“If you don’t cut associate starting salaries now, you are nuts. They were too high. Now we have to pay for it.” – Bradford Hildebrandt (as reported in the ABA Journal online)

Most of the biglaw firms just let them go. MacGuire Woods is rolling back salaries of its incoming associate class to $144k. Do I hear $135? $125? How low will the roll back go? In the aftermath of letting 190 associates go, Latham & Watkins has offered its 2009 class $75k to postpone their start date to 2010. Then there’s Simpson Thatcher’s approach: pay associates $60k to work at a non-profit for a year.

Now that biglaw’s bubble has burst, redundant associates flood the job market. Above the Law has some condescending, tongue-in-cheek interview tips for those seeking jobs at smaller firms. (My favorite comment was offered by poster #32, who in attempting to correct a prior comment, said you don’t “hang a shingle”; as any roofer knows, you “lay a shingle.” Now there’s another career option!)

As for hanging your own shingle, Omair Farooqui (an intellectual property associate at Mannatt, Phelps & Phillips) was laid off in June. He partnered with bankruptcy attorney Javed Ellahie, and started Ellahie & Farooqui, a small firm in San Jose, California.

Another push out the door is coming from general counsels who won’t be paying those biglaw fees. Some attorneys are taking their book of business to smaller firms, where cash-strapped clients may follow. The strategy here is to offer flexible rates to existing clients that make you more competitive. As reported in the National Law Journal, Mark Berkoff, a former DLA Piper bankruptcy attorney, offers rates that are 30 percent lower at Neal, Gerber & Eisenberg in Chicago.

In the incredibly shrinking law firm world, there’s a growing market for the virtual law firm as well. Geoff Willard left DLA Piper, started up a virtual practice, and said he was able to cut 25 percent off his clients’ bills. “Everyone realizes the big law firm model is broken,” Willard told the Washington Post.

With contraction of the legal marketplace, what will the new model be? Will there be a niche law firm revolution? Will the billable hour really die? Is this, as Hildebrandt International managing partner James W. Jones said, simply a matter of right-sizing? Do we really think a more corporate model will be any more successful?