Tag Archives: Headhunters / Recruiters

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.

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! 

Burned Out in Biglaw? Don’t Jump In-House Without Also Considering Boutiques

We all know that Biglaw practice can be a grueling experience. Some lawyers love practicing at the cutting edge and manage to navigate the lifestyle trade-offs over the long term. However, many Biglaw attorneys eventually find themselves feeling burned out and needing to escape. That feeling tends to be especially acute towards the end of the year, as associates confront the prospect of spending yet another holiday season burning the midnight oil. 

So with a new year on the horizon, it’s unsurprising that many candidates have been coming to me to discuss potential in-house opportunities. After all, in-house is the most widely discussed alternative career path. But before plunging headfirst into an in-house search, I find it helpful to dig a little deeper into what these candidates are trying to achieve. It turns out that many Biglaw associates who initially tell me they want to go in-house haven’t actually thought hard about the realities of in-house careers, whether they would be a strong fit for those roles, or if this would be the best fit in the long term. Fundamentally, they’re just seeking a more balanced lifestyle, and they see in-house as the easiest means to that end.

The thing is, in-house isn’t for everyone. To be sure, some lawyers thrive as in-house counsel. But many are disappointed to discover that the grass isn’t actually greener.

Fortunately, Biglaw and in-house are not the only options. Attorneys who are tired of Biglaw life should also consider a different alternative: boutique and midsize law firms.

The boutique and midsize alternative

I know what some of you are thinking. “Hold up. I’m trying to get away from billing hours. Wouldn’t a boutique mean working the same nights and weekends, but for less money?”

The truth is, in some cases, it absolutely would mean that. But not all. Attorneys working for boutique and midsize firms have a wide range of experiences. It’s an overstatement to say that Biglaw firms are all the same, but the basic business model is pretty standardized. In contrast, there is way more differentiation between boutique law firm models. The key is finding a boutique or midsize firm that offers the right model for you.

Some boutiques are designed very explicitly for Biglaw refugees: same high-level, interesting matters with highly-trained colleagues, but working fewer hours, for somewhat less pay. Exactly how many fewer hours and how substantial a pay cut will vary from firm to firm, and market to market. But note that these are essentially the same trade-offs that candidates confront when considering in-house roles. The most lucrative in-house positions tend to require almost Biglaw-level hours, whereas a true 9-to-5 in-house role will require a significant pay cut. (If it doesn’t, the job very likely won’t be 9-to-5!)

Evaluating boutique/midsize opportunities

What should you think about when exploring boutique or midsize roles? The basic mantra is: do not make assumptions. Talk to many people. Ask probing questions.

For example, when comparing opportunities, don’t just look at the number of billable hours required. The number alone won’t tell you very much—you need to dig deeper. How does the firm bill? What counts as billable? Are associates generally billing significantly more than the requirement? Are there additional marketing hours required or is the quoted hours number the full amount actually expected?  

Let’s imagine you are currently at a Biglaw firm that requires 1950 hours. You have an opportunity at a boutique or midsize firm that requires 1800. On the surface, that doesn’t sound too different. But there’s a good chance your current 1950-hour requirement does not fully capture how much you are working. It’s quite likely that you end up billing more than the requirement in most years on client matters alone—perhaps significantly more. On top of that, Biglaw firms often expect something like 300 hours on marketing, CLEs, and other work that isn’t billed to a client. Just as you might want to give a candidate considering your firm some additional context about the “1950 hours,” you would be well-advised to ask questions about your potential new firm’s 1800-hour target, so that you can make an informed comparison.

Speak with multiple associates and really probe to understand the reality of the lifestyle. Some boutique and midsize firms genuinely offer work/life balance. Others do not. Do your diligence to figure out the true nature of the opportunity presented.

A trusted recruiter can be an especially useful resource in this process. A recruiter who knows your market well has likely already placed candidates at the firms you should be considering. Take advantage of the inside knowledge and introductions your recruiter can offer.

If you manage to navigate the process successfully, it really is possible to end up in a sweet spot. Interesting work. Humane hours. Solid compensation. While in-house may appear to be the easy answer, if a better lifestyle is what you’re seeking, the boutique/midsize path is well worth your consideration.

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.

Testing the Market as a Law Firm Partner

If you are a law firm partner, there are many reasons why you might consider switching firms.  A competitor may offer a better platform and stronger bench, enabling you to serve your clients more effectively and ultimately generate more business.  Another firm may feature a different geographic footprint that could better align with your practice or business development goals.  Perhaps you’re looking to reduce the frequency of conflicts after having to turn away too many potential matters.  Or maybe you are interested in taking on a leadership role, but your current firm has been slow to open up opportunities.

Although each of these factors is distinct, they have something in common: all ultimately bear on your compensation. At Lateral Link, this is our peak season for compensation questions from partners.  The issue is front of mind for many, as they prepare their compensation memos and learn what they will take home this year.  Some partners are ruminating on their desire for promotion to equity.  Others have a nagging sense that their current compensation package does not fairly value their contributions.  And some may have broader concerns about the stability of their firm’s finances in an uncertain economy and the attendant risks to their compensation trajectory.  Might somewhere else offer a better package?

Reasons to consider testing the market

There are myriad ways in which firms can disappoint their partners financially.  Here are just a few examples:

  • Partner expected to receive more ownership units (i.e., a raise) but was disappointed to receive a smaller increase than anticipated.  Management asserts that this is one of the largest raises in the firm this year and that they cannot go higher.
  • Partner has finally originated enough business for a promotion to equity, only to learn that the target required to become an equity partner has increased.  The new, higher originations requirement keeps equity out of reach.
  • Partner is dismayed at the amount of his or her net worth tied up as a capital contribution and wonders if other firms might have different, more forgiving requirements.  (The answer is yes!  There are firms without capital contributions or with low capital contribution requirements.)
  • Partner turns away business regularly due to legal conflicts with the firm’s other clients, materially compromising his or her practice-building efforts and sometimes leading the partner to refer millions in business to other firms.  Inability to take on this work lowers originations, and as such compensation.

If you find yourself in a situation similar to the above, it could be an ideal time to test the market.  Whether you can secure a higher offer will depend on various factors, including level of demand for your practice area, your reputation in the broader legal community, and your current volume of originations.  But however it turns out, the process should be informative.  At worst, you’ll have peace of mind that you are in fact being compensated fairly.

How to test the market

The most effective way to test the market is to work with a trusted recruiter.  An experienced recruiter who understands your practice area and region will know exactly which firms are open to making lateral hires and which are offering the strongest compensation packages.  As a first step, the recruiter will have you assemble a business profile and pitch, highlighting the value you could bring to a potential new firm.  Even if you don’t end up moving, you may find this to be a valuable exercise that enables you to negotiate more confidently within your current firm’s compensation structure.

Of course, you can also attempt to test the market yourself, but you will lose the benefit of having a trusted advisor who knows your market and has secured offers at a range of firms.  That unique and valuable insight can only help you. 

Consider the broader opportunity

When testing the market, candidates sometimes have a tendency to focus excessively on the compensation guarantee that a firm is offering.  It’s important to bear in mind that there are many elements to a compensation system beyond the guaranteed paycheck.  For example, is the capital contribution unusually onerous?  Also be sure to consider the likely extent of conflicts, as this could have an important bearing on your ability to expand your book.

Always place the guaranteed dollar amount in the context of the broader opportunity.  For instance, if you have been turning away class actions work, joining a firm with a robust class actions practice is likely to accelerate your compensation materially.  Even seemingly minor factors like having an office in a geography relevant to your practice can make a real difference.

Be a smart negotiator

One of the curiosities of being a legal recruiter is seeing partners who are excellent negotiators for their clients make serious mistakes when negotiating for themselves.

Sometimes an attorney will get a call directly from another firm, gauging their interest in a move.  (Incidentally, this type of call raises unique issues for high-level government officials, where any answer other than “no” may lead to demands for recusal.)  Flattered, the attorney only considers the firm that called.  If you receive such a call, do not let the firm that reached out hold you back from exploring other options so that you understand your true market value.  If the firm that called does not want you to test the market, it may be because they want to avoid a compensation bidding war.  Failing to protect your interests in this scenario could cost you millions of dollars over the course of your career.  

Another frequent error is quickly accepting a counteroffer from the current firm after tendering your resignation.  Is the firm’s attempt to keep you too little, too late?  Ask yourself if that one-time bonus is a band-aid on larger systemic issues, including the issues that motivated you to explore other opportunities in the first place.

The decision to move is a complicated one, requiring careful consideration.  But it never hurts to check your market value, especially if you suspect your current firm isn’t treating you as well as it should.  If you feel you could benefit from a confidential discussion about your individual situation, please contact me.

Mandatory Retirement Policies: A Source of Vulnerability and Opportunity

King & Spalding scored two notable coups this year when it lured prominent litigators Randy Mastro and Mark Kirsch away from Gibson Dunn. The loss of Mastro in particular was a serious hit for Gibson: in more than two decades at the firm, Mastro had accumulated a multitude of lucrative and high-profile clients, ranging from Chevron to Chris Christie.

Mastro and Kirsch undoubtedly weighed many factors in deciding to move. Lately, there have been rumblings in the market about office politics involving leadership in Gibson’s litigation group, so it’s possible that played a role. The rising fortunes of King & Spalding presumably helped: thanks to 25% growth in profits per equity partner from 2020 to 2021, King & Spalding is now within $70,000 of Gibson’s PPEP figure. (Over the same period, Gibson grew PPEP by just 8%.)

But regardless of the exact motivations, the defections of Mastro and Kirsch cast a spotlight on an important difference between the two firms: whereas Gibson requires partners to step down from its executive committee at 65 and to give up equity status at 68, King & Spalding has no mandatory partner retirement age. Mastro and Kirsch left Gibson at ages 65 and 60, respectively. Mastro, a longtime member of the executive committee, was already confronting the effects of Gibson’s retirement policy, and Kirsch could have been vulnerable to forced retirement in the coming years.

The traditional retirement model is less relevant today

Roughly half of Am Law 200 firms have mandatory retirement, with most specifying ages in the range of 63 to 68. Protocols for handling the retirement process vary. Some firms will transition partners into counsel positions as an intermediate step, enabling them to continue practicing while transferring their clients and work to younger partner colleagues. Others broach the topic of the impending retirement a year or two in advance to ease the partner’s transition out of the firm. It must be noted that retirement policies are often applied selectively, even at firms that supposedly have an age threshold. For example, there appear to be at least 23 Gibson Dunn partners who are over the age of 68, notwithstanding the firm’s mandatory retirement rules.

Traditionally, mandatory retirement has played an important role in career development for mid-career partners. When senior partners depart, it opens leadership positions for the next generation and enables younger partners to inherit primary responsibility for lucrative clients. However, an important premise of this model was that senior partners would, at least grudgingly, agree to transfer their clients. In a world of substantially increased partner lateral movement, this is no longer a safe assumption. As Mastro and Kirsch illustrate, partners over 60 with a robust book of business have attractive alternative options, and they need not acquiesce to a retirement plan that doesn’t suit them.

The other important function that mandatory retirement historically played was to help firms cull partners whose declining productivity no longer merited their high compensation. Stepping down due to age enabled a more graceful departure than being pushed out explicitly in response to diminished revenue production. But in the current environment, with the decline of lockstep partner compensation and an accelerating shift towards a pay-for-performance model, firms are not waiting until age 65 to push out unproductive partners. As a result, partners who still have equity in their mid-60s are much more likely to be important revenue contributors than in the past.

Potential lateral destinations: an initial screen

So if you are a partner of a certain vintage confronting impending mandatory retirement and are not yet ready to step aside, where else might you consider? Naturally, this will depend on a number of factors specific to your practice and your book of business. But as an initial screen, it may be helpful to highlight firms that — purely by the numbers — have demonstrated a particular willingness to retain partners beyond the age of 65.

To that end, we analyzed the number of partners at each Am Law 200 firm who received their JD in 1981 or earlier. The logic for selecting 1981 is that, assuming each attorney was at least 25 years old in the year of JD graduation, all partners in this data set should now be older than 65. For each firm, we divided the partners in this set by the total number of partners, thereby estimating the proportion of the firm’s partnership comprising members age 65+. Firms with a higher proportion of these seniormost partners may be especially receptive to considering potential lateral partners who are approaching mandatory retirement at their current firm.

We estimate that there are 12 Am Law 200 firms with at least 5% of the partnership aged 65+:

Firm% of Partnership Aged 65+
Irell & Manella15%
Buckley11%
Patterson, Belknap8%
Stroock & Stroock & Lavan6%
Herrick, Feinstein6%
Boies Schiller5%
Cahill Gordon5%
Hughes Hubbard5%
Kasowitz Benson5%
Munger, Tolles5%
Sullivan & Worcester5%
Susman Godfrey5%

The pension factor

A frequent complicating factor in considering the viability of late-stage lateral moves is the potential loss of a pension. Partners may understandably view their pension as a set of golden handcuffs: having spent so many years accumulating pension credits, does it make sense to walk away now?

In some cases, the answer will indeed be no. But it’s important to recognize that the pension issue is surmountable, at least sometimes. Gibson Dunn is known for its generous pension package, but Mastro and Kirsch departed regardless. For a partner with a strong book of business, there is a good chance a competing firm will be prepared to offer a package that adequately compensates for loss of an accumulated pension.

***

Naturally, this is an area where consideration of individual circumstances is critical. At Lateral Link, we maintain an extensive proprietary knowledge base of firms’ mandatory retirement policies to assist our senior lateral candidates in targeting the most suitable destinations. If you feel you would benefit from an outside perspective on potential opportunities tailored to your specific situation, we welcome you to get in touch for a detailed discussion of your current firm’s policy and how it compares to the alternatives available in the broader market.

Navigating Your Performance Review

Bonus season is around the corner!  But first, associates need to make it through performance reviews.  Few people look forward to the review process.  Some find it stressful — after all, these can be complicated conversations.  Others may be tempted to dismiss it as pointless, considering that many firms award bonuses based primarily on class year and/or hours billed.  But even if you’re at a firm where performance reviews are not a critical compensation driver, you should treat the review process as a valuable opportunity to elicit helpful feedback.

Instead of viewing your performance review as something to be endured, take control of the process to the extent possible.  Put in the time to prepare fully, clarify the feedback you receive, and reflect on the implications for your broader career goals.

Prepare for the review conversation

It’s likely that your firm will ask you to do some form of self-evaluation ahead of the review process, but regardless of what is formally expected, preparation is critical to achieving a productive conversation.  Questions to ask yourself include:

  • Did you make your hours?
  • What sort of feedback have you gotten along the way?
  • Did you have a trend line this year of improvement, or did you have the same problems all year?
  • Did you successfully address the feedback you received in last year’s review?

Identify your weaknesses, and think about how to frame them constructively.  You want to go into the review conversation prepared to talk about what you learned and what you’ll do differently next time.  Demonstrating that you have a specific plan for future improvements helps your evaluator look past any bumps.

Ahead of the review, be sure to update your deal sheet or representative matters list!  In case you don’t already have a deal sheet, see how to make one here.  Updating your deal sheet will help you review your work and prepare to discuss both victories and setbacks.  It’s too easy and too common for a supervisor to forget about things you thought were really important, so don’t rely on your reviewer to generate a comprehensive list.  Having your deal sheet at your fingertips will make sure you’re prepared to advocate for yourself.

Listen carefully and seek clarification

During the review conversation, remember to take notes as best you can.  You can’t expect to remember it all, especially if you’re anxious or you get feedback that surprises you.  Detailed notes will be helpful if you need to follow up on something later.  

Ideally, the feedback you receive will be specific and actionable, but it’s possible it will be generic and unhelpful.  If so, it’s on you to ask granular questions to elicit more precisely what the reviewer is talking about.  This applies to either positive or negative feedback, but it’s especially critical in situations where the reviewer is expressing concern about your performance.  Valuable questions to ask include:

  • Am I on track for partnership?
  • What do I need to do this year to get there/stay there?
  • What specific skills would you like to see me acquire this year?
  • Are there any weaknesses I need to shore up?
  • Now that I’m a Xth year associate, how do you see my role on deals in the coming year?  In mentoring juniors on our team?  In business development?

Ask for clarification, especially about critiques, but don’t be defensive.  Remember: “curious, not furious.”  Achieving this balance can be really challenging for us over-achieving lawyers.  You may find it helpful to practice reacting to feedback in advance, ensuring you enter the review conversation with some default responses.  Ask A Manager has some great advice on this, as well as scripts for if you disagree with the criticism.  For example: “I’m glad you’re telling me this.  I’ve been letting some deadlines on this project slide because I had thought that projects x and z were higher priorities and was more focused there.  But am I looking at this wrong?”

Keep in mind that it’s perfectly acceptable to ask for a follow-up conversation!  You may find that you ask more effective questions after having had some time to gather your thoughts.  Ahead of the follow-up, draft a list of questions digging into the specifics of how the firm wants you to perform in the next year.

Reflect on your broader career trajectory

Although the review process is principally about your performance in your current role at your current firm, don’t forget to reflect on the bigger picture.  The end of the year is a great time to consider whether your firm remains the best setting to achieve your career goals.  Are you getting the work you want?  How do you feel about your professional development?  Have you found your people at this firm?  Are you content?

If not, keep in mind that other firms would be happy to have you.  I’d love to help you think through your options or connect you with one my colleagues in your area.

Good luck!