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March 11, 2009 5:37 PM

Headhunters Have Layoffs, Too

Posted by Zach Lowe

It was early 2007 when Tony Obst decided to leave an established recruiting firm and launch his own business with a focus on placing associates. He was having lots of success at Stofsky & Schiller Legal Search, and he felt ready to break out on his own, especially if it meant keeping 100 percent of his placement fees.

Two years later, Obst, a lawyer, is spending lots of time at home in New Jersey. He's out of the recruiting business and looking for a job. Over the recent holiday season, he sublet his office space, shut off his office phone line, and took down his firm's Web page.

"The associate market just froze," Obst says. "It was devastating."

The headhunting industry is experiencing its most violent retrenchment in recent history, with shops huge and small laying off headhunters or watching as recruiters hard up for commissions simply leave the business. Those that remain are retooling their practice to focus exclusively on partners and firm mergers, leaving thousands of laid-off associates with fewer recruiters to turn to for help.

"I've never seen anything like this before," says Mark Henley, who founded Smythe Masterson & Judd in 1980. Smythe has reduced its headhunting staff from 14 to 5--a process Henley says he began in 2007--and does almost no work with associates. The result, he says, is that the firm had its highest ever profits-per-headhunter in 2008. 

Major, Lindsey & Africa recently laid off about 10 percent of its headhunters--15 people--and a larger percentage of its staff, says Jonathan Lindsey, managing partner of the New York office. A majority of those recruiters focused on associates, Lindsey says. Mestel & Company laid off an "insignificant" number of associate headhunters and is retraining the rest to handle partner placements, says Lynn Mestel, the company's president and founder. 

Sivin Tobin Associates, founded in 1994, cut its headhunter staff in half--from ten to five, says cofounder Eric Sivin. (The firm did make one recent addition: they hired Leslie Bodner, former head of partner recruiting at Heller Ehrman, to open a Bay Area office.) 

"We've had some associate recruiters move on," Sivin says. "We have to devote more of our resources to partners."

Reports of layoffs and attrition are coming from everywhere, says Marina Sirras, head of Marina Sirras & Associates in New York and current president of the National Association of Legal Search Consultants (NALSC).

Sirras say some associate recruiters who've held onto their jobs have decided to walk away after their bosses reduced or eliminated their draw (the stipends they receive between commissions). They typically must return a large chunk of the stipend to their firm once they make a placement and earn a commission, Sirras and others say.

"They were in the red so much because of the draw that I just couldn't keep them," Lianne Stofsky, cofounder of Stofsky & Schiller, says of recruiters who had their draw reduced. "It just wouldn't be good business."

The new focus on partners isn't necessarily a bad thing for associates on the job market, says Joseph Ankus, head of Ankus Consulting in Florida and an executive director of NALSC. The market for associates now is so tight that using a recruiter that carries a hiring fee might cost an associate the slim chance he or she has at landing a good job.

"If they put my fee on their head, they're not even going to get an interview," Ankus says. "That's the first thing I tell associates when they call."

Ankus, who has two other full-time employees in his shop, actually hired someone in recent weeks. So did Sirras, whose Web page lists 13 recruiters, and Michael Lord, who went from two recruiters (himself included) to three in January. Those who are adding realize they are bucking the trend but say they have plucked experienced recruiters who will, they hope, find creative ways to make money in a down economy. 

"I knew very well that the economy wasn't good and that it was going to be difficult at times," Lord says of his hire. "But I found someone who really knew what he was doing."

Recruiters say that those who survive this downturn will find fewer competitors around them when the economy recovers.

"The hackers will be weeded out," Ankus says. "This is Darwinism. It's recruiter Darwinism."

As for Obst, he's not coming back. He's applying for jobs at nonprofits, hoping his experience as a volunteer and a lawyer sets him apart from what's sure to be a flood of applicants. 

"I am not in the legal search business anymore," he says.

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Like lawyers who have enough of their own clients, headhunters who can place partners effectively will always have a job.

It is a sad day for the Legal Search community, but for the most part, our industry has not be inclusive and therefore, we have put all our eggs in one basket,the associate market. The one area that the Legal Search community failed to approach during the hey day of law firm and in house recruitment was the diverse attorney community. Unfortunately,for the majority of headhunting firms, that market may be closed because, they did not look to be more diverse in their own shops and now will most likely be looking to find firms that are still looking for diverse Partners and Associates. It is sad but true that as a business, the legal search community has been exclusive in its business dealings concerning the diverse attorney community legal community, that today may become their bread and butter. It is my hope that they will come with sincerity and truthfullness in dealing with a community, that they have ignored, for the most part, far too long. We will see...

I am an executive recruiter with over twenty-six years of experience placing Partners and Associates, as this is my sixth economic downturn in the industry, I would very much like to comment on your article regarding Headhunters. Although some items in your article are very true, there are several that are equally false. It’s true that recruiting firms are downsizing, and many recruiters are exiting the industry. The question is why? It is true that making placements especially for Associates is increasingly difficult. Many of us are turning to Partner and firm merger opportunities, but there are still several opportunities out there for the hard working, dedicated, and tenacious recruiter who is representing talented Associates. It is not true that an Associate who utilizes a Headhunter drastically decreases their chances of gainful employment. An experienced recruiter who has developed rapport with Hiring Partners can “create” opportunities for excellent Attorneys. Those recruiters who have relied upon working with Attorney Recruitment Coordinators (Personnel) rather than building relationships with Partners in those firms are the ones who are finding it increasingly difficult to make placements. Why? Because they are not dealing with the decision makers of the firms they represent. Furthermore, those recruiters who have relied upon making placements with large firms who are suffering due to credit line decreases, and being overstaffed, thus downsizing, are hurting them as well. In other words, those recruiters who have relied upon a handful of firms to hire from them, rather than continuing to reach out to other firms in order to increase their market share, are the recruiting firms closing ! their doors, never to return to the industry. I have found during the past year, recruiters can capitalize on placing Associates with firms who normally would not have access to these individuals for any number of reasons. Furthermore, a recruiter who has immediate access to the Hiring Partner has a better chance of getting that candidate’s foot in the door, rather than being one of perhaps hundreds resumes sent to the Personnel Department. Additionally those recruiters who have crossed the line of ethical conduct during the boom years, those who have relied upon website advertising, or who simply send emails to potential candidates, rather than using traditional recruiting methods are also seeing a dramatic drop in their business lines. Furthermore, this is the time for the exceptional recruiter to focus on relationship building for when the current economic climate improves. Those recruiters who have worked passively and in a reactionary method over the last decade are those who have either lost their recruiting expertise, or never learned it in the first place. My suggestion to Attorneys out there, is when you register with an agency, interview the recruiter. What do they bring to the table in helping you find your next opportunity? What methods do they utilize? What relationships do they have? How long have they been in the business? Most importantly, do they sit there and wait for firms to call them, or do they take an aggressive, proactive approach to representing you in the market place?

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