courtroom; if you want to work in a big firm and want real-life litigation experience, do as much pro bono work as you can. Salary range: $46,500 to $70,000 for the entry level at small firms; $68,000 to $129,000 at larger firms.

In-House Associate Counsel
These are positions within companies' in-house legal departments. People in these positions advise the management of the company employing them on legal issues. The work can be a grind: Studying the same type of transaction over and over. Or it can be very entertaining-for instance, a TV production company lawyer has to decide if there's anything legally objectionable in each day's talk show broadcast. These spots are typically filled by attorneys with three to six years' experience. Salary range: starts at $60,000 to $87,500; well into six figures for counsel with several years experience.

Public Defender
Public defenders are appointed by the court to conduct criminal defenses. They get a lot of courtroom experience early on and get paid better than most people think. But dealing with a lot of hopeless cases-and judges-can sour a young lawyer's idealism about the system very quickly. Salary range: $39,000 to $65,000.

Legal Aid Lawyer
Legal aid lawyers defend indigent clients in civil cases. Most of the people in these spots will have come from the more liberal end of their law-school class. While this position offers a lot of responsibility from the get-go, many legal-aid attorneys burn out on the job quickly, after representing too many unsavory defendants or seeing how cold and inefficient our legal system can be. Salary range: $36,000 to $64,000.

Assistant U.S. Attorney
AUSAs work with law enforcement to put together federal cases against individuals or institutions. The jobs are fairly specialized; different AUSAs will work on, say, DEA cases, securities-law cases, and racketeering cases. Salary range: $57,000 to $72,000 to start; up to $125,000 after several years.

Nonprofit Attorney
Lawyers in these positions are renowned for having the greatest job satisfaction-and among the lowest salaries. The responsibilities will vary greatly, but most focus on handling legal and financial issues for a charitable organization, many of which are trying to do good though low on funds and in organizational disarray. Salary range: $35,000 to $120,000.

Paralegal
This is a good way to check out the legal profession. While they cannot sign legal documents or represent clients, paralegals perform many of the tasks that lawyers do, such as drafting briefs and other legal documents, communicating with clients, performing legal research, and preparing witnesses for trial. The hours are long, but these positions pay overtime. And if you're a star performer at a big firm, you may even find your law school education paid for. Salary range: $30,000 to $47,000.

Follow these tips to land a job at a top law firm:

  • Get top-25 percent grades (anything below the 50th percentile will be an obstacle, no matter how good your other credentials) from a top school. That said, law firms are pretty generous to those making a lateral move; experience will count more than grades at that point.
  • The most common advice interviewers give is pretty simple: Just relax and be yourself. Personality weighs heavily in hiring decisions at law firms because lawyers tend to work in groups. "People who have done interviewing for a while can quickly sense when someone isn't being genuine. That type of phoniness, even if it's innocent, comes across negatively," says one recruiter.
  • Whatever you do, curb your arrogance. This is now an employer's market, and nothing turns a recruiter off faster than a you'll-be-lucky-to-have-me attitude.
  • Gain judicial clerkship experience, law review experience, regulatory experience, or other meaningful work experience.
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