Tag Archives: Associate

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.

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.

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! 

Want to Hire Your First-Choice Candidate? Don’t Delay!

Relative to 2021’s unprecedented level of lateral hiring, the market has cooled somewhat this year.  But it would be a mistake to conclude that law firms now have the upper hand.  By historical standards, we are still in a supply-constrained market, and there remains imperative for firms to optimize their hiring processes to avoid self-inflicted errors.  The biggest culprit in this category is unnecessary delay: the longer and more drawn out the interview process is, the less likely a firm is to hire its preferred candidate.  As the saying goes, “time kills all deals,” and this rings especially true in the world of legal hiring.

The consequences of delay

Law firms don’t intentionally design an inefficient hiring funnel.  But unless the process is managed with exceptional focus and discipline, it’s all too easy to end up in a bad place.  Small decisions that individually seem reasonable can collectively accumulate into a bloated process that alienates candidates.  Moreover, the longer the process, the greater the risk of losing a top candidate to your competition. 

A good example is the number of interviewers.  Firms have an understandable tendency to solicit input from a large cross-section of the candidate’s potential future colleagues.  On the surface, allowing more lawyers to weigh in seems perfectly reasonable, and even good for the candidate, as it theoretically provides greater insight into firm culture.  But by adding one more interviewer here and another one there, the firm can inadvertently end up with a daunting process that places an excessive burden on the candidate’s time.  Moreover, the larger the group of interviewers, the more difficult it is to compile feedback internally, and the greater the potential for delay.  

Firms tend to underestimate candidates’ propensity to abandon a slow hiring process.  But we at Lateral Link see this happen routinely.  The vast majority of candidates we work with tell us that the most frustrating part of their job search is the long wait after interviews to obtain feedback from a prospective new employer.  If a candidate does not receive feedback within a week or two, they question a firm’s continued interest, and in turn, they lose interest in the firm.  I recently worked with an attorney who was so offended by a firm’s long drawn-out process that they wrote the firm off completely and pursued other opportunities.  By the time the firm got back to me expressing continued interest, I had to sadly let them know the candidate had accepted another role and was off the market.  You snooze, you lose!

The consequences of a poorly managed process tend to extend beyond the individual candidate who goes through it.  Lawyers talk to their friends about their experiences, and firms that drag out the hiring process risk reputational damage.  It’s bad enough losing a candidate in the context of one particular search, but inadvertently dissuading potential future candidates from applying is even worse.  What’s more, a firm is losing money with every hour that goes by with a job vacancy.  As we all know, law firm attorneys are profit generators, so a limited number of attorneys doing the work translates to a ceiling on revenue.  And with attorneys’ hourly rates where they are, that’s literally thousands of dollars in lost revenue every day.  There’s also the negative impact a job vacancy has on a firm’s current employees. When a vacancy has been open for an extended period of time, the extra workload inevitably falls on others within the team.  This added responsibility can lead to burnout, stress, and low morale. That in turn has a direct impact on retention rates as the burned out team members look for greener pastures with increasing urgency.

Tips for improving efficiency

So what can firms do to improve their efficiency and make it more likely that they’re able to hire their first-choice candidate?  It isn’t rocket science.  Think ahead.  Stick to the plan.   Be efficient.  Communicate frequently.  And quickly make the offer.

Sometimes long hiring processes are the result of misalignment in the firm about the type of candidate desired, or even about whether to hire at all.  Any such disagreements must be resolved before launching the recruitment process.  If there isn’t alignment among all relevant stakeholders about what it is the firm needs, don’t post a vacancy as a means of forcing the conversation.  Have the debate internally and come to a collective decision.  Only then should you solicit applications.

At the beginning of the process, map out precisely who the candidate is to meet with and book all interview slots in the interviewers’ calendars.  If there is a high risk of an interviewer not being available in the necessary window, find a substitute interviewer ahead of time.  Don’t let foreseeable delays derail the process.  In addition, avoid the temptation to add extra interviewers partway through.  Sometimes the logic for doing so really is compelling, but this should be an exceptional situation.  Have the discussion upfront about who needs to participate, and stick to the plan.  Then solicit feedback from the interviewers immediately after the interview while the conversations are fresh in their minds. 

If the process is unreasonably long, the firm will lose candidates.  But at the margin, proactive communication can be highly effective in keeping a candidate engaged.  Tell candidates upfront what the process entails and how long it’s expected to take.  If an unexpected complication arises, inform the candidate and/or recruiter promptly.  Give a real explanation for the delay, along with assurances that the firm remains interested, and be sure to check in regularly to keep the candidate warm.  But by no means should you string a candidate along.  Job seekers strongly dislike that, and it can really sour the relationship before it even starts.

Finally, once the interviewers have collectively identified a first-choice candidate, make an offer as soon as you possibly can.  It’s not a problem if the offer has various contingencies, such as conflicts and background checks.  But a fast offer is a critical signal to the candidate that the firm is serious about making the hire.

Take advantage of what you can control

Many elements of the hiring process fall outside a firm’s control.  At the height of the boom in 2021, when mid-level corporate lawyers seemed almost impossible to find, there was no magic wand a firm could wave to increase candidate supply.  But firms do control the efficiency of their hiring process, and making an active effort to improve it can lead to a material improvement in the firm’s recruiting success. One law firm we work with regularly has mastered this process and typically makes associate hiring decisions within a matter of two to three weeks.  They know what they want in a new hire, and when they find it, they don’t delay.  Everyone is busy and no one has time to waste, so fast-tracking the hiring process and making it as efficient as possible will go a long way with prospective employees.  

If your firm or law department has questions about how to improve the lateral hiring process and eliminate some pain points, please don’t hesitate to contact me or any of my Lateral Link colleagues.

How to Survive an Economic Downturn

With talk of recession now impossible to avoid, many lawyers have started to wonder about their job security. It’s worth emphasizing that actual hiring data still looks healthy by historical standards. Nationwide, lateral moves in Q3 2022 were down more than 20% from the Q3 2021 level, but keep in mind that the 2021 market was unbelievably active. If we use Q3 2019 as a more normal base case, we find an almost 10% increase in lateral moves in Q3 2022. But even if widespread pain is not yet evident, there is much anecdotal discussion of so-called stealth layoffs. Additionally, at least one firm has deferred start dates for its incoming first-year associates, reviving an approach that was widespread in the Great Recession.

Making the conservative assumption that conditions will get worse before they get better, now is the time to assess your situation and take steps to position yourself to survive a downturn. Here are some things to consider.

1. Are you a restructuring lawyer? Can you become one?

There’s nothing like a countercyclical practice to help you ride out a recession. If you do happen to be a restructuring lawyer, you should be worried more about a coming deluge of work than about job security. But assuming you haven’t worked in bankruptcy, now may be the moment to wedge your way in. In the old days, corporate lawyers tended to have broader skill sets, with bankruptcy being one component of a more diversified transactional practice. Even though modern law firms tend to be all about specialization, this historical legacy can still serve as an inspiration. If you’re already in a corporate or finance practice, call up a restructuring partner and ask if the group needs help. With the next wave of restructurings presumably on the horizon, if you can get in the door now, you might find yourself in the enviable position of having plenty of work.

More broadly, you may want to think about retooling, if not to restructuring then to another more recession-resistant practice. This is especially worth considering if you are a junior corporate associate who never particularly liked your work. The best time to retool is when your group is not busy — a slowdown in deals might present an opportunity to escape.

2. Assess your firm: is it well-positioned for a downturn?

In thinking about your firm’s relative strength, it’s helpful to consider the past, present, and future. As the disclaimer goes, past performance is no guarantee of future results. But if your firm is known to have conducted stealth (or outright) layoffs in the last recession, that’s probably a relevant consideration.

The present is relatively easy to assess. Are you busy? Is your group busy? What about your friends in other groups?

The future is inevitably murkier, but you can still make some educated guesses. Is your firm unusually reliant on corporate M&A and capital markets work? Bad sign. Is it well-diversified, with strong offerings in litigation and restructuring? Good sign.

3. Consider your alternatives

Keenly observing conditions at your current firm is an important first step, but you also need to contextualize against the rest of the industry. Talking to friends at other firms is a good idea. But for deeper insights informed by data, having a relationship with a trusted legal recruiter can be invaluable. We spend all day talking to people at various firms, so we’re always informed about how the market is trending. And we have access to extensive proprietary data specific to individual markets and practices. We know which firms are growing and which are losing people to the competition. As stealth layoffs pick up, you can be sure that seasoned recruiters will be among the first to know the real story.

If you learn that your firm is underperforming relative to peers, or that it’s perceived to be at greater risk in a downturn scenario, you’d be well advised to investigate whether firms in a stronger position may be seeking someone with your skill set. Naturally, a trusted recruiter can help with that diligence as well.

4. Watch the partners

Even in a good economy, most partners are open to hearing offers from rival firms. But with conditions deteriorating, it’s especially safe to assume that your partner is taking calls. Many partners feel the ground shifting under their feet, and they are just as worried as associates about potentially being pushed out. To the extent there may be concerns about the health of the firm overall, partners will be especially eager to flee: nobody wants to be the last person on a sinking ship. If you notice an uptick of partner turnover at your firm, it could be a sign that you too should look elsewhere.

Being Smart About Utilization and Realization: How to Improve Your Contribution to Firm Profitability

Law firm economics can be a little opaque for associates.  Partnerships typically aren’t great at explaining the business of law to non-partner firm members, and associates naturally focus their efforts on learning to be an effective lawyer.  But like it or not, a law firm is ultimately a business, and if you aspire to have a long-term career in private practice, you need to understand the drivers of firm profitability and how you fit into the equation.  In particular, you need to understand how to manage utilization and realization.

Utilization and Realization drive Profitability

Utilization is the proportion of your available time allocated to billable matters.  Specifically, it’s the number of billable hours you work divided by the number of “available hours,” times 100.  Let’s say your firm requires 2000 hours (your “available hours”), your billable hours are 1800 for the year, and you’ve got 300 in non-billables.  Your total hours tracked exceeds the 2000-hour threshold, but non-billables don’t factor into utilization.  Therefore, your utilization rate is 90% (1800/2000).

Realization is the percentage of recorded time that is actually paid by the client.  When your partner cuts your bills or offers the client a discount or write-off, that reduces realization.

Why do these metrics matter?  Simply put, firm profitability depends on them.  Here’s a simplified law firm profitability equation:

Profitability = Margin x Realized Rate (the “true” rate the client is paying) x Utilization x Leverage.

As an associate, you have no control over margin or leverage.  (Even as a partner, your ability to improve these metrics is constrained by market realities: for example, some practice areas are inherently lower margin than others.)  Conversely, although utilization and realization aren’t entirely within your control, it’s absolutely possible for you to influence them.

Track all your time, and resist the urge to cut it

Nobody enjoys billing, but accurate time tracking is a prerequisite to strong utilization.  If you’re not billing daily, you are likely failing to capture time that you would have remembered to bill if you had been more diligent about regular time entry.  Chronic underbilling is a major threat to law firm profitability, so you should do your best to ensure that you aren’t part of this problem.  (Of course, daily billing also guards against the risk of inadvertently overbilling, the consequences of which are even worse than underbilling!)

After you’ve accurately captured your billable time, do not cut it, even if you are uncomfortable with the pace of your work.  Partners need to know how long things are really taking, and the decision to cut a bill is theirs, not yours.  If you’re embarrassed about how long it takes you to complete a task, talk to someone about whether it truly is an issue and, if so, what steps you can take to improve your efficiency.

Knowing the accurate utilization rate within a department also helps partners decide when to request additional attorneys, and it’s a key input for firm management when approving requests to expand a group.  If everyone is underbilling, department leadership may not realize how close their lawyers are to burning out and potentially leaving the firm.

Remember that proper time tracking extends to non-billable hours also.  Your firm needs to know how much time you’re spending on administrative or other non-billable matters.  They may be tracking whether their workflow is efficient, if they’re using the right software, etc.  Useful analysis of those factors depends on you accurately reporting your non-billables.

Be smart about the wording of your bills

Healthy realization depends not just on how much time you spent on a task, but also on how you describe what you did.  Be aware that many different parties may review your bills: partners and clients, certainly, but potentially also courts or other third parties.  Take care to bill with the specificity that the client or firm requires (without including anything privileged or embarrassing, please).  Appropriately specific wording will make it easier to justify the bill for your work, creating the conditions for better realization.

Ensure aligned expectations

If partners are routinely cutting your hours, that is an indicator of misaligned expectations.  You should proactively communicate with partners about their expectations, so that you avoid incurring time that won’t be collected.  Find out how long the partner expects a project to take, and do your best to stay in that ballpark.  In the event the partner has an unrealistic view of what’s possible, have a conversation about it as early as you reasonably can.  You’re managing their expectations so they can manage the client’s expectations.  If you perceive a misalignment, it’s your responsibility to speak up and make an effort to resolve it.

Consider the bigger picture

So why am I sharing this, as a recruiter?  Managing utilization and realization makes you more productive and efficient: you’re a more valuable associate.  But this isn’t just about you.  It’s also about how much work the firm has: underutilization can result from not enough work to go around.  Conversely, understaffing can lead to overutilization.  And your personal utilization rate reflects your quality of life.  If your utilization is very high, then you’re likely overworked!

If this has got you thinking about your role in your firm, or your practice group, then let’s chat.

An In-House Reality Check: The Grass May Not Be Greener

As a legal recruiter, one of the most common things I hear from law firm associates is that their goal is to go in-house. Law firm associates often can’t wait to leave behind the billable hour.

On the face of it, there’s nothing wrong with that — in-house roles can be a good fit for many lawyers. But the way law firm associates idolize in-house counsel positions often indicates an incomplete understanding of the realities of these jobs.

Having spent the majority of my legal career working in-house, I am deeply familiar with the tradeoffs associated with working in-house and can tell you it is not what you’ve been led to believe.

A lengthy interview process

If you land an interview, buckle up because it’s a long road.

You’re likely to get your first taste of the differences between law firms and companies during the in-house interview process.

Law firm interviewing tends to prioritize efficiency: you interview with some partners, meet a few associates, go to lunch, and get an offer. The whole process takes about a month and sometimes much less. 

For in-house roles, you typically apply online, send your resume into the ATS abyss, and hope for the best. If you are one of the lucky ones, you will advance to a recruiter phone screening. Once that is complete, expect to wait at least a week to meet with the hiring manager. After interviewing with the hiring manager, you will be scheduled to meet members of the legal team. If all goes well, you’ll be introduced to the functional leaders you would support. Finally, you may meet with the Chief Legal Officer. The time between rounds is usually about a week. In the interim, you may be expected to complete a take-home assignment or a case study, which you then may or may not present to your potential future colleagues. Overall, expect this process to take four to eight weeks or longer. 

From profit center to cost center

As a lawyer at a law firm, you are part of the profit center: you bill hours and directly generate revenue. You are paying for staff salaries and keeping the lights on. In contrast, an in-house legal department is a cost center, supporting the revenue-generating parts of the business, but not bringing in revenue independently. 

When you go in-house, all eyes are no longer on you, and you are somewhat less important. This shift affects every aspect of your job, including resource allocation, leadership focus, and budget.

No longer the profit center and no longer keeping time, in-house counsel must find ways to add value to the business and develop creative ways to measure those contributions. Adding value and measuring it is doubly important in times of economic uncertainty, when companies move to cut costs.

A change of pace — but not necessarily slower

Whoever told you that in-house counsel enjoy a well-balanced 9-to-5 was wrong. Let’s be clear: the typical in-house role is far from the relaxed 40-hours-a-week you’ve been pitched. In reality, 60-hour weeks are not uncommon for many in-house lawyers.

First, the decision to hire in-house counsel is made for a reason: there is a lot of work to be done. You are expected to take on the work of outside counsel independently, and to do so with fewer resources.

Remember that hearing you went to 30 minutes away or the time you spent sitting in court waiting to argue? As an associate, this counted as productivity. As in-house counsel, when you spend time on activities where your presence turns out not to have been necessary, you’re the one who bears the cost. You still have to get your work done, and frequently that means putting in time in the evenings or on weekends to catch up.

Finally, businesses move at an incredible pace. You’re likely to find that timelines are extremely short. Gone are the days when you had two weeks to complete a memo. Now you need to do it in 30 minutes. Your internal clients need quick answers, and if you don’t weigh in immediately, the business will take action without you.

Juggling many responsibilities

Private practice is all about specialization. But at most companies, especially smaller ones, every in-house counsel has a much more diverse range of responsibilities on their plate. That can be exciting, but it’s also time-consuming and stressful, especially when you are given responsibility for an area unrelated to your prior law firm practice.

Startups take this to the extreme. Not only will you be one of the few lawyers in the company (perhaps even the only one!), but you will also probably be one of the smartest people in the room. People will recognize that, and they’ll want to tap you for projects that aren’t squarely within the legal domain. Being involved in non-legal subject matter might sound fun, but it can be exhausting when combined with the legal work that forms the core of your portfolio.

Be realistic about the tradeoffs

There’s no denying that law firms can be a tough environment, and a long-term career in private practice isn’t for everyone. But it’s easy to take for granted the benefit of being surrounded by smart and well-credentialed colleagues. Not to mention resources like immediately responsive paralegals and subscriptions to any database you desire. Or a well-defined career progression with material increases in compensation every year. As an in-house counsel, you can’t expect a luxury building in a prime location, a private office, an assistant, a paralegal, or even Westlaw.

You may be more than happy to make those tradeoffs. But do think it through carefully. The grass isn’t always greener.

New York Market Update: Strong Lateral Demand, Though With Variation Across Practice Areas

With talk of recession on the rise nationally, how are law firms in New York holding up? So far, the lateral market remains open for business. Firms are emphasizing some different practice areas compared to a year ago, but they continue to hire broadly.

Lateral placement data indicate a healthy market: there were around 75 more lateral moves in New York in Q2 2022 than in Q2 2021. That’s saying something, considering that 2021 was an exceptionally strong lateral market.

Litigation rises as transactional starts to slow

Demand for transactional lawyers has moderated compared to last year: there were 341 lateral placements in Q2 2022 into corporate practices (35% of all placements in the quarter), as compared to 420 the year before (46%). However, other practice areas are picking up the slack. Demand for litigators is on the rise: whereas in Q2 2021, there were 162 lateral placements in litigation, the number rose to 210 in Q2 2022.

A central driver of the growing opportunity in litigation is a widespread effort among firms to expand their white-collar practices. The Biden administration has made no secret of its intention to increase enforcement, and firms are positioning themselves to compete for what should be a lucrative wave of white-collar assignments. Boutiques that are mainly known for complex commercial litigation have lately been especially active in the lateral market, seeking to build up their white-collar credibility.

Many opportunities in niche practices

Among more niche practice areas, antitrust is in strong demand, as firms anticipate coming enforcement activity. Funds is a particular bright spot on the transactional side, with practices sufficiently stretched such that they have been willing to retool junior associates from other groups. And both real estate and bankruptcy are on the rise, with around twice as many lateral placements in Q2 2022 as compared to the same period a year earlier. Bankruptcy and restructuring practices are particularly interested in candidates who have both transactional and bankruptcy litigation experience. Of course, if a recession does materialize, demand in this area should accelerate further.

Who is best placed to make a move?

Across practices, midlevel associates have the broadest range of lateral opportunities, with the sweet spot around 3-5 years of experience. In litigation, there has been an unusual level of demand for more senior associates in addition to midlevels. Boutiques in particular have been extending offers to sixth and seventh years.

With most firms having adopted a hybrid working model in their New York offices, we are seeing an increasing number of interviews conducted in-person, which candidates tend to find helpful in gaining insight into a firm’s culture. This summer is a particularly good time to enter the lateral market because an unusual number of associates are tied down by bonuses issued last year or in early 2022, either as part of a lateral move or as a retention incentive.


Though candidates shouldn’t worry about changing firms right now, we are urging those exploring in-house roles to proceed with caution. The risks of a layoff appear to be elevated in the current environment, especially for lawyers entering at more junior levels. Keep in mind that unlike at law firms, the most recently hired employees tend to be most vulnerable when companies go through layoffs.

Is Your Firm Recession-Resistant Enough To Thrive In An Economic Downturn?

We’ve all heard the adage that sex sells. But when it comes to the financial press, no topic is more irresistible than speculating about the possibility of a recession. Are we on the verge of an economic downturn? I don’t know, and frankly, neither does anyone else. But given all the recession talk, now is a good time for lawyers to consider their strategy in the event we do experience a downturn. 

There are two key messages to keep in mind. First, the good news is that if you are at a well-diversified firm, recession fears should not keep you up at night. Most major Am Law 200 firms are recession-resistant thanks to their diversity of practice areas.

Second, hiring remains strong by any normal standard: there were around 300 more lateral placements in Q2 2022 among Am Law 200 firms than there were in Q2 2021. And as you might remember, spring of 2021 was not exactly a slow market!

Law firm hiring is like squeezing a balloon. Last year we saw an overwhelming appetite for capital markets and M&A laterals to fill the never-ending demand for attorneys to service deal flow. Today we are seeing a large uptick in the demand for litigation laterals. That’s exactly what we would expect given the historical pattern of recessionary times fueling more litigation and insolvency work from deals gone bad and inevitable breakups.

In Q2 2021, 30% of lateral placements in the Am Law 200 were in corporate practices, and 27% were in litigation. By contrast, in Q2 2022, only 24% were corporate and 30% were litigation. Bankruptcy hiring was a small proportion of the total in both quarters, but it is clearly picking up. There were 67 bankruptcy lateral placements in Q2 2022, as compared to 46 in Q2 2021.

Is now a good time to lateral?

If you aren’t happy at your firm, don’t let concern about the economy dissuade you from making a lateral move. If you’re in a situation where you don’t feel supported, it would be a mistake to resign yourself to being miserable just because people are talking about recession. The truth is that demand for lateral candidates is persisting across a broad range of practice areas, so you likely have options.

However, if you are at a firm overly dependent on corporate M&A and capital markets work, perhaps you should look at some alternatives that are better positioned to weather the storm, if not come out of it even stronger.  The benefit of being at a well-diversified law firm is roughly analogous to the benefit of being in a long-short fund as an investor. The long-short structure gives you upside while protecting the downside through diversification of puts, shorts, and long positions. Similarly, a strong bankruptcy practice may not “pull its weight” in the good times, but it is extremely useful when the economy sours.

Although you shouldn’t hesitate to accept a good lateral offer, you may want to think twice about pivoting to a new practice area unless you are certain retooling meets your long term career goals. With an uncertain economic outlook, it’s especially important that you make an immediate impact at your new firm — now is not the best time for a long ramp-up period.

If we reach the point of layoffs — which, again, are not happening yet in any widespread way — firms will primarily consider the revenue impact of each practice group and lawyer. An advantage of the billable hour model is that individual contributions are more easily measured than in a typical corporation. So instead of taking a blunt “last in, first out” approach, firms can be more targeted. The way to protect yourself isn’t necessarily to cling to your current job, but rather to put yourself in a situation where your skills will be well utilized.

What about a move in-house?

It’s more difficult to generalize across in-house roles because some sectors are likely to be more resilient in recession than others. But broadly speaking, you should be wary about moving in house with a downturn potentially on the horizon. When a company is forced to cut costs, the most recent hires are often the first to go. You could then find yourself looking for a job in a relatively weak market.

If you are considering an in-house transition, it’s important to understand that switching back to a firm likely won’t be easy. Firms value law firm experience more than in-house experience, so returning to law firm work can be a challenge even in a good economy. Now imagine trying to make that switch while unemployed, in a soft economy, when your skill set has stagnated.

That’s not to say that going in house is definitely a mistake. Individual circumstances vary. But make sure you are clear-eyed about the risks and your potential backup plan.

Strengthening your position at your current firm

What if you’re reasonably happy at your current firm and just want to guard against a layoff?  The first thing to realize is that this is not 2009, where we had a complete collapse of the financial markets and widespread law firm layoffs. Instead, we expect that the uptick in litigation and insolvency work will largely offset any slowdown in corporate.   

So the better question is how do you protect yourself and stay relevant if you are a corporate attorney? There’s a few things you can do to strengthen your standing ahead of a potential downturn.

First, do you have strong relationships with partners? If not, make it a priority to develop some. You should be doing this regardless of the economy, as it will both improve your experience at your firm and position you to be recommended for future external opportunities. But obviously these relationships can be especially valuable in the event a practice group head is instructed to cut headcount.

One way to build stronger relationships is simply to make yourself more visible. Spending less time in the office over the past two years may have made it easier to hide, whether intentionally or not. If you haven’t been making an effort to connect with partners, either in person or virtually, now is the time to start. Make sure they know who you are and that you’re eager to be helpful.

As mentioned above, your recent record of billable hours will be an important factor in case of layoffs, so an obvious way to strengthen your position is to make sure you’re meeting billable expectations. For most Biglaw associates, that hasn’t been a problem recently, but if the economy slows, billable hours will be less plentiful in some practices. In that scenario, you will want to be flexible about accepting work outside of your primary practice area. You may not enjoy bankruptcy work as much as M&A, but if the alternative is falling short on your hours, the choice should be clear.

DC Market Update: Strong Demand for Litigation, Transactional, and Regulatory Attorneys

After more than 200 years with New York as its only US office, Cravath announced in June that it will open in Washington, DC this fall. Given that Cravath has long resisted the Biglaw office expansion trend, its change in strategy is notable. Presiding Partner Faiza Saeed explained that the firm’s “clients face an increasingly complex and active regulatory environment.” Cravath’s move demonstrates an understanding that a strong DC presence is more valuable than ever — and not just for traditional regulatory counseling practices.

Cravath is not alone in reaching this conclusion. With increasing client demand in the face of an anticipated wave of enforcement actions, firms are recognizing the need to bolster their ranks in the nation’s capital, even if they aren’t new to the region. We at Lateral Link are working on numerous searches for firms opening or expanding their DC offices. Clients are acutely aware that DC is where the key regulatory decision-makers sit, and that local credibility in the unique DC market is essential.

The state of the lateral market

So what does this mean for the lateral market? In short, opportunity. We count more than 500 lateral moves in DC so far this year, and firms continue to hire at a strong pace. We have hundreds of openings for litigation, transactional, and regulatory attorneys.

Litigators are in the greatest demand, with thriving practices hiring at every level from associates to partners. Regulatory-related litigation groups — such as antitrust, white collar, and enforcement defense — are especially healthy. Firms are seeking talent in both the private and public sectors. Lateral candidates looking to switch firms are well-positioned, especially associates with two-to-five years’ experience and partners with at least $1 million in portable business. High-profile government officials are also coveted, as Cravath’s announcement illustrated: in tandem with the new office opening, Cravath hired three partners with high-level FDIC and SEC experience, including former FDIC Chairman Jelena McWilliams, former SEC Commissioner and Acting Chairman Elad Roisman, and former Associate Director of Enforcement for SEC Jennifer Leete.

On the corporate side, hiring has retreated somewhat from last year’s blistering pace, but opportunities still abound. Private equity, M&A, capital markets, and securities associates will have a plethora of options to consider, with two-to-five years’ experience again being the sweet spot. We are also filling a number of EC/VC and finance openings. For many candidates, DC might not immediately spring to mind as a top transactional hub, but this market has some real advantages for corporate associates. DC corporate teams tend to be smaller than in New York, and associates have the latitude to work across a wider variety of deals. Associates seeking a more generalist practice, plus expanded opportunities for client contact at an early stage, might want to consider a move to DC.

Naturally, much of the regulatory-related work in DC is tied to litigation and investigations. However, we also have active searches with many of the more traditional regulatory counseling practices. Banking, healthcare, energy, environment, and healthcare practices among others are seeking new talent at both junior and senior levels.

Is recession a concern?

Whether and when the economy might enter a recession is a matter of intense debate, and I’m not here to make macroeconomic predictions. But it’s worth addressing the recession scenario, as it will certainly be on some candidates’ minds. First, DC offices have continued to hire in the face of growing recession talk — if there is going to be a recession-induced hiring slowdown, it hasn’t happened yet. Second, DC law firms historically have been relatively resilient in recession periods.

Because the federal government continues, recession or not, government-related legal work continues. DC firms tend to have relatively diversified practices, which is also helpful: litigation, regulatory, and corporate practices each comprise material revenue streams for the larger DC firms. Few DC offices are excessively dependent on transactional work, the area that often takes the biggest hit in a recession. Historically, DC firms tend to be better positioned to weather economic storms than many of their peers in other markets.

A remarkable range of opportunities

The appeal of DC for a practice like antitrust needs no explanation. But it’s important to realize that the vibrant legal market here encompasses a remarkably broad range of practice areas, even some that are not tightly connected to the federal government. What is particularly striking about the current moment is that firms are hiring in virtually every practice area. At Lateral Link, we have worked with many attorneys to leverage the strong market demand to achieve their goals, whether that entails ascending the ladder to a more highly regarded firm, increasing their compensation, or both. If you are based in DC (or are open to moving here) and you are interested in taking your practice to the next level, please contact me to learn more.