BY BRION BICKERTON
You’ve been reading about the bad economy and the aftermath of the excesses of the high tech boom. How hard have those factors hit the Boston market, and are there good reasons to put your stake in the ground in the Boston area? Why stay in Boston?
During the tech and Internet boom period, Boston was the hottest business market in the country after Silicon Valley. Boston rose with the bubble and undeniably has landed hard with the fall in the high tech markets. While Silicon Valley is more of a one horse town, there is still strong merit to Boston’s claim as a much more diversified market, with strengths in software, Internet, telecommunications, biotechnology, biomedical, venture capital, investment management, mutual fund, health care, defense and the education industries.
While many dot-com startups have shut down, the overall balance in the Boston market has helped the city avoid a bankruptcy meltdown. By some measures, Boston has the largest biotech, life science market in the country. This industry has been the rare tech sector which has continued to attract venture capital investment. This dynamic has helped Boston maintain some stability in the wake of other gloomy economic indicators.
The weakness of the economy has had some obvious impact on the legal market. Over the past several years, firms have been laying off associates – principally undertilized corporate associates first. Few firms have remained unscathed, though those firms vested most in the technology and venture capital markets have felt the greatest impact. One firm which had a larger concentration in the telecommunications and Internet industries has suffered through four or five rounds of layoffs. Firms have responded to the sporadic activity in their corporate transactional practices in different ways. Some have significantly decreased entry -level classes (thereby, decreasing summer programs). Others have reacted more aggressively, delaying start dates for entry-level hires and, in a few draconian instances, turning away entry level hires.
Salaries have also taken a hit. Some major firms that had starting salaries of $135,000 have scaled those back to $115-125,000. Many firms have reduced or failed to pay bonuses during this period. Prior to this scaleback, many of the major Boston firms had narrowed their compensation gap with New York. Profitability at some firms has suffered, but many have offset leaner corporate practices with stronger litigation and IP business. Partner compensation at the top firms continues to rank within the top 40 of all U.S. law firms in profitability.
Corporate transactional practices continue to be lackluster and sporadic. Some time next year is the more realistic hope for an upturn. By then, the dynamics should be established for a robust recovery. In addition, the departure of laid off associates into other parts of the country and into different professional endeavors should provide for a strong hiring market in the Boston firms.
The new economy presented some more interesting opportunities for Boston lawyers. With the proliferation of emerging companies in hot technology areas, an unprecedented need developed for attorneys at ever earlier stages in their careers to assume general counsel and business development roles. A decade ago, most lawyers would have found themselves working slowly up the institutional ladders at corporations, only attaining general counsel roles over a longer period of time. Because of the dearth of high-tech start-ups and the improbability of going public in the current economic climate, there are many fewer opportunities for entry-level associates to make the same kind of leap common just a few years ago. However, particularly within the biotech industry – where there is an enhanced need for biotechs to rapidly develop business relationships and strategic partnerships – lawyers continue to be asked to undertake business development roles in addition to their lawyering roles. But for those lawyers seeking to move into the business side of a corporation, the picture has presented many fewer opportunties.
Boston has strengths in many practice areas. However, attorneys looking to launch a career in areas such as entertainment, admiralty, capital markets (commodities, derivatives) and international law will find many fewer opportunities. Certain other areas of practice, like environmental, have stagnated for several years and do not show signs of rejuvenation.
Law firm options in Boston have been multiplying. With the long-term promise of its economy, Boston has drawn a lot of attention from out-of-state firms looking to secure a foothold. Florida-based Holland & Knight and Greenberg Traurig, which developed branch offices a couple of years ago, have continued to grow. Weil Gotshal just opened a branch office this fall, taking over a corporate group from an existing Boston firm that is dissolving. Existing branch offices of Pittsburgh-based Kirkpatrick & Lockhart expanded by merging with a mid-sized Boston firm, and Chicago powerhouse McDermott Will & Emery made some key partner hires, increasing its size to almost 100 lawyers. Defying the trend to go big, other partners from established firms have opened up new law firms with the expectation of developing niche practices.
Boston remains one of the most attractive cities to call home. Extensive new construction projects along the waterfront call for such diverse developments as a new arts center and a European-style housing community. The “Big Dig” project, which will put underground the current elevated autoway, is within sight of its 2004 completion date. By then, Boston’s infrastructure will have been upgraded to keep pace with the rest of the economy.
Brion A. Bickerton is the founding partner of Bickerton & Gordon LLC, which specializes in the placement of lawyers in Boston and New England. He formerly practiced in the London and Boston offices of a major Boston law firm and can be reached at 617-371-2929 or firstname.lastname@example.org. Bickerton & Gordon hosts a web site which provides updates about the Boston legal market and its opportunities (see BickertonGordon.com).