Tag Archives: Am Law firms

How to Successfully Navigate Your Career as a Lateral Partner in the Legal Industry

The legal landscape for lateral partner transitions in law firms in 2023 is still a complex and multi-faceted journey. It requires a comprehensive strategy that conforms to several legal industry norms and standards. If you’re a practicing attorney weighing your potential as a lateral partner, let’s delve deeper into this multifaceted process.

Each legal firm cultivates a unique culture and looks for specific traits in lateral partners. However, there is a universal baseline or a certain prerequisite that an attorney must meet to become an appealing candidate. This benchmark typically includes factors related to profitability (such as portable business, billable rates, working hours, and leverage), educational qualifications (such as law school attended), years of legal practice, and occasionally, even academic performance (GPA).

Profitability is a key determinant in the lateral move. We can understand its impact better by imagining two partners with equal portable businesses but differing in their earnings due to variations in their billable rates and hours.

Let’s say Partner X has a $3 million portable business. If their billable rate is $700 per hour and they clock in 1,500 hours annually, they contribute $1.05 million directly to the $3 million. The rest ($1.95 million) is handled by other attorneys who complete the tasks originated by Partner X. The larger the team involved in their practice, the higher the costs related to their business. As a result, Partner X may earn approximately $700,000 per year from their $3 million practice.

Now, consider Partner Y who also boasts a portable business of $3 million. Their niche expertise allows them to charge $1,400 per hour and their services are in high demand, logging 2,500 hours a year. As a hardworking attorney with minimal leverage, Partner Y can predict earnings nearing $1.2 million from their $3 million practice. The crucial difference between Partners X and Y lies in the direct and associated overheads needed to operate their respective practices.

The educational background of a potential lateral partner plays a significant role. Our extensive placement records indicate that the law school a lateral partner attended is strongly linked to their likelihood of acceptance by any firm (this link strengthens within the top 50 Am Law firms). A simple breakdown of the partner composition of national law firms will underscore the significance of a law school’s reputation. For instance, a considerable proportion of partners at nationally recognized law firms are alumni of top-tier law schools. Past these prestigious institutions, there’s a discernible drop in the returns on law school rank.

What’s the next step after meeting the baseline? Law firms usually expect younger partners — roughly fifteen years post-law school — to have smaller client portfolios. Nonetheless, they’re keen on seeing junior partners displaying growth in their portable business. As an attorney rises through the ranks, their client portfolio is expected to grow two or threefold compared to that of a less experienced partner. Although this expectation varies among firms, it is common for firms with profits per partner around $2 million to expect lateral partners to bring about $3 million to $4 million in business. Firms with lower profits per partner might accommodate junior partners with less than a million in portable business.

Billable rates often pose a greater challenge than conflicts for lateral partners. A substantial difference in the billable rates between a firm and a lateral partner candidate can lead to deadlock. For example, a partner with a lower hourly rate may find it difficult to adjust to a firm that doesn’t offer flexible billable rates. Firms might be more open to lateral partners who are willing to lower their rates. However, they seldom accept partners who charge considerably lower rates, as client rates are often inflexible. Envision a partner explaining a rate increase to a major client due to a switch to a larger firm; this could likely result in client loss, and subsequently, a drop in the profitability of their original firm.

Evaluating a potential lateral partner usually begins with a meticulous review of their client list to spot any conflicts. Major conflicts can instantly disqualify a lateral application, which is why we prioritize a thorough understanding of our clients’ histories to avoid such predicaments. Firms also examine the prospective lateral’s clients to identify any overlaps with their existing partners. A significant overlap can deter a firm from considering a lateral partner unless the new client provides a potential that compensates for any impact on the current business.

Successfully navigating the lateral partner market requires more than just knowledge—it demands a vast network, keen insights, and extensive experience. At Lateral Link, we pride ourselves on possessing all three. Our industry experts have their fingers on the pulse of the legal landscape, ensuring you’re always a step ahead. Why venture into this challenging terrain alone when you can have the industry’s best by your side? Connect with Lateral Link today, and let our seasoned professionals guide you through the complexities of the partner market with unparalleled expertise.

Navigating Compensation Trends in 2023: Ensuring Fair Pay in the Legal Sector

Over the past decade, the legal industry has undergone substantial transformations, prompting law firms and in-house legal departments to continually adjust their compensation strategies to attract and retain top talent. In 2023, evaluating whether you are underpaid is more crucial than ever, given the salary increments, shifts in bonus structures, and the emergence of new compensation models. This article delves into the prevailing compensation trends in the legal sector and offers insights on how to ascertain if your remuneration aligns with current market standards.

Grasp the Compensation Landscape

To accurately assess whether you are underpaid, it is imperative to comprehend the existing compensation landscape for legal professionals. In 2023, Biglaw firms have persistently elevated associate salaries, with first-year associates now receiving a market standard of $215,000. This rising trend encompasses all seniority levels, with eighth-year associates earning up to $375,000.

Partner compensation has also witnessed a surge, with average profits per partner surpassing $2 million at several distinguished law firms. In-house general counsel roles have experienced considerable salary growth, with chief legal officers at Fortune 500 companies earning between $700,000 and $3 million, contingent on the company’s size and complexity.

Benchmark Your Compensation Against Industry Averages

A practical approach to determining whether you are underpaid is to juxtapose your current compensation with industry averages. Resources such as the National Association for Law Placement (NALP) and legal industry publications furnish extensive salary data for diverse legal roles and practice areas. Bear in mind that compensation can vary considerably based on factors like firm size, location, and practice area specialization.

Evaluate the Significance of Bonuses and Benefits

Beyond base salaries, bonuses and benefits are instrumental in ascertaining total compensation. In 2023, Biglaw firms have consistently offered substantial bonuses, with year-end and special bonuses frequently reaching six figures for high-performing senior associates. Moreover, law firms and in-house legal departments have broadened their benefits packages, encompassing health insurance, retirement plans, and flexible work arrangements. To precisely assess your compensation, take into account the worth of these supplementary factors.

While examining your compensation, it is vital to recognize that base salary constitutes just one aspect of a comprehensive compensation package. Bonuses and benefits, such as health insurance, retirement plans, and vacation time, can substantially influence your overall earnings. Ensure that you incorporate these components when comparing your compensation to market standards, as they can significantly impact your total income.

It is important to note that not all Am Law firms adhere to the market standard for compensation, with some underpaying their associates. For instance, Gibson Dunn has faced scrutiny in recent years for not aligning with the industry’s compensation trends. Despite the firm’s renown for its high-profile cases and robust practice groups, reports indicate that its associate compensation packages have not paralleled the rapid salary growth observed at other Am Law firms. This disparity underscores the necessity of researching and contrasting compensation packages across firms, even those with esteemed reputations, to guarantee that you are justly compensated for your skills and expertise.

To accurately determine if you are underpaid, gather information on comparable positions within your specific practice area, location, and experience level. This data can often be sourced from salary surveys, legal industry publications, or through conversations with colleagues and recruiters.

Examine Your Compensation in Relation to Your Peers

Another valuable tactic is to compare your compensation with that of your peers. Networking and candid discussions with colleagues or alumni can yield invaluable insights into the compensation landscape within your practice area or region. Approach these conversations with tact and professionalism.

Consult an Expert for Guidance

If you are uncertain about whether your compensation aligns with the market, consider seeking advice from a legal recruiter. Knowledgeable legal recruiters, like those at Lateral Link, possess an in-depth understanding of the legal market and can offer tailored guidance based on your distinct background and career aspirations.

Discerning if you are underpaid in 2023 entails comprehending the current compensation landscape, contrasting your salary with industry averages, taking into account bonuses and benefits, appraising your pay in relation to your peers, and seeking expert guidance when necessary. As the legal industry continues to evolve, staying informed about compensation trends and engaging in open dialogues can help ensure your pay corresponds with your skills and experience.

If you suspect that your compensation is not commensurate with the market, or if you are exploring new opportunities with competitive compensation packages, contact Lateral Link today. Our adept legal recruiters can assist you in navigating the intricate legal market and discovering the right position that aligns with your professional objectives and financial expectations. Don’t leave your career and financial success to chance – let Lateral Link help you seize the opportunities you deserve.