All posts by Lateral Link

Government Attorneys: Now is the Time to Launch Your Move to Private Practice

As a recruiter who focuses on helping government attorneys make the move from government to law firms, I regularly receive questions about the ideal time for government attorneys to make a lateral transition. The cloud of economic uncertainty in 2023 has fed rumors that some firms are now less likely to hire government attorneys than in years past. Potential candidates for a transition to private practice may be hearing that this is the wrong time for a government attorney to start a lateral search. But that is not at all in keeping with my experience—either in 2023, or in the third year of previous administrations.

Year three of an administration is actually a great time to launch a lateral move to private practice. Here’s why:

You have real—and scarce—value to offer

Historically, the third year of a presidential term is a particularly strategic time to make the jump to private practice. Why? Year three is a sweet spot between depth of insight gained and opportunity to apply that insight for immediate client impact. Plus, leaving before most of your colleagues do will place you in the strongest competitive position.

Attorneys who have worked with the current administration—both political appointees and career officials—have helped shape recent policy changes. Their government service has given them a nuanced understanding of agency priorities and the application of evolving regulations. Clients are eager for guidance from attorneys with this profile because they face a moment of exceptional uncertainty and, perhaps, jeopardy. New rules have been adopted, but there remains a paucity of cases applying them. 

As a recent government attorney with insight into what to expect, you have a unique opportunity to help companies chart the right course. This is especially true in the most innovative sectors of the economy, where there is little regulatory track record from which to draw inferences. You are exceptionally well positioned to help companies develop effective compliance programs, evaluate the need for internal investigations, and successfully navigate a new regulatory landscape.

Note that if you wait until closer to the potential end of an administration, this value may decline. By then, companies will have more of a track record to consider, and although they will still wish to consult recent insiders, the sense of urgency may have diminished. Moreover, a large number of attorneys start lateral searches in year four of an administration, creating more competition. Given those dynamics, it should come as no surprise that candidates who have moved in year three have attained better outcomes (more prestigious firms, higher guaranteed compensation), relative to their peers who waited longer.

Don’t preemptively count yourself out

Candidates who entered government early in a presidential term might fear that they won’t be marketable this soon. Such concerns may be particularly acute in this administration, where a sizable number of Senate-confirmed appointees faced delays in the process. Many appointees have not yet been in their roles for a full two years.

Even if you find yourself in that situation, don’t let it dissuade you from starting a search. The dynamics described above still apply. Sure, it would be ideal if you had been confirmed on day one and brought two full years to the table. But in a market with limited supply, firms are not going to exclude candidates with shorter tenures. What matters most is the insight you bring, not the number of years you’ve logged.

Some government attorneys also have concerns that their lack of experience in private practice may prevent them from moving to a firm. It’s true that the transition from government attorney to law firm partner is often easier for those who already have experience as a law firm partner. But it should be noted that not every successful candidate has that background. Firms frequently interview government officials who, despite their lack of law firm experience, can present a credible business plan. As you might imagine, candidates in this category tend to benefit greatly from working with an experienced recruiter who has the judgment to help sharpen their business case.

Know what to expect

Even though the market dynamics are currently favorable, preparation remains essential. A strong recruiter will help you develop answers to the most common questions that firms ask candidates seeking to transition from government. For example, firms may probe the sincerity of your interest in private practice, your comfort with “switching sides,” your aptitude for business development, and the substance of the practice you expect to build.

If you are a government attorney with questions about making a lateral move to private practice, let’s connect. We can work together to find the best platform for you.

***

Amy Savage is the Chair of the Government Transitions Group at Lateral Link, where she focuses on helping current and former government attorneys make lateral moves to law firms.

Questions to Ask Your Interviewer in a Lateral Interview

Are you a law firm associate preparing for lateral interviews?  If there’s one thing I can guarantee, it’s that your interviewer will ask at some point: “Do you have any questions for me?”  This article will help ensure you don’t meet that invitation with an awkward silence.

Asking thoughtful questions has two benefits.  First, you score points with the interviewer by demonstrating your genuine interest in the firm.  Second, you can elicit useful information to help determine whether the firm is the right fit: don’t forget that you are interviewing the firm, just as the firm is interviewing you.

Asking questions helps create a genuine dialogue

Before delving into what constitutes a good question, it’s worth pausing to talk about the overall interview dynamic.  The most successful interviews are dialogues, not depositions.  Your goal is to establish a natural back-and-forth, with both parties eliciting and conveying information, building on each other’s points.  Don’t feel you need the interviewer’s permission to ask a question.  Instead, play your part in making the interview a genuine conversation.  

Naturally, you want to leave space for the interviewer to ask most of the questions in the first part of the interview.  But there’s no reason to hold all your queries until the end, especially if you have a question that follows directly from something the interviewer has just said.  The more seamlessly you weave in questions throughout the interview, the more likely your interviewer will leave with the impression that it was a great conversation and that spending more time with you would be enjoyable.

Formulating intelligent questions

Whoever said there’s no such thing as a stupid question must not have been talking about law firm interviews.  Taking the time to learn about the firm and formulate some informed, targeted questions is an important part of preparing for your interview.

Speaking generally, good questions tend to invite the interviewer to elaborate on their perspective about a topic that arises in the interview or to share insights from their personal experience.  These questions help build rapport.  Conversely, asking questions that seem overly formulaic or divorced from the interview conversation will tend to damage rapport: you risk giving the impression that either you weren’t listening closely or you weren’t interested in what the interviewer had to say.  Whatever you do, don’t ask for information that is readily available on the firm’s website!

Law firms and in-house legal departments want to hire lawyers who are genuinely excited to join their team.  Asking specific, informed questions that show you’ve diligently researched your interview panel and the firm will demonstrate real interest.  Questions that suggest an appetite to stay for the long haul are especially favored.  Asking about topics like performance reviews, feedback, mentoring, training, and business development signals to the interviewer your interest in building a career at the firm.

Keep in mind that most people — and especially attorneys — love to talk about themselves.  So be sure to ask questions about your interviewer’s practice.  In particular, this is an opportunity to communicate your interest in the firm by asking about information you’re able to find from the interviewer’s web bio, firm website, LinkedIn page, or even public records such as PACER for a litigator or Pitchbook for transactional lawyers.  For instance, if you’re interviewing with a litigation partner, check out the representative matters section of the partner’s web bio and ask about a recent case or investigation they handled.  If the interviewer is ranked in Chambers or Legal 500, mention that you saw the write-up and ask about a deal referenced there.

A particularly savvy form of question, when executed well, is one that both highlights something you bring to the table and confirms that that attribute or experience will be valued at the interviewer’s firm.  This could be a skill, an achievement, or an aspect of your personality.  You can both ask an intelligent question and simultaneously steer the conversation toward a point you wish to make about your interests or qualifications.  An example: “I’ve been fortunate to have the opportunity to take a handful of fact witness depositions at my current firm, which I really enjoyed.  Would the team consider giving me the opportunity to handle more senior tasks if I prove I’m ready for them?”

Remember that your time is limited, so you want to be strategic about how you allocate questions across interviewers.  For example, partners will likely be better equipped to answer questions about the matters and clients you will be staffed on and the firm’s growth trajectory, while associates will be better equipped to answer questions about the firm culture, training, mentoring, and reviews.

What to ask

Below is a non-exhaustive list of sample questions to use as a starting point.  In addition, you should feel free to ask the hiring partner (or the recruiting coordinator) about the next step in the interview process and when the firm anticipates deciding who will advance to the next stage.

Role, Team, and Nature of the Work

  • Is this a growth position or are you replacing someone? 
  • What are your (or the team’s) biggest staffing needs right now?
  • What are you looking for in this role?  For example, what qualities do you think make for a successful mid-level corporate associate at this firm (or on this team)?
  • Will I be working primarily with a particular partner or team?
    • If not, how are associates staffed on matters?
    • If yes, who makes up the team?  Are there particular clients/matters/cases/deals that I will be working on immediately?  Over the next year?

Firm Culture, Clients, and Growth Plans

  • How would you describe the firm’s culture generally and the culture in this practice group?
    • [If interviewing outside of the firm’s main office] Do you think the culture in this office aligns with the culture firmwide?
  • Who are the firm’s biggest clients?
    • Does the firm have institutional clients in [your practice area]?  Or is developing business from new clients emphasized?  
    • How does the firm support and encourage cross-selling within the firm?
  • What can you tell me about the firm’s future plans?  Are there plans to grow, and if so, how do you think the firm will look in the next 5 or 10 years?  Any specific growth plans you can share relating to our practice area?
    • If the firm has recently merged, acquired a firm, or expanded into a new market, work that into your question.  For example, you could say, “I read that the firm recently opened offices in Texas and Miami.  Does the firm have plans to continue expanding in the Southeast?”

Integration, Training, Mentoring, Evaluations, and Promotions

  • How does the firm handle integration of lateral associate hires, both here in this office and firmwide?  Is there a formal integration program or is it more informal?  
  • Do you have any recent lateral hiring success stories you can share?
  • [If the interviewer lateraled to the firm] How was your experience as a lateral hire?
    • How did the firm support your integration?  
    • Were there formal events or was it more informal? 
  • [Ask about success stories for other lateral hires, such as lateral hires who have made partner at the firm.  If you’ll be working with a particular team, consider asking if any lateral hires have made partner from that team or in that practice area.  However, if you get the sense that your interviewer isn’t prepared to answer these questions, don’t put them on the spot.  You can always ask to speak to successful lateral associate hires after you’ve received an offer and are evaluating it.]
  • What training opportunities are available for associates in my practice area?  Is there a formal training program or is it more informal?  Does the firm offer access to outside training resources, such as litigation skills courses offered by the National Institute for Trial Advocacy (NITA)? 
  • How does the group/office/firm handle mentoring (formal and informal)?
  • Does the firm do formal evaluations on an annual or semi-annual basis?  Will I receive more immediate feedback on my work product in between?
  • What is the typical path to partner for a lateral hire?
    • Are there objective criteria/benchmarks that I’ll be expected to achieve to make partner? 
    • [If you are a senior associate] When will I first be eligible for partnership consideration?

Flexible Staffing for Antitrust Boom

Any way you slice it, antitrust is a booming practice area.  A year ago, Bloomberg Law projected that antitrust would be a top practice set to power Biglaw growth in 2022 and beyond.  The wisdom of that prediction was reinforced by what turned out to be an immensely competitive lateral market for antitrust partners, with a string of high-profile lawyers changing firms.  The 2022 lateral market was so strong that even partners without portable books of business were a hot commodity.  In 2023, the FTC has already proposed a broad ban on non-compete agreements, and the FTC and DOJ appear ready to issue revised merger guidelines based on last year’s “joint public inquiry aimed at strengthening enforcement against illegal mergers.”

As law firms confront an influx of major antitrust matters, some of which will arise on short notice, flexible staffing is playing an important role in serving clients efficiently and effectively.  Given this need, Bridgeline Solutions, a Lateral Link company, recently established a dedicated Antitrust Practice Group co-chaired by Bridgeline’s CEO, Craig Brown, and one of its senior executives, the Group’s Managing Director, David Copeland.  Craig is a former government attorney who practiced as an antitrust attorney with Kaye Scholer, the same firm at which David was a Chambers-ranked antitrust counselor for 25 years, including 15 years as a partner.

Although Bridgeline Solutions’ services have included antitrust since the company’s inception, the booming activity in this vital area drove the decision to establish a standalone Antitrust Practice Group.  The Group will advise on best practices in all areas of antitrust and will staff and manage Second Requests.  Additionally, the Group will continue to provide premier Biglaw-trained antitrust attorneys to assist on mergers as well as non-merger substantive antitrust matters.

The Antitrust Practice Group will also continue to assist in educating the public and practitioners in antitrust law and its evolution.  For example, Craig and David were instrumental in procuring Jonathan Kanter, Assistant Attorney General of the Antitrust Division of the Department of Justice, as the keynote speaker for the 2022 Milton Handler Lecture at the NYC Bar Association.  In delivering this Lecture, AAG Jonathan Kanter sharply criticized the “consumer welfare standard” that has been the hallmark of civil antitrust enforcement since the 1980s.  Instead, Mr. Kanter signaled that the Antitrust Division would prioritize “protecting competition” under his leadership.  “Companies that test our resolve . . . do so at their own risk and will continue to confront aggressive antitrust enforcement. As one of my predecessors explained, some deals should never leave the boardroom.”

After much anticipation, that tough talk is now translating into action.  In October, the DOJ successfully blocked Penguin Random House from acquiring Simon & Schuster.  In December, the Federal Trade Commission sued to block Microsoft’s $69 billion acquisition of video game publisher Activision, an ambitious effort that illustrates Chair Lina Khan’s willingness to bring cases that may be difficult to win. Law firm and corporate legal department leaders who wish to learn more about the Bridgeline Solutions Antitrust Practice Group’s services are invited to contact Craig Brown (917-551-0711) and/or David Copeland (570-517-1759).

Lateral Attorney Hiring in a Softening Economy: Diverging Trends Across Practice Areas

2022 saw a pullback in lateral attorney hiring, as inflation and high interest rates slowed corporate and lending activity, and as law firms found themselves overstaffed after record hiring in 2021.  Unfortunately, we have also seen recent associate layoffs, mainly by firms particularly dependent on the currently beleaguered tech sector.  Despite these developments, overall lateral attorney hiring levels are currently more reflective of pre-pandemic lateral attorney hiring than a full-fledged recession.

Certain practices and industry sectors have featured continued demand for mid- through senior-level associates, counsel, and partner-level attorneys.  As we enter 2023, depending on the length of the economic slowdown and whether inflationary pressures subside, we would ideally see a continuation of current lateral attorney hiring levels followed by an uptick later in the year, tracking a resurgence in business activity.

2022 Lateral Hiring Trends Compared to Previous Years

With 2021’s economic recovery spurring exorbitant deal-flow, associate hiring increased to historically high levels, especially in transactional practice areas.  In 2022, there was a 20% year-over-year decrease in lateral associate hiring by Am Law 200 firms, with 8,116 total hires compared to 10,179 hires in 2021.  In the second half of the year, as the economic slowdown became more evident, there was a 45% year-over-year decrease in Am Law 200 associate hiring versus 2021.

While the 2022 decrease in Am Law 200 law firm associate hiring was substantial compared to the aberrational hiring levels during the same time period in 2021, when putting these numbers into historical context, 2022 associate hiring levels were consistent with those in the years preceding the pandemic when the economy was relatively healthy.  Am Law 200 associate hiring in the second half of 2022 was 7% higher than the five-year average for the same period during the pre-pandemic years of 2015 through 2019.  Mirroring the resilience of the broader labor market, the lateral attorney hiring market endures, although practice area demand has adjusted due to distress in certain segments of the economy.

Corporate Transactions, Finance, and Real Estate

The economic challenges of 2022 have had the most impact on corporate transactional practice areas.  There was a precipitous decline in deal activity in 2022, including a fall in strategic M&A and capital markets offerings due to interest rate increases and market volatility.  2022 had the lowest Q4 global M&A deal volume in the last six years.  Even so, private equity-backed M&A remained steady, with PE leveraged buyouts notching their second-busiest year in a decade.  Deal activity was driven by PE firms holding record levels of committed capital (“dry powder”), attractive target company pricing, and private debt fund financing.

These market developments are reflected in 2022 lateral attorney hiring and in current demand.  We are seeing very few mid-level M&A associate openings in public company and strategic M&A-centric corporate practice groups.  However, we still see consistent openings for mid-level private equity M&A associates with corporate practice groups representing large-cap and upper middle market PE sponsors.

Associates experiencing a slowdown in non-PE M&A corporate practice groups may wish to explore such PE M&A associate positions, as strategic M&A primary and ancillary document drafting experience is directly transferable.  Capital markets and securities associate hiring has diminished substantially more than M&A, with very few openings nationally.  Due to rising interest rates, stock market volatility, and lending costs, the IPO and global debt offerings markets collapsed to historic lows in 2022.  While we have not yet seen many publicly acknowledged layoffs of corporate M&A or securities associates, there were reports of stealth layoffs during this past review season.

Tech and emerging companies and venture capital (ECVC) corporate practice groups were perhaps the most detrimentally impacted by the global economic downturn in 2022.  Rising interest rates and borrowing costs, lower stock prices, geopolitical tensions, and other factors have halted tech company expansion, spurred austerity measures, and caused VC funding to fall to pandemic period lows.  Over the past two quarters, the decrease in demand for tech company legal guidance has led to associate and staff layoffs in practice groups servicing tech companies and VC sponsors.  Associates affected by these layoffs may look to transition into other corporate practice areas in which their core corporate transactional experience would be transferable.

While on a smaller scale than in 2021, we are still seeing demand for mid- through senior-level commercial finance associates. As leveraged finance transactions by investment banks have retrenched, private equity firms have increasingly turned to the private credit market to finance acquisitions, thereby providing a steady deal-flow for certain commercial lending practice groups.  There have also been recent lateral associate structured finance and securitization openings, though demand has decreased significantly since 2021 due to slow growth and higher interest rates.

Investment funds groups are still hiring relatively actively, with openings for associates across all levels.  While private equity, venture capital, and other fundraising slowed significantly in 2022, certain sectors have remained busy.  Real estate fundraising slowed while investment in infrastructure and energy funds remained active relative to previous years.  Further, although private equity firms and other sponsors are taking longer to raise capital in the current environment, that does not substantially decrease the amount of legal structuring or regulatory guidance needed for active fund management. Because fewer associates have funds training, relative to other corporate specialties, many investment funds practice groups are short of talent.

In Real Estate, we are still seeing demand for mid- through senior-level lateral associates, with steady commercial deal activity and some high-performing asset classes.  For example, in Q3 2022, although commercial real estate deal activity was down compared to the same quarter in 2021, deal activity was 6% higher than in Q3 2019.  Transactions involving industrial property have been particularly active due to the continued growth of e-commerce and inventory surpluses from supply chain constraints.

Litigation

Litigation is less sensitive to recessions and decreased corporate activity, exhibiting reduced but stable demand for lateral associates this past year.  Litigation was the second-best performing practice area in 2022, with midsize firms seeing a slight uptick in litigation demand and many experts predicting an uptick in M&A disputes for 2023.  We are seeing litigation lateral associate positions fairly evenly divided between: (1) general commercial and tort litigation (breach of contract, products liability related class actions); and (2) white collar criminal (particularly False Claims Act-focused) and other securities and antitrust litigation.

Litigation practice leaders are anticipating increased government enforcement in 2023, with a quicker pace of proceedings following two years of the Biden administration adding personnel and instituting new policy directives.  Law firm practice leaders and plaintiffs’ attorneys are also anticipating increased consumer privacy class action activity, with large tech companies recently having agreed to substantial public consumer class action settlements.

IP

Intellectual property litigation has remained busy, and firms have significantly invested in partner and associate hiring, banking on IP as a practice that is less elastic to economic conditions.  Courts are seeing an influx of patent cases that built up during the pandemic.  In addition to litigation involving the more commonly disputed technologies, such as software, semiconductors, and electronic devices, new technologies such as artificial intelligence, autonomous vehicles, and battery technologies are emerging in patent disputes.

Given the scarcity of IP associates with the requisite engineering backgrounds, we have seen continued patent prosecution lateral associate positions, though in much lower volume than IP litigation openings.  Global patent filings have seen a significant decrease over the past year due to the economic slowdown, with companies seeking to avoid patent filing costs and maintenance fees.

With respect to life science patents, we are seeing associate openings in both prosecution and litigation.  Biotech, pharmaceutical, and healthcare companies have continued filing patents and were bolstered by some pandemic-derived technologies, including developments in vaccines, immunology, and telemedicine.

Countercyclical Practice Areas: Restructuring and Labor & Employment

While we have seen an uptick in restructuring associate positions, openings have not risen to the level we typically see during major economic downturns.  There were a significant number of corporate bankruptcy filings in 2022, but Chapter 11 filings have remained slow since 2021.  Prior to 2022, government stimulus programs, low borrowing rates, and high debt forbearance contributed to the corporate bankruptcy filing slowdown by assisting distressed companies.  As these protections dissipate, law firms are fielding more inquiries from clients of over-leveraged companies.  Crypto, life sciences, and healthcare are primary sectors currently driving restructuring.

Labor and employment is another hallmark countercyclical practice area, as layoffs and other workforce changes can drive increased employment litigation.  There is particularly strong demand for associates experienced in wage and hour class and collective actions as well as discrimination cases.

While the lateral attorney job market is broadly experiencing a slowdown, certain practice areas have persistent need for top associate talent.  Should the economy achieve a soft landing, we hope to see the reemergence of transactional practice area hiring in 2023.

Who is Better Compensated: Elite Biglaw Partners or Top General Counsel? (2023 Update)

It’s no secret that it pays to be a Biglaw equity partner. A 2022 survey of partners in “NLJ 350- and Global 100-size firms” found average compensation of $1.12 million, a 15% increase over the average in the prior survey conducted in 2020.

Seven-figure compensation is nothing to sneeze at, but as with professional sports teams, the real stars of Biglaw make significantly more than the average. Firms vary widely in their compensation ranges. At the most traditional end of the spectrum, a firm’s highest-paid partner might take home 4x the pay of the lowest-paid partner. In contrast, at a firm with a strong eat-what-you-kill culture, that ratio may be 10x or higher. Bloomberg reports that the top earners at Kirkland & Ellis earn more than $20 million annually. Eight-figure pay packages remain uncommon in Biglaw, but with competition for partners with the strongest books of business as intense as ever, rainmakers at an increasing number of firms are breaching the $10 million mark.

So the top tier of law firm partners are doing very nicely, indeed. But what about the leading in-house lawyers? In this article, we take a look at the pay packages of the top 100 highest-paid General Counsels, in comparison to partners of top Biglaw firms (as measured by profits per equity partner). We find that on a cash compensation basis, equity partnership is more lucrative than being a General Counsel. But the story is more complicated when taking stock options into account.

A quick note on sources. For general counsel compensation data, we look at the top 100 highest-paid GCs as listed in the 2022 ALM Intelligence GC Compensation Survey. This data set is not comprehensive. For one thing, ALM compiles its data from proxy statements filed with the SEC, so only public companies are included. Our source for Biglaw partner compensation is the 2022 edition of the Am Law 200 ranking.

It’s hard to outearn a top Biglaw partner (in cash)

The General Counsel Compensation Survey ranks General Counsels based on total cash compensation. The top 100 highest-paid GCs earned total cash compensation of $2.7 million on average. We don’t know how much the 100 best-paid Biglaw partners earned in the comparable period, but as one benchmark, the 91 equity partners at Wachtell enjoyed profits per partner of $8.4 million.

Just one General Counsel took home cash compensation higher than $8.4 million: Alan Braverman of Disney ($8.8 million). Meanwhile, 42 Am Law firms had profits per equity partner in excess of the $2.7 million average General Counsel cash compensation.

What about cash compensation growth over the recent past? From a growth perspective, who did better in the two-year period from 2020 until 2022: the top 100 General Counsels or the partnership of the top Am Law firms? The table below shows the results, ranked by growth rate. The law firms in the table were the top 10 firms by profits per equity partner in the 2020 Am Law 200. We see that all 10 Biglaw partnerships outpaced the General Counsels, some by a substantial margin.

Group (equity partnership or GCs)Compensation growth from 2020 to 2022
Davis Polk55%
Kirkland & Ellis42%
Sullivan & Cromwell37%
Simpson Thacher35%
Wachtell33%
Cravath31%
Paul Weiss31%
Skadden30%
Weil Gotshal29%
Quinn Emanuel26%
Top 100 GCs25%

But stock options can make a big difference

It’s critical to note that the very highest-earning General Counsels receive a substantial portion of their compensation in the form of equity. Taking stock options into account, some General Counsel roles start to look considerably more attractive. For example, revisiting the 2022 surveys, when considering total compensation, the number of General Counsels topping Wachtell’s profits per partner rises from one to 16. Kathryn Ruemmler (Goldman Sachs) and Kate Adams (Apple) top the list, each earning total compensation just shy of $27 million. David Sorkin (KKR) also cracked the $20 million threshold. These examples illustrate the importance of equity: Ruemmler, Adams, and Sorkin earned total cash compensation of $7.9 million, $5 million, and $5.75 million, respectively.

Conclusion
There are a lot of reasons why an attorney might prefer to be a General Counsel than a law firm partner. But viewed strictly through the lens of compensation, high-performing lawyers are typically better off staying on the law firm track. Of course, that doesn’t necessarily mean they should stick with their current firm. With Biglaw partnerships increasingly diverging in their approaches to compensation, it’s a mistake to assume that a partner with a given book of business will be paid similarly at any comparably prestigious firm. Productive partners have a variety of options—and it pays to know about them.

2022 Associate Bonuses: Celebrating The Early Announcers

It has been more than a month since associate bonus season kicked off with Baker McKenzie’s first-mover announcement of its bonus scale on November 21. Since then, numerous Am Law 50 firms have announced their bonus plans, converging around a scale that starts at $15K (pro-rated) for the Class of 2022 and rises to $115K for the Class of 2015.

Although the content of the announcements has been subtly different from one firm to the next, most announcements have essentially matched the market rate, as is typical. The most notable differences have been in how quickly firms have made their announcements. As usual, several Am Law 50 firms were quick to match once the market scale was established. But weeks later, no announcement has been made by the majority of Am Law 100 firms.

Some might argue that any delay ultimately won’t be that important: it’s likely that many of the radio-silent Am Law 100 firms will eventually match. But in a time of economic uncertainty, we believe that promptly announcing a (matching) bonus scale has greater value than it would in most years. Given all the talk about recession, you’d rather see your firm’s commitment in writing than to just trust that the money will arrive in due course.

For example, if you’re a Gibson Dunn associate, should you be concerned at the firm’s slow pace in committing to the market scale? The chances you’ll receive your money obviously get slimmer the longer the firm delays payment. Chatter about impending recession could just serve as an excuse not to pay associate bonuses despite healthy firm profits.  

And even for associates who ultimately suffer no adverse financial impact, this matters from a motivational perspective. It certainly feels better to be at a firm that’s quick to display appreciation for your efforts, as compared to working for a partnership that drags its feet.

So with New Year’s Eve festivities almost upon us, let’s talk a moment to celebrate the firms that stepped up and matched quickly. Here is the list of Am Law 100 firms that issued announcements in the week of November 28, roughly one week after Baker McKenzie’s first-mover announcement:

Baker McKenzie [first mover]

Cravath

McDermott Will & Emery

Skadden

Fried Frank

Cleary Gottlieb

Davis Polk

Paul Weiss

Debevoise

Baker Botts

Paul Hastings

Hogan Lovells

Milbank

Ropes & Gray

Willkie Farr

O’Melveny

Morgan Lewis

Note: firms are sequenced by date of communication, with earlier-announcing firms towards the top of the list. The source of this data is the helpful AboveTheLaw tracker.

Congratulations to associates at the early mover firms! Here’s hoping that your firm’s swift announcement made for a more relaxing holiday season.

Biglaw Partners: Are You Capturing a Fair Share of Your Revenue?

If you are a Biglaw partner, you may have heard this compensation rule of thumb: you should be taking home a third of the revenue you generate for the firm. The 33% rule has the advantage of being simple, and it makes for a reasonable starting point. But to really know whether you are capturing a fair share of the value you create, it’s important to consider some other factors.

Your hours vs. your team’s hours

The first distinction you’ll want to make is between the hours you bill and those billed by the people working for you, such as associates and service partners. The 33% rule is supposed to apply to all revenue for which you are responsible. But we can make things more precise by breaking that revenue into two segments.

As a general rule, you should make about 40% of revenue from hours you billed personally. As for the hours billed by members of your team, it depends how profitable those lawyers are for the firm. Associates at some firms are substantially more profitable than others. The more profitable your associates, and the more leverage your book has, the greater the share of your team’s revenue you can expect to take home.

RPL and leverage are the key metrics

To understand what share of team revenue should accrue to you, consider how your firm stacks up on two key metrics: revenue per lawyer (RPL) and leverage.

RPL is critical because it is so poorly correlated with associate salaries. You could imagine a different compensation model in which firms paid associates a standard share of the revenue they generated, either individually or on average across the firm. But as we know, that isn’t how this industry works. Instead, all top-tier firms pay associates more or less the same salaries based on class year. As a result, partners at firms with relatively high RPL get to divide a much larger profit pool than partners at “top” firms with low RPL.

Within the Am Law 100, the spread between high and low RPL is striking. Firms at the low end have RPL of around $500,000. For example, Lewis Brisbois is the lowest of the Am Law 100, at $448,000. Firms at the high end have RPL around 4X that of the low-end firms. Sullivan & Cromwell, for example, clocks in above $2.2 million. (Wachtell is in a league of its own, with RPL in excess of $3.8 million.) Granted, a Sullivan & Cromwell associate earns higher total compensation than a Lewis Brisbois lawyer in the same class year, but that multiple is nowhere near 4X.

Now, RPL isn’t everything. We also have to consider leverage. If a partner’s book can feed a relatively large number of associates, the proportion of the team’s revenue that should accrue to the rainmaking partner will be higher. And to be fair to Lewis Brisbois, their partnership is doing well on that dimension, with leverage of 9.99 (third-highest among the Am Law 100).

Let’s take a look at leverage for the top 10 firms by RPL:

FirmRPL ($ millions)Leverage
Wachtell3.8602.2
Sullivan & Cromwell2.2153.8
Cravath2.0354.1
Kirkland1.9975.2
Ropes & Gray1.9504.1
Davis Polk1.9235.4
Simpson Thacher1.9134.7
Quinn Emanuel1.8394.2
Skadden1.8384.1
Paul Weiss1.8365.0

We see that Kirkland and Davis Polk are outperforming on leverage, which is good news for their equity partners. And in fact this flows through to the profits per equity partner (PEP) ranking: although Sullivan & Cromwell outranks Kirkland and Davis Polk on RPL, it is behind those firms in profits per equity partner. (Wachtell is first in both categories.)

FirmPEP ($ millions)
Wachtell8.400
Kirkland7.388
Davis Polk7.010
Sullivan & Cromwell6.366

Ambitious associates who are aiming for partnership should be aware of the importance of leverage in modeling their future expected compensation. To take another example, Gibson Dunn is immediately ahead of Paul Hastings and Weil Gotshal on the RPL ranking. But Gibson’s leverage is on the low end: 3.4. Because Paul Hastings and Weil have better leverage, they comfortably beat Gibson in PEP.

FirmRPL ($ millions)LeveragePEP ($ millions)
Gibson Dunn1.6133.44.400
Paul Hastings1.6064.54.703
Weil Gotshal1.5735.55.181

How does your practice compare to the firm average?

Your firm’s overall RPL and leverage are important considerations, but unless the partnership has a pure lockstep compensation model, the performance of your practice relative to the firm average is also critical. A good starting point for thinking about this dimension is to compare the firm’s profit margin to the share of your revenue that you are taking home. For example, let’s say your firm’s profit margin is 45%. Are you being paid 45% of the revenue you are generating?

If not, consider how your practice may differ from others in the firm. Does it have lower leverage than the firm average? Are you personally billing fewer hours than your peers in the partnership? If the answer to both of these questions is no, then your compensation should reflect the firm profit margin. If it doesn’t, you are likely underpaid, and you may want to consider your options.

Making a Lateral Move Without a Recruiter? Beware of Conflicts

“Susie” is a midlevel Biglaw associate who has worked at the same firm since she graduated law school. She’s had a good run, but a few months ago she decided it was time to move on. Her practice area is in demand, and she’s acquired solid experience at her current firm, so she figured it shouldn’t be too hard for her to get a lateral offer without help from a recruiter.

In the months since she decided to make a move, Susie has drafted her materials, researched and applied to potential new firms, prepared for and completed three rounds of interviews at her top-choice firm, and received an offer. All good, right? But there’s a catch. The new firm needs a list of every matter Susie has handled at her current firm. She now has to gather all of that information (preferably without tipping off her current firm). Fingers crossed there isn’t an unresolvable client conflict!

Identifying past matters

The first thing Susie should do is go back in time and set up a running tab of clients/matters she has worked on. If Susie had kept such a list throughout her current firm tenure, her task now would be considerably easier. She would be able to submit the conflicts form quickly, speeding the new firm’s review process and (assuming no conflicts were found) making it possible for Susie to give notice at her current firm sooner.

(Incidentally, a running tab of matters is useful for many purposes beyond lateral recruiting: updating your firm bio, future networking, aiding in conflicts checks for your group, impressing partners in your group with institutional knowledge… It’s never too late to start assembling your list!)

Because Susie doesn’t have her list at hand, she will need to consult other sources. The most precise method is to scan through billable hour reports, which some firms give out monthly as a matter of course. Note, however, that accessing the reports through a firm database can be risky because some firms have alerts set for when associates pull this information. Given the risk of tipping off the current firm, lateral candidates tend to default to scanning through old emails to identify clients/matters. This is easier said than done, particularly for more senior associates who have worked on dozens of transactions (100+ matters is not uncommon!).

Wait time for a conflicts check

The duration of a conflicts check depends on both the candidate and the firm. The sooner the candidate returns the conflicts form, the sooner the firm’s process can begin. A recruiter likely would have advised Susie to start identifying all of her clients for conflicts purposes at latest after she passed the second interview with the new firm. By waiting until after she received an offer, Susie has introduced an unnecessary source of delay.

On the firm side, Susie will be at the mercy of her new firm’s conflicts department. These departments are often short-staffed, with frequent turnover. They must juggle competing priorities: in addition to clearing lateral associate conflicts, the department will be responsible for clearing conflicts for a partner’s potential new business. The partners are typically prioritized. The upshot is that Susie’s wait time is hard to predict: it could be 3-4 days, but it could also be two weeks. Clearing conflicts almost always takes longer than a background check.

Getting a waiver

Let’s imagine the conflicts department identifies a conflict between one of Susie’s former clients and an important current client of a partner at the new firm. What now?

There are various ways this can go. One factor may be Susie’s jurisdiction. Some jurisdictions allow a firewall to be created without notifying the potentially conflicted client, but still give that client the ability to object later. Firms tend to be wary of this situation, requiring that the affected partner grant approval before proceeding with the hire. Other jurisdictions require an actual waiver from the client in question. Where a waiver is necessary, the new firm will most often contact the client to request it. But not always.

We have occasionally seen cases where firms ask candidates to seek a waiver themselves.  Do not do this without talking to your recruiter first! It might not even be necessary. In this worst-case scenario, the hiring firm asks the candidate to go to the current-firm partner responsible for the client, admit their intention to leave the firm, and seek the partner’s help in contacting the right person at the client to request the waiver. In one particularly extreme case, it took over two months for the client to make its decision to grant the waiver.

In these situations, having a recruiter on your side can make a real difference. Sometimes conflicts supervisors aren’t fully informed about the nuances of ethics rules in every jurisdiction — we have occasionally helped draw their attention to exceptions that helped smooth the process. More broadly, we know what standard practice looks like, and when a firm makes an unreasonable request, we are in a strong position to push back.

Special considerations for partners

If Susie were a partner, the conflicts question would be even more consequential. Successfully clearing conflicts can make or break a lateral partner’s ability to port over business. It’s critical that lateral partner candidates get accurate advice, with full documentation, before committing to a new firm. If there is any uncertainty about conflicts, waivers, or any other ethics matter, the wisest course is to talk to your recruiter; if needed, they can refer you to a skilled attorney for advice. (This likely will not be expensive: often the cost is below $1000.)

For example, “John” was negotiating a lateral move without the assistance of a recruiter. He took the word of someone at his new firm who assured him that a conflict would not be an issue — unfortunately, he didn’t get that assurance in writing. Lo and behold, it became an issue, and John was not able to port over his client. The situation didn’t prevent him from practicing at the new firm, but it did hinder his ability to hit his promised numbers.

A recruiter would have advised John not to make a move without formally documenting the mutual understanding that he could serve this client at the new firm. In the absence of such written assurance, the recruiter would have recommended John consider alternative firms.

The value of having seen it before

An individual lawyer will make, at most, a handful of lateral moves in his or her career. Given that context, it’s entirely understandable that a candidate would be unaware of common conflicts pitfalls. If you are considering a lateral move, don’t assume the best-case scenario. Issues can easily arise. When they do, an experienced recruiter will be well positioned to help you navigate the situation. We know what is normal, the traps that can be avoided with advance planning, and how to manage unexpected complications. Ideally, you will sail through the conflicts check. But if you hit a snag, having a credible recruiter on your side can be critical to bringing the process to a successful conclusion.

Lateral Partner Moves to Secondary Markets: An Unprecedented Opportunity

Growth in Biglaw partnerships follows a cyclical pattern. Firms expand their partner ranks rapidly in some years and not at all in others. 2022 was a year for lateral expansion — hardly a surprise considering that client demand remained strong in most practices. The unique feature of this recent expansion wave is where firms grew: 2022 will be remembered for unprecedented hiring of lateral partners outside of the largest cities.

COVID and remote working have upended traditional assumptions about where a partner must be based in order to maintain a Biglaw book of business. The pandemic shuffled the location preferences of many professionals, including both lawyers and their clients. Partners who would rather live outside of the traditional business centers now feel emboldened to voice that preference, and many firms are prepared to accommodate.

Firms see new opportunities for business development in cities that traditionally wouldn’t have supported top Biglaw billing rates: the recent growth of the finance sector in Miami (at the expense of New York and Chicago) offers a case in point. Additionally, clients today are more tolerant of their lawyers being based in a different state: a partner who moves from the Bay Area to Austin will likely have no problem continuing to serve California clients. Another factor firms are considering is the many associates and counsels who are eager to move to secondary markets: where partners are prepared to anchor a new office (or expand an existing one), it typically helps a firm’s non-partner recruiting efforts.

Perhaps no secondary market has drawn as much attention in this period as Miami. The city has not been shy about branding itself as the hot new tech and finance hub. Distinguishing between hype and reality hasn’t always been easy, but with important Biglaw clients like Citadel moving their headquarters to South Florida, firms are rightfully taking notice. Among the firms that have opened Miami offices since COVID are Kirkland & Ellis, Winston & Strawn, King & Spalding, Sidley Austin, and Quinn Emanuel.

Salt Lake City is another market worth highlighting. Though it maintains a lower profile than Miami, Salt Lake has enjoyed a fast-growing, tech-driven economy, attracting both larger companies (Adobe, Ebay, Overstock, Qualtrics) and many startups. Kirkland & Ellis, Wilson Sonsini, and Foley & Lardner have all opened Utah offices since the pandemic.

Although secondary market expansion may have been the defining story of 2022, we expect this trend to continue in 2023. The window remains open to partners making a lateral move to a secondary city.

If you’re a partner considering such a move, should you take the plunge? Obviously, circumstances vary depending on your practice and your proposed destination. A recruiter who specializes in partner moves and knows the specific markets in question will be best placed to advise you. But speaking generally, here are a few reasons you may wish to jump to a secondary market:

Better lifestyle! Many secondary cities are attractive places to live. Interested in a warmer climate? Easy access to skiing? A lower cost of living? Chances are there’s a secondary market that would suit your lifestyle preferences.

Big fish, smaller office! Partners entering from larger cities often enjoy the best of both worlds. They can establish themselves immediately as a top expert in their new, smaller market by virtue of the high-profile matters they handled in the prior market. At the same time, they can bring their current clients with them. For more junior partners, a move to a less crowded market can also be a fast-track to internal leadership opportunities.

Billing rate flexibility! In some cases, it is increasingly possible to charge national billing rates in smaller cities as companies used to paying those rates move in. But as a general matter, smaller markets usually require firms to adopt a more flexible approach. The ability to offer more flexibility on rates can be of great help to partners looking to expand their client base outside the big cities.

Talent retention! Many associates and counsels want to be based in lower-cost cities with more affordable real estate. For partners, the ability to accommodate that desire means they can retain their talent group for longer. Instead of leaving to join a smaller firm in a secondary market, associates and counsels can achieve the same cost-of-living benefit while staying in Biglaw.
Strategy, strategy, and more strategy! In the current market, lateral partners moving to secondary locations are a key part of many firms’ strategic growth model. If you join a new firm under these circumstances, firm leadership will be especially invested in your success. As a lateral partner, you want to ensure your new firm is committed to integrating you into the firm’s platform, and it is always advantageous to lateral into a situation where the firm feels some extra pressure to make the move work. Coming in as an anchor partner for an office that is a focus of firm growth should set you up nicely.

Minding the Gap, Finding the Bridge, and Taking the Longview

The Lateral Link team recently held our company retreat in Las Vegas, and it occurred to me that law firm life can sometimes feel a little like being stuck in a Vegas casino. You are in a place where you can make really big money, but it can require working around the clock, even to the point where you aren’t even sure what time of day it is.  The upside is really good, but after a while you may start to feel an overwhelming desire to find an exit, get outside, breathe some fresh air, and regain a sense of balance in your life.

During these times, it can feel tempting to just draft your dream resignation email and press send!  In these moments, all of the good advice you have heard to never give up and push through the pain flies out the window.  Adding fuel to the fire, you may be at the point in your career where you have some savings built up so economically you can afford a break. You hear a little voice inside saying, “How great would it be to just quit and have time to figure out my next move without the constant stream of responsibilities and due dates hanging over me?”

As a former Biglaw attorney, I can tell you, this thought most certainly crossed my mind.  But as a legal recruiter, I have a whole new appreciation for what I call “minding the gap.”  As tough as it may be, there is undoubtedly value in avoiding any unnecessary employment gaps in your resume.

There is, of course, a huge carve out for time off for mental and physical health issues.  I am a strong advocate for mental health awareness and am in no way suggesting that sticking it out is the answer in all cases as everyone has their own particular mental health and/or medical considerations.  But barring these and other such extenuating circumstances, the simple truth is — it is significantly easier to get hired if you are currently employed.

Being employed gives you leverage — mind the gap.

In an ideal world, one would like to think that firms give candidates the benefit of the doubt when it comes to employment gaps in evaluating interview invitations.  Sadly, though, that is not how the process usually works.  Like many large companies, law firms sort candidates based on the limited information in their resumes and inevitably make assumptions based on this information.  And gaps in your employment timeline can unfortunately raise questions of reliability, focus, and drive.

Of course, you can overcome this presumption by telling a compelling story about the reason for your gap.  But, given the high volume of applicants for any one role, a firm may pass on your resume before even hearing the explanation.

Conversely, if you can manage to stay in your current role, you are only increasing your chances of getting an interview and avoiding unfair judgment.  This will let you walk into your interviews with greater confidence knowing that you can focus on your relevant experience and how you will make a seamless transition into the practice group given this background. 

And even if you are switching careers entirely, the fact that you are currently working will be reassuring to any potential new employers. Bottom line – this strategy allows you to play your strongest possible hand.

What happens when you are handed a gap you can’t mind? Build a bridge.

You might be thinking as you are reading — that is all fine and dandy when you are in control of minding the gap, but what happens when the “gap” is handed to you on a layoff platter??  This is where the story of the candidate who can’t be in the room to tell his/her/their story can have a different ending.  Enter stage left – your trusted legal recruiter.  

I know when some attorneys think of recruiters they think of stereotypical cold calls and emails that interrupt the workday, but one of my favorite parts of recruiting is being my candidates’ advocate and a source of career support for them.  I love getting to know each of my candidates personally so I can present her/him/they to a firm in a compelling way that paints a detailed picture of why this candidate — gaps included — would be an asset to that firm.  A gap can be an unknown, but when it gains a story bridge, it can transform into a stepping-stone to the candidate’s next destination.

Take the longview – it’s all part of the career journey.

I realize that all of this may be easier said than done. When you are feeling overwhelmed – whether it be from unrelenting work, roadblocks to business development, endless roads to partnership, or gaps handed to you — it can be really hard to focus on the bigger picture.  I too have felt lost in the chaos of the moment, but I have also learned over the years how important it is to try to take the longview.  In these times, I turn to my trusted friends and family to help me re-center and remember that my career is a marathon not a sprint.

Another way to help maintain perspective is to discuss your situation with your trusted recruiter.   A recruiter can develop a strategy for you to find your next role and counsel you as you go on the path together to get there.  Another favorite part of my job is that I get to be a legal industry data nerd.  Everyday my colleagues and I read and share intel from trusted legal news sources as to what is happening in the market.  We are also meeting with firms regularly to understand their specific needs each quarter.  We witness the trends unfold in front of us in real time and have all of this information to share with you to help you figure out your longview.  

For example, we are seeing and hearing about an uptick in hiring in the secondary markets right now.  You might be staring down a layoff in New York City, but it has been your longtime dream to move to Denver. Now might be the time!  How does dawn patrol skiing and logging into Citrix by mid-morning sound?  Carpe diem!  Feeling like you are ready for warmer weather?  Try Austin, another booming secondary market.  Whatever your frustration is – it might just be the path to something better.  All you need to do is figure out what that bridge is for you and how to get there.  We work with firms in all of these markets and can help you figure out what would be the best fit for you given both your legal and lifestyle interests.  

Your recruiter will also be able to advise you on which firms might be a better platform/culture match for you and your practice. Maybe you need a firm with less hours or a more flexible schedule? Maybe you need more billing rate flexibility? Maybe you need a more international platform to grow your book of business?  Maybe your business would thrive better at a boutique?  These are all questions that can be a fork in the road that leads to a new and exciting career trajectory for you.  Your recruiter can advise you on how they have helped past candidates in similar situations who have found success on a new path. 

Hearing about other lawyers who have made a change and ended up thriving in their new geographic market, tripling their book of business at their new firm, making non-equity partner from a counsel role, or overcoming an unexpected gap may help you see the light at the end of the tunnel you are in and help give you courage to embark on that next phase of your career path.  Mind as well have some fun and embrace the possibilities of where the path might lead you next!