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 L. 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.

Read more from Roy's column here.

Big Law Confronts Tail Risk Threat to Private Equity Bankruptcy

Big Law partners are looking at a ruling that sent shock waves through the bankruptcy world as a lesson rather than a serious threat to their model of representing both private equity sponsors and their distressed portfolio companies.

The fallout comes in the wake of a decision this month in the Eastern District of Virginia. The court declared Vinson & Elkins could not represent wood-pellet maker Enviva Inc. in its bankruptcy case due to the law firm’s longstanding relationship with Riverstone Investment Group LLC, a private equity firm that held 43% of Enviva’s publicly traded shares.

Given how commonly law firms represent private equity sponsors and their related companies in Chapter 11 proceedings, concern swirled that firms could face a sort of Sophie’s choice: Represent private equity companies on their dealmaking, or try to keep their bankruptcy teams intact. That tradeoff would have a fairly obvious answer for most firms as private equity deals are a much larger business.

“We should all be paying attention to what’s happening here because it’s instructive,” said a partner at a major firm who requested anonymity to protect relationships amid a sensitive issue.

Duane Morris Sued for Misclassifying Non-Equity Law Partners

International law firm Duane Morris LLP was hit with a proposed class action from a non-equity partner alleging the firm intentionally misclassified her as a “partner” to reduce business and tax expenses.

The complaint—filed by employment attorney Meagan Garland, who has worked at Duane Morris since 2018—alleged her title of “partner” is misleading because she doesn’t have a management role and her salary is set by the equity partners board.

Garland alleged her nominal promotion to the non-equity partner position in 2021 resulted in the firm shifting its tax liability on her by failing to withhold federal and state payroll taxes and reporting her compensation on a Form K-1 instead of a Form W-2. Duane Morris also shifted business expenses to her by withholding portions of her compensation for “capital contribution” and operating expense fees, Garland alleged.

Duane Morris said in a statement that it “strongly disagree with the allegations set forth in the complaint” and that it looks “forward to responding to those allegations and vigorously defending the case in court.”

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