What Happens to BigLaw During a Recession?

BigLaw is not immune to recessions. When the economy contracts, deal flow slows, clients cut legal budgets, and firms respond by reducing costs. If you are a law student thinking about BigLaw, understanding this cycle helps you plan.

What typically happens

Hiring slows. Firms hire smaller summer classes and make fewer offers. Some firms freeze hiring entirely for a cycle. The OCI process becomes significantly more competitive.

Start dates get deferred. Instead of laying off incoming associates, many firms push start dates back by 3-12 months and offer a deferral stipend. This happened widely during the 2008-2009 recession and again in some sectors during 2020.

Layoffs happen. In severe downturns, firms lay off associates, usually targeting mid-level associates and those in practice areas most affected by the slowdown. Layoffs are presented differently by different firms, sometimes as "performance-based" reductions even when the real driver is economic.

Bonuses shrink or disappear. Year-end bonuses are the first thing to go. Special bonuses vanish. Some firms reduce or eliminate bonuses for a year or two.

Which practice areas are affected

Most affected: M&A, capital markets, private equity, real estate finance. These areas are directly tied to deal volume, which drops during recessions.

Less affected: Litigation (disputes increase during downturns), restructuring and bankruptcy (busy by definition in a recession), regulatory and compliance (regulation often increases during crises), and employment law (layoffs generate legal work).

If you are choosing a practice area and want some recession insurance, restructuring and litigation tend to be more resilient.

How to protect yourself

Build savings. If you are already in BigLaw, save aggressively during the good years. Having six months to a year of expenses saved gives you options if things get rough.

Diversify your skills. Associates who can work across practice areas are less vulnerable than those who are narrowly specialized in a single deal type.

Maintain your network. During layoffs, the associates who land on their feet fastest are the ones with strong professional networks.

Stay informed. Follow legal industry news. If your firm's revenue is declining or key partners are leaving, those are signals to start thinking about your options.

The firms in the firm directory have different levels of financial stability. Revenue, profits per partner, and diversification of practice areas are all indicators of how well a firm weathers economic downturns.