All posts by Miranda Ganguly

The Lateral Partner Market in Texas

For partners in Texas considering a change, the time is now. After an unprecedented number of lateral partner movements in 2018, Texas continues to be a hotbed of activity.

There were a whopping 284 lateral partner movements in the AmLaw 200 in Texas in 2018. The majority of these took place in the first two quarters, following a fairly typical pattern in years past.

Dallas beat out Houston, with 127 lateral moves to Houston’s 108. In Dallas, the majority of these moves were in corporate practices followed closely by litigation.  In Houston, corporate, energy, and litigation were the top three practices areas on the move.

The high number of lateral moves in 2018 were in part driven by several office openings, including Shearman & Sterling LLP in Austin, Katten Muchin in Dallas, Reed Smith in Austin, and White & Case in Houston.

2019 is not quite at the frantic pace of 2018, but is still a very active year for lateral partners.  Nearly 100 Dallas partners have lateraled to date, with close to 90 in Houston

As we roll deeper into the fourth quarter, I expect lateral partner moves to pick up and carry over into the first two quarters of 2020 for several reasons:

  1. With a potential recession looming in the background, it is more important than ever for partners to make sure the platform they are on is the absolute best one for their practice and clients.
  2. The 1st and 2nd quarter are typically ideal times for partners to move after they have collected any holdbacks, true-ups, profit sharing or bonuses which are usually paid in the 1st or 2nd quarter. As a lateral move can take several months, the high numbers of lateral partners moving in the 1st and 2nd quarter are a result of conversations that started happening around now, in the 4th quarter. The logistics of getting several busy schedules aligned for meetings, the lateral partner questionnaire, conflicts, and executive/management committee votes all take time.
  3. A large number of AmLaw 200 firms have moved into the market in the past five years in addition to several Texas firms that have been involved with major firm mergers. These big changes continue to have a ripple effect for years as partners evaluate whether their rapidly changing firm continues to make strategic sense for their client base.
  4. Many partners with rate-sensitive practices are moving firms, particularly with patent prosecution and labor & employment. Regional or large firms with flexible hourly rates are using the opportunity to aggressively bulk up their groups.

Please ">email me if you want to discuss Texas. I’m always happy to chat about the market, even if you are not actively looking.

 

How Austin’s Tech Boom is Propelling The City Up The Rankings

Austin is known for many things: it’s “weirdness”(though some would argue it’s not nearly as weird as it used to be), internationally attended festivals (SXSW, Austin City Limits), the University of Texas, live music and the technology industry.

Oh, and El Arroyo’s restaurant signs (and food). They are legendary around these parts.

Tech is driving Austin’s growth, though it’s not new to Austin. Dell has called the Austin area home for many a decade and tech companies have been incubating in Austin for years. However, something new IS happening in Austin, a major tech boom that some say is evocative of Silicon Valley’s early years.

Over the past few years, hundreds (if not thousands) of tech-focused companies have relocated their headquarters, expanded, or established major operating centers in Austin. These include massive tech companies like Apple, who have announced their plans to expand their presence in Austin with a $1 billion new campus. Apple’s not alone – Google, Facebook and Oracle all have large offices in the Austin area.

Along with the giants, hundreds of start-up and emerging growth companies have relocated to Austin in the last year. In September 2018 alone, eleven companies relocated or expanded their footprint in Austin. 2019 is showing no signs of slowing down — Residio, for example, has announced the relocation of their headquarters to Austin in 2019. The companies are rolling in.

Tallying up all the tech activity in Austin is beyond the scope of this article, but Austin is undergoing a massive tech boom. It’s a cycle that is continuing to perpetuate itself and it looks something like this:

Tech Companies = Jobs = Skilled workers move to Austin = Massive talent pool = Attracts even more tech companies

Rinse and repeat

So what does this mean for law firms and lawyers in Austin? Growth, of course!

Austin is home to several offices of AmLaw 200 firms in addition to boutiques and midsized firms that cater to tech and emerging growth companies. Several AmLaw 200 firms have opened offices in Austin in the past three years, and the ones that are already in Austin have been increasing their headcount over the past few years.

Our law firm clients are telling us the same thing we are seeing in the statistics: The Austin legal market is growing by leaps and bounds. Here is what I see for Austin in 2019 and beyond:

1) More opportunities for lateral attorneys in Austin. Austin is an attractive proposition for companies, but it’s also an attractive proposition for attorneys that provide legal services to these companies.

Many of the firms we work with have told us most of the attorneys they are interviewing for their Austin roles are from out of state. There are a finite number of attorneys in Texas, and Austin has always recruited lateral candidates from other geographies. Texas has a MUCH lower cost of living than many other major cities on either coast, particularly when it comes to the cost to rent or buy real estate. It also offers the “cool” factor mentioned above – great personality, culture, food etc. Attorneys can get all of that AND still get paid at Cravath levels at major law firms. Also, there’s a chance to build a client base in Austin because the clients are there. It’s a good combo – same compensation, access to the excellent client base, and your dollars stretch much further in Austin. And margaritas. Don’t forget the margaritas.

2) Growth in a multitude of practice areas. Sure, with the influx of tech companies comes the more obvious practices (emerging growth, start-up), but there’s a “trickle down” effect of all the practices related to tech. Venture funds are pouring money into Austin-based companies (hello fund attorneys!). Intellectual property protection and litigation follow the innovations these companies bring. Data Security and Privacy is always in demand across a multitude of industries, but particularly those in the tech and financial services space. FCPA and White Collar come into play. I expect all of these practices to deepen in Austin, creating opportunities for attorneys in a variety of practices.

3) A bigger AmLaw 100 presence in Austin. Yep, the AmLaw 100 has been moving into Texas, with dozens of firms opening offices in recent years. Prior to now, those have primarily been in Dallas and Houston. As Shearman & Sterling and Orrick, Herrington & Sutcliffe (and others) have demonstrated, Austin is a solid destination for a Texas-based office of an AmLaw100. We will see more AmLaw 100 firms seeking out Austin as their Texas footprint, along with the continued expansion of the existing AmLaw 100 Austin offices.

I’ve been working with firms and placing partner and associate level talent in Austin (and other markets) for over ten years, and I’m excited to see what the next ten years bring to this dynamic city. If you have any questions on the Texas market, feel free to reach out to me or our recruiting team at Lateral Link.