David Madden calmly shut the door to his office at Omaha's McGrath North law firm, jumped up and down a few times, then composed himself and walked down the hall to inform his boss.
He'd just seen his name on a website listing those who passed the bar examination. That meant he could officially begin working as a McGrath North attorney.
Madden's celebratory sense of relief came not only from passing the test but also from landing the job he wanted.
Law school students and recent graduates have experienced two years of anxiety as the faltering economy cut demand for legal services. Law firms slowed their hiring, and in some cases, especially in larger cities, reduced salaries of experienced lawyers or laid them off.
For many, the anxiety continues, even though senior partners at some Nebraska law firms say their business clients are starting to move ahead with growth plans as the economy begins to improve.
Foreclosures, bankruptcies and creditor lawsuits created by a recession require lawyers, but a growing economy generates more legal work through real estate deals, acquisitions, contracts and general business issues.
“In 2009 things really slowed down, and this past year they picked up some but not substantially,” said Bob Freeman, a partner at Fraser Stryker in Omaha.
The firm had cut its summer law-student corps from six to four, and next summer will return to pre-recession level.
“It's not going to suddenly bounce back,” Freeman said. “But our clients are beginning to have us involved in forward-looking work, which wasn't the case in '09 and the early part of this year.”
Michael Curry, chairman of Kutak Rock in Omaha, agreed the recession slowed business but said the firm's diverse practice protected jobs.
“We have tried to maintain our presence in the market as far as recruiting is concerned,” he said. “We have continued to hire. We probably are not as aggressive as we were in the past. The times are still uncertain.”
Curry said Kutak Rock will continue to hire as the need arises.
“But we're not going to get out ahead and hire 10 lawyers because we think things are going to pick up. It's not a ‘Field of Dreams' thing,” where clients will come if you hire attorneys, he said.
Third-year law students, including Destynie Jenkins, get such mixed messages when they look for jobs. She has a backup plan in case a job doesn't materialize after she graduates next spring from Creighton University's School of Law.
“I'm optimistic, but there's still a little uncertainty, from talking to different firms. Now they're kind of waiting until they have a need to hire you,” she said.
Jenkins, who also has a master's degree in business, worked for six years after college, including for a bank. Blue Cross Blue Shield of Nebraska has offered her a job for next summer.
If she doesn't join a law firm, Jenkins said, she could parlay her work experience and graduate degrees to possibly win a spot in a corporation's compliance office. That could develop into a position as corporate counsel.
Or, she said, “I can always go back to banking.”
Jenkins said she would “be really scared right now” if she didn't have that business background and a summer job lined up.
Third-year Creighton law student Ryan Portwood has sent about 60 applications for judicial clerkships and is still looking for all sorts of summer openings.
Portwood was a paid intern in a Utah pharmaceutical company's legal office one summer. Another summer, he worked at an Omaha hospital for class credit in lieu of pay.
He volunteers at a Spanish-speaking legal clinic in Omaha and is keeping his options open.
Many other students are in the same situation, he said.
“I'm married, and we just had a baby, so the time crunch and the pressure is on,” Portwood said. “Day by day I check the job boards. I have a lot of little things pending. I just have to wait and see and use my connections.”
Students at the top of the class have an easier time finding jobs, he said, but many others wonder how they will be able to start repaying their student loans after graduation.
“Usually you get to this point and you know who you're going to work for, but I guess people are scrambling.”
Portwood said there are jobs, just not as many as there used to be. “It's so competitive, and now more than ever.”
Officials of the state's two law schools said they've seen improved demand for their graduates.
“Right now we're looking pretty good,” said Tasha Everman, assistant dean of the NU College of Law.
Law firms cut summer positions, the traditional path to full-time work, in the last two years, she said. For 2011, “all of them are either holding steady very confidently or they've moved back to pre-recession levels with their summer associate hirings,” Everman said.
Some firms are seeking experienced attorneys to fill spaces that became vacant during the recession, she said.
Everman said new health care and financial regulations are creating work for lawyers. Economic troubles also create demand in employment law, which is almost recession-proof because employers typically need legal help when firing people, she said.
Omaha firms have been able to avoid laying off lawyers in part because they are careful about hiring, said Tammy King, assistant dean of the Creighton University School of Law.
Even so, she said, “we've been seeing signs of a slow recovery in the legal employment. It's still a challenging market for job-seekers. I wouldn't say we've recovered.”
“We're hearing from our 2010 graduates that they are starting to accept offers,” mostly from larger law firms, King said.
Paul Schudel, a managing partner with Woods & Aitken of Lincoln, said the law firm has followed a steady growth path, hiring two graduates each year in 2008 and 2009. The firm has hired one new graduate so far in 2010 and has an opening for an experienced attorney at the firm's Denver office.
“We try to avoid spikes and valleys if at all possible,” Schudel said. The firm's strongest specialties have shown steady growth in recent years: telecommunications and industrial and highway construction. “We've been able to move through the recent economic cycle with relatively little damage.”
Mike Mills, a partner with Gettman & Mills in Omaha, said the office didn't trim its staff during the recession and recently added longtime attorney Thomas J. McCusker as a partner.
Firms specializing in mergers, securities and other financial services might have cut back during the recession, Mills said, but his five-attorney firm practices mainly in litigation and general corporate law.
“My sense is that firms that focus on litigation maybe weren't as hard hit,” Mills said.
Freeman, the Fraser Stryker partner, said the economic pressure was “all very healthy.”
“It forces us lawyers to be more effective and more tuned in to our clients' needs. They don't have the money to spend on legal that maybe they were used to before,” he said.
To control costs, clients are asking for fixed fees instead of hourly rates, sometimes with yearly retainers or caps on annual fees. That allows clients to budget for legal costs and pay by the month, Freeman said.
Freeman said Nebraska firms could gain national or international clients looking to cut costs.
“Our overhead is lower than comparable law firms in bigger cities,” Freeman said. “We pay way less rent. We pay less in salaries because the cost of living in Omaha is so much lower.
“You can get the same quality of work done as in Boston or Los Angeles, and fees are sometimes less than half.”
Roger Wells, president and CEO of McGrath North, said business seems to have “bounced off the bottom.”
The company, which has 61 attorneys, had no new hires in 2009 but recently hired four 2010 graduates.
“That reflects the uptick we've seen in the past year,” Wells said. “It's fair to say that all firms in general, as we look around, haven't come back to where they were three or four years ago.”
McGrath North didn't lay off any attorneys but left some positions vacant when attorneys went to work in-house for clients, he said. The firm is looking to fill two of those positions now with “lateral hires” of attorneys with the right experience.
Madden, the new McGrath North attorney, said it's a tough time for law students, but they should be optimistic.
“I tell people the beauty of a law degree is that you've been taught to think in a completely different way, which is an invaluable asset.
“You have a marketable degree. You can walk in and say, ‘I may not know about your specific business, but I can promise you I'll be able to see issues from all sides and engage in some analysis.'”
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