Tag Archives: Legal Recruiter

From In-House to Law Firm: Returning to Private Practice is a Growing Trend

A common career path is to graduate from law school, spend a few years practicing at a firm, and then take a job as an in-house counsel. Biglaw associates are drawn to in-house opportunities to escape the billable hour and to benefit from a less demanding and more predictable schedule. The lawyers who make this transition traditionally have not looked back. That’s partly because they haven’t wanted to return to law firm life and partly because firms have preferred to hire lateral candidates currently working in private practice.

But in 2021 — an exceptional year for the legal industry in many respects — a novel trend is emerging. We at Lateral Link are hearing from a striking number of in-house lawyers who are interested in making a lateral move to a law firm. And firms are displaying an unprecedented openness to hiring such candidates.

The in-house grass is not looking so green

Any lawyer who accepts an in-house role understands that the transition presents certain tradeoffs. A paycut is generally required, and even for those fortunate enough to land an in-house position with similar current compensation, it’s unlikely that the rate of growth in future years will match the financial upside of private practice. Relatedly, upward mobility in the in-house context is constrained: a law firm practice group can support multiple highly compensated partners, but only one member of an in-house legal department can be General Counsel.

In the current environment, some in-house counsel are finding those tradeoffs starker than they bargained for. Most notably, sharply escalating base salaries and special bonuses for law firm associates have widened the pay disparity between firms and in-house legal departments. That disparity is especially painful for in-house counsel who find themselves working long hours. (It turns out the absence of billables doesn’t necessarily guarantee a better lifestyle!)

Another important factor is work-from-home flexibility. In many industries, employees have already been called back to the office full-time, barring a medical exemption or other special circumstance. The same is true of some law firms, but as a general matter, hybrid arrangements in Biglaw are easy to find. Firms historically have not been known as bastions of flexibility, but the pandemic has forced real change on that front. For in-house lawyers whose companies are insisting on full-time office attendance, the relative flexibility of law firms has become a selling point.

Firms are prepared to hire in-house counsel

In the past, most law firms would have been hesitant to hire lateral candidates from in-house roles — lawyers currently in private practice are considered a safer bet. But in the current war for lateral talent, firms have been forced to cast a wide net. Just as they have become more open to candidates with less prestigious educational and prior firm backgrounds, firms are increasingly willing to extend offers to in-house counsel.

Candidates returning to private practice tend to return to the same type of work that they were doing prior to their in-house transition. We are seeing candidates join practice groups such as M&A, finance, and IP. Litigation is tougher, both because firms are less desperate for lateral litigators and because firms tend to view in-house roles supervising litigation as less directly relevant to their practices.

We advise in-house counsel who may be interested in exploring a return to private practice to start the process soon. The current demand for lateral hires is exceptional, and it won’t last forever. Now is the time to test the market, before the window closes.

In the Market for Cannabis Counsel? Don’t Pay Your Lawyers to Learn on the Job!

Demand for high-end legal services is booming this year, and law firms are competing fiercely for talent across many practice areas. Growth has been particularly strong in some niche practices that barely existed a decade ago, such as cannabis and blockchain. For law firms, the business case for establishing and promoting groups in these emerging fields is becoming ever more compelling. The demand is there, so why not try to get a piece of it?

But there is a big difference between proclaiming expertise in an emerging practice area and actually delivering a top-flight offering. The supply of practitioners with a genuine track record in an emerging field is relatively thin by definition. So from a client’s perspective, it is important to be a skeptical consumer.

Let’s take cannabis as an example. If you found yourself in need of counsel to assist with a cannabis-related matter, you might think the Chambers and Partners ranking of nationwide cannabis practices would be a natural place to start. In Band 1, you’ll find three diversified Am Law 100 firms (Akerman, Duane Morris, Fox Rothschild) and a boutique specialized in cannabis (Vicente Sederberg). So is the right answer to just hire one of those Band 1 firms?

Possibly — but not necessarily. You’ll first want to be clear about the nature of the task and how it aligns with the service offerings of different firms. Cannabis is an especially complicated area for two basic reasons. First, and most obviously, marijuana remains a Schedule I drug at the Federal level. Many elite law firms therefore remain cautious about serving cannabis clients, especially companies whose operations entail direct handling of the product (sometimes called “leaf-touching” entities).

Second, to the extent cannabis cultivation and distribution has been legalized by State legislatures, each market exists wholly within the individual State: there is no legal interstate commerce in cannabis products. This means the regulatory dimension of the industry is deeply fragmented. To the extent counsel may have regulatory experience in one State, the legal knowledge and regulatory relationships will not translate neatly to another jurisdiction.

Given that complexity, it is important to be savvy about what you actually need and whether a firm is properly equipped to provide it. For one thing, the fact that a legal task is connected to a cannabis company doesn’t by itself make the matter distinctive. Much of the legal work in the cannabis field entails bread and butter transactional services that look broadly similar to transactional work in any other industry. For example, if you want to set up a fund to invest in the cannabis space, you should probably hire a highly experienced funds counsel, rather than a lawyer who claims particular expertise in cannabis. If you can find both, that’s great, but in general, industry knowledge is going to matter less than functional experience.

Conversely, if you need advice about cannabis regulatory matters, both industry and geographic experience will be critical. Be careful about hiring a nationwide firm in this situation. A credible locally-based provider who knows the regulators in the relevant State may well be a better choice than a firm that appears on the Chambers ranking.

As a general rule in emerging practice areas, there is a real temptation to rebrand some current partners as experts in the new field. The firm will then try to convince clients to send relevant matters its way, enabling the firm’s lawyers to learn on the fly by working on those initial matters. Essentially, fake it until you make it. One Am Law 100 firm currently has a cannabis group led by a litigation associate. In fields like cannabis or blockchain, you’ll want to be extra skeptical of claims of expertise, to ensure that you aren’t subsidizing the development of lawyers whose depth in the subject matter is questionable. Know what you need, and don’t pay your counsel to learn on the job.

Why A Conflicts Check Should Be Step One in a Partner’s Lateral Move

Any experienced lawyer knows that making a lateral move to a new firm requires a conflicts check. You have surely heard about lawyers whose attempt to lateral was blocked when a client refused to grant a waiver. But despite the general understanding that conflicts are an important factor, many law firms wait until the end of the lateral process to run conflicts, even when the candidate is a partner.

Waiting to run conflicts until after starting interviews and vetting LPQs is an inefficient practice that leads to unnecessary frustration for both lateral partner candidates and firms. A sophisticated legal recruiter doesn’t need to wait to help in the process and is cognizant of conflicts from the beginning of the process given their experience, databases, and knowledge. By taking time upfront to examine the partner’s book of business and the client list of the partner’s current firm, a recruiter can proactively determine which target firms are a nonstarter due to conflicts before a firm even runs conflicts typically closer to the end of the hiring process. This helpfully narrows the set of targets and positions the candidate should consider at the start of the process before devoting time and resources to devoting attention to opportunities that are nonstarters.  

Conflicts are a key initial filter

There are several factors to consider when drawing up a list of firms that could be a good fit for a partner lateral candidate. For example, are the firm’s billing rates compatible with the rate the candidate currently charges? Will the firm’s profits per partner and partner compensation structure match the candidate’s expectations? Would the firm provide a strong platform for the candidate’s practice? Does the firm operate in the city where the candidate lives? Just as you would eliminate certain firms at the outset based on these filters, you should also eliminate firms that are a poor fit due to conflicts. 

Conflicts come in many forms

When lawyers hear the word “conflict,” they are likely to think first of legal conflicts. Obviously, if a litigation partner’s current firm represents Samsung, it would be unwise to pitch that candidate to a firm that represents Apple, given the history of claims and counterclaims between the two companies. Client waivers can sometimes be a solution to legal conflicts, but companies vary in their willingness to grant a waiver. Savvy recruiters know which clients notoriously refuse to waive conflicts and will apply that knowledge in constructing the target list. Good luck sourcing a conflict waiver if you are adverse to Chevron.    

Although legal conflicts are critically important, they are just one piece of the puzzle. Conflict considerations also extend to broader business issues. Firms typically do not represent two companies that are fierce competitors in the same sector, whether or not there is a formal legal conflict based on recent litigation. If a material client of a lateral partner practice directly competes with an institutional client of another firm or even a major client of an important decision maker at that firm, the candidate is most likely not a fit for that firm. Think Coca-Cola and Pepsi. Apple and Samsung. American Airlines and United. Or even the New York Yankees and Boston Red Sox.  

Even where there is no legal conflict or direct competition between the candidate’s book and a firm’s current clients, it is important to consider whether future conflicts are likely to arise. For example, if the candidate represents clients that have a track record of suing banks, a firm that represents a major bank as an institutional client is a poor strategic fit. Similarly, a candidate with a book that includes insurance policyholders will not be a fit for a firm that regularly represents insurers. Over time conflict considerations become more apparent but it’s not a subject where Cliff Notes has a special edition.     

The rise in partner mobility has increased conflicts 

In decades past, when partners were lifers at their firms and clients were more likely to concentrate their business with a single outside law firm, conflicts were less prevalent. Needless to say, the industry has changed, with partners switching firms more frequently than ever before. Partners who lateral tend to bring their clients with them, as a client’s loyalty to the relationship partner often exceeds its loyalty to the firm. This has contributed to a broader trend of clients spreading work among a larger number of outside firms. And unfortunately that makes conflicts an ever more important factor in the conversation that should be addressed upfront.  

As a consequence of rising partner mobility and more fragmented use of outside counsel, conflicts are arising with increased frequency. Some partners have sought to avoid conflicts headaches by decamping to boutique firms. But for those lateral candidates who prefer a traditional full-service firm, it is critical to anticipate likely conflicts as part of a well-managed search. A sophisticated recruiter will proactively address this issue and ensure that a candidate does not waste time on firms that are nonstarters due to conflicts.

Think Fall is a Bad Time to Make a Lateral Move? Think Again.

Every fall we at Lateral Link have conversations with associates who are ready to switch firms but worry that this is the wrong time of year to do it. Wouldn’t it make more sense to just wait until the new year, after annual bonuses have been paid?

That line of thinking is fundamentally flawed, for many reasons. As a service to any associate who might be holding off on making a move until 2022, we’ve assembled the collective wisdom on this topic of a dozen Lateral Link recruiters. Read on to hear why—contrary to popular belief—fall is a great time to lateral.

Don’t worry about your annual bonus! The new firm will make you whole

“The lateral firm hiring market is very active from now until around Thanksgiving, so it is a very good time to explore your options. We can always negotiate a signing bonus to make you whole for the year-end bonus that you may be leaving on the table.”  – Romina Filippou

You might actually come out ahead financially by moving now

“We are seeing lateral associate offers with extra signing bonuses on top of true-up signing or guaranteed bonuses. Making associates whole is standard with the majority of most Am Law 100 firms and many firms are incentivizing prospective lateral associate hires with significant additional signing bonuses. This gives lateral associates the opportunity to earn substantially more for the fiscal year than they would if they remained at their current firm.”  – Jesse Hyde

“Big Law firms are regularly offering full year-end, signing and even special bonuses to associates, especially corporate associates, that join between now and bonus season. So, you may actually make more money if you leave your firm now, than if you wait to make a move in January! Special bonuses are generally being paid out this fall, in the case of firms that are offering them.” – Romina Filippou

If you’re worried about meeting your hours target, a lateral move could be a solution

“Some candidates prefer a fall start date if they know they likely won’t make their hours by the end of the year, so they want to get out and be made whole before that happens.” – Kelly Rizzo

Strong firm demand + weak competition = exceptional opportunity

“When we hit Q4, the supply of strong candidates tends to drop dramatically. But the demand from firms is just as high (in some cases, higher given how many end of year closings there are). Many firms I work with will not only make candidates whole but will offer compelling bonuses on top of that in order to make the decision a no-brainer. The other scenario is that attorneys can make a move that is by no means ‘lateral,’ in that they’re joining a much stronger platform with better short term and long term prospects. So it’s truly an upward move that puts them on a far better trajectory.”  – Zach Sandberg

“If everyone is going to zig, a Fall move might be the right time to zag. The needs of firms remain strong. Less competition for a dream role or firm can happen if everyone’s waiting until January to leave their current position.”  – Steven Rushing

“Your dream job may not wait for the new year. Firms that hire in the fall — especially for roles on smaller teams or for a practice that is steady, but not booming — may not hire again until the back half of 2022.” – Andrew Clyne 

The lateral market will be much more crowded in the new year

“Competition will be more fierce in the spring when everyone is looking to move.”  – Ed Hossain

“Don’t get lost in the crowd. If you wait until bonuses are paid, you’ll be part of a huge surge in applicants we see every January. That increases competition for the same openings.”  – Amy K. Savage

“I expect an especially competitive January this coming year. Many firms have moved their office reopening dates back to January 2022, which will trigger more lateral movement at that time. By moving now, you’ll get a leg up.”  – Stephanie Ruiter

A fall start enables you to ease into your new job

“Associates like starting new roles in the Fall because they like to time their ramp-up period with a new firm at the end of the year (and end of the firm’s billable cycle).  This takes some pressure off, particularly if the candidate is receiving a guaranteed year-end bonus.  Then he/she can hit the ground running in the new year.”  – Zain Atassi

“Some candidates want to transition before the holidays to get familiar with their new firm and team in order to hit the ground running after the new year. Any transition involves some ramp up time and the fall is a perfect time to settle into a new role.” – Megan Penrod

It’s silly to stay at a firm where you aren’t having a good experience

“Consider the opportunity cost. Why put up with months of misery when you can leave and join a team where you will thrive over the holidays?”  – Amy K. Savage

The lateral process could take longer than you expect

“The process can also take longer than you might think from resume to start date. So if you start the process now, you may not end up starting until January 2022 anyways.”  – Abby Gordon

Should I Stay or Should I Go?

So you fought the law2 … and won! Congrats, you’re now a firm partner. You’ve obviously achieved a lot in your career already. You’ve honed your legal skills and become a trusted advisor to your clients. You’ve generated business for your firm, mentored associates, and contributed to the broader legal community. Rudie can’t fail!3 You deserve that brand new Cadillac4.

But are you happy? Or do you feel a little lost in a supermarket?5

Maybe that’s a complicated question. You’re a busy person, living a life of death or glory6, with a constant stream of noise competing for your attention. You might not often find the time to reflect deeply on your career opportunities7 and trajectory, or on your goals for the next phase.

Partner compensation structure. If you entered your firm as an associate, the partner compensation structure probably wasn’t front of mind when you decided to join. But as a partner, this is a big deal! The choice between full eat-what-you-kill versus a more balanced approach to sharing the wealth has implications for both your bank account and your relationships with colleagues. Ask yourself whether your firm has chosen the point on the spectrum that you would prefer.

Your personal compensation. Does your pay fully reflect the value you’re creating? As a general rule, you should be taking home 40% of revenue from hours you billed personally. Your fair share of the hours billed by members of your team is going to depend on the firm’s profitability and leverage. If you have questions about whether you’re being paid fairly, we should talk.

Equity. Do you have equity? If not, do you want it? Does your firm offer a viable pathway to the equity tier?

Capital contributions. What capital contributions does your firm require? Are the terms more or less burdensome than those of other firms?

Support for your practice area. Does your firm value your practice area? Is your practice a priority in the firm’s marketing efforts? Are you benefitting from cross-selling by the firm’s other practices?

Opportunity to own client relationships. Does your firm provide a strong platform for you to develop your own business? To the extent some of your work comes from the firm’s institutional clients, are more senior partners making room for you to own key relationships?

Broader firm strategy. Does your firm have a well-defined strategy? Do you believe in it? Are you confident that your firm will be stronger in five years than it is today?

If you know you want to keep practicing, but you aren’t entirely sure that your firm is the best place to do it … whether you are looking for bankrobber8 compensation or need a pressure drop9, we should talk. I don’t have to tell you that the market for lateral partners is extremely hot right now. I’m sure you have friends and colleagues who have moved recently.

And with good reason! On average, a partner who makes a lateral move receives a compensation boost of 20-30%. The potential gains are especially eye-popping for female partners: when a female partner switches firms, she receives a median pay increase of 40%. Makes sense that so many partners are exploring their options, right?

Keep in mind that window shopping is not a final decision. You don’t need to be bored with the USA10 to find out if London’s calling11. Actually, the ideal time to start looking is before you’re ready to move. Confidence is a better look than desperation.

But the bottom line is, in this market, you are doing a disservice to yourself if you don’t at least explore your options. You need to know your rights12 and know your worth. And the only way to find out how another firm might treat you is to ask.

Discography:

1.     Should I Stay or Should I Go (1981)

2.     I Fought the Law (1979)

3.     Rudie Can’t Fail (1979)

4.     Brand New Cadillac (1979)

5.     Lost in a Supermarket (1979)

6.     Death or Glory (1979)

7.     Career Opportunities (1977)

8.     Bankrobber (1980)

9.     Pressure Drop (1979)

10.  I’m So Bored With the USA (1977)

11.  London Calling (1979)

12.  Know Your Rights (1982)

Why You Should Build a Relationship with a Recruiter Now

So you’re happy at your firm? That’s great! It’s possible you’ll continue to like it so much that you’ll spend your entire career there. But it isn’t likely. Firms change over time and so might your priorities. Maybe personal circumstances will cause you to move to a market where your firm has no presence. Maybe your most valued mentors will retire or switch firms. You never know.

If in the future you find yourself ready to lateral, you will be well advised to consult a skilled and trustworthy recruiter. Do you know who you’ll call? If not, now is the time to start preparing. 

Start early

Many lawyers adopt a blanket policy of ignoring all recruiters. I get it. Dealing with recruiter spam is no fun, and it’s tempting to think you can always start replying once you’ve become dissatisfied with your current firm and are ready to leave.

This mindset is understandable, but it’s a mistake. Calling a recruiter when you’re ready to move is definitely better than going it alone. But if you wait until that moment, you’ll find yourself behind the 8 ball. You’ll feel pressure to move ahead quickly and will end up choosing a recruiter without much information. You’ll also be at the mercy of whatever opportunities the market presents at that particular moment. In contrast, if a well-connected recruiter is familiar with your profile ahead of time, she will be actively looking out for the most suitable roles and may be able to create opportunities specifically for you.

A relationship is important

Why does a relationship with a recruiter matter? And what does that even look like?

You probably consider your career to be one of the most important things in your life. Just as you wouldn’t go to a random doctor to address a serious health concern, you shouldn’t assume that all recruiters will be equally effective in helping you shape your career. The best recruiter is one who has listened to you and taken the time to understand your priorities. You want to work with someone who is happy to speak with you even though you aren’t looking to move. That’s a good signal that the recruiter cares about you as an individual and isn’t simply trying to fling plausible candidates at open roles. 

You should make it a regular practice to call your recruiter once a quarter. These calls are an opportunity to find out what’s happening in the market and to place your firm in context. Even assuming you determine that your current firm remains the best fit, the conversation will be valuable. And through these regular interactions, you will develop a feel for whether the recruiter is someone you trust. You will have greater confidence in the advice and feedback you receive from a recruiter if you have known that person for years.

Choose one recruiter

You are not under any obligation to work with the first recruiter you come across. By all means, speak to a few and get a sense of who seems most competent and trustworthy. But after you’ve done that initial diligence, it’s in your best interests to choose one to work with exclusively. Working with a single recruiter enables you to maximize trust and rapport.

How should you choose your recruiter? Interpersonal rapport is critical. If you don’t feel a connection, you probably shouldn’t trust that recruiter with your career. Pay close attention to whether the recruiter is truly listening to you and is supportive of your goals. And watch out for red flags. A big one is pushing you to move immediately even if you have already made clear that you’re happy at your current firm. Another is promising to achieve something far out of the ordinary. A skilled recruiter can help you negotiate a better deal, but there are limits. If it sounds too good to be true, it probably is.

A little advance planning will pay real dividends when the time comes to lateral. Don’t wait until you find yourself in a bad situation and are feeling pressure to move reactively. If you decide to switch firms, you’ll want it to be an intentional, considered, career-enhancing move. A strong relationship with a trusted recruiter can make that happen.

Strategies for Working Effectively With Your Recruiter

Recruiters can offer invaluable information and guidance during your job search and throughout your legal career long before or after a move. Here are a few tips for working most effectively with your recruiter and leveraging their knowledge and experience to benefit your job search:

Establish a relationship with a recruiter you trust early on. Take advantage of us. We have information on the market to share and we can offer you the benefit of our experience working with hundreds of other lawyers over the years who may have faced similar circumstances and decisions. It doesn’t cost you anything to have a conversation once in a while. Then if and when you are ready to make a move, you’ll know which recruiter has the best relationships with employers, which recruiter is most knowledgeable about the market you’re exploring (and the market you’re coming from, if different) and which recruiter you trust to best advocate for you and guide you through the process.

Work with one trusted and knowledgeable recruiter. While it may be beneficial to touch base with multiple recruiters if you’re looking for in-house positions, when exploring law firm options, working with multiple recruiters often leads to problems—at worst, duplicate submissions and at best, an imperfect management of your timing and leveraging of offers.

Allow your recruiter to adequately prepare. If you’re ready to make a move, send your resume and deal sheet if you have one ready in advance of an introductory call. This will make for a more efficient conversation if you’re pressed for time. Of course, if you’re not actively looking to move, no need to send a resume just to open the dialogue.

Give us all the logistical details. Then let us decide what may be important to share with the prospective employer and at what stage. For example, if you would need a delayed start date due to notice periods, school calendars, leases, etc., or if you do not yet have work authorization in the U.S., please let us know upfront.

Give us all the substantive information to work with. I recently spoke with a partner candidate who told me, “Don’t be offended. I value your knowledge and input but no one can sell me better than I can sell myself.” And he’s largely right. Recruiters can be instrumental in determining how to best present you to prospective employers, but without your substantive input, our abilities are limited. So don’t be the candidate who tells your recruiter simply, “Submit me!” Empower us with as much information as you can. For example, give us bullet points/sound bites covering why you’re looking to make the move and why in your own words you believe you’d be a good asset to the new team. See my post on cover letters for more details.

If you are working with other recruiters or applied anywhere on your own, let us know where and when right from the start. And keep us posted on the progress so we can best manage the timing and leverage your other interviews/offers.

Keep us posted on your thinking. We’re here as a source of information—in terms of the substance of opportunities and the logistics of the job search process—but we’re also here to be a sounding board. Let us know what concerns you may have so we can dispel any rumors or flag issues that may indeed be real concerns. Let us know your thinking on why you’re leaning towards accepting one offer over another.

When in doubt, run it by us first. If you don’t know how to answer a question a firm poses or you don’t know what to say when a partner is calling you with a verbal offer…if you don’t know if a detail is important enough to share, JUST ASK.

The bottom line: It’s better for everyone if there are no surprises! There’s no such thing as “too much information” when it comes to working with your recruiter. Give us all the information and let us do our best work for you! If you’d like to discuss your job search, have questions about the lateral process or just want to open a dialogue for general career guidance, please reach out to me at .

Making the Jump from Government Practice to Law Firm Partnership

A stint in public service is attractive to many lawyers. Government practice enables attorneys to improve public policy and promote justice, contributing directly to our collective well-being. But for many attorneys, government practice will be just one phase of a longer, multifaceted career.

After their time in government, lawyers frequently transition to private practice. For some, this represents a homecoming—many attorneys simply return to the firm for which they worked prior to entering government. Others are new entrants to private practice, drawn by the challenge of applying their government knowledge in a new context and by the lure of a substantial increase in compensation.

For a government attorney seeking to make this transition, the range and quality of available private practice roles will depend on several factors. Realistically, not everyone is competitive for law firm partnership, especially at the most prestigious firms. A former equity partner who left her law firm for a stint in a high-profile government post is in a different situation from a career government attorney whose expertise is not aligned with a hot law firm practice area.

Firms value seniority, expertise, and a business development track record

Whether partnership is a realistic aspiration for a departing government lawyer typically depends on three factors: seniority, nature of expertise, and history in private practice.

High-level government leaders tend to be strong partnership candidates, even if they have no prior law firm experience. The lawyers in this category are often political appointees. Examples include:

  • General Counsel of an Agency;
  • US Attorneys and First Assistant US Attorneys;
  • Attorneys General and Deputies;
  • Directors (such as Directors of Enforcement);
  • Chiefs and Deputy Chiefs of major divisions/committees etc.

Some government lawyers who are not in top leadership posts are nevertheless competitive for partnership on the basis of specialized and valuable expertise. A Senior Counsel with deep knowledge of a hot regulatory area such as privacy, cybersecurity, or international trade has a shot at becoming a partner. On the litigation side, partnership is realistic for attorneys with a proven track record of high-profile trial advocacy. An association with an elite group such as the Mueller Special Counsel team is ideal, but even other AUSAs who have accumulated substantial first-chair trial experience can have a solid shot at partnership.

When law firms assess the suitability of a government lawyer for partnership, one critical question is how successful the candidate will be in generating revenue for the firm. Service in a high-profile government role and/or expertise in a high-demand regulatory area will assist in marketing to potential clients. But the most reliable predictor of business development ability is having done it before. A government lawyer with prior experience as a law firm partner will therefore have a considerable advantage. Candidates with partnership experience are especially desirable if they have taken care to maintain relationships with their former private practice clients, as this is a strong signal of capacity to ramp up a book of business quickly.

Although the majority of lawyers who make the transition from government to AmLaw partner fit into one of the above categories, there are occasional exceptions. For example, a former agency attorney (GS-15) became a partner at a firm thanks in part to her former supervisor, who had sufficient business and clout at the new firm to push for the title. In this instance, it was particularly critical for the attorney to work with a recruiter to craft an effective business plan and to prepare for interviews. That preparation enabled her to make the business case to each interviewer she met, regardless of their practice area and location.

Equity or non-equity?

Experience as a law firm partner will be weighed heavily in the decision to offer equity partnership versus non-equity partnership. It is rare (but not unheard of) for all but the highest-ranking government lawyers who lack a business development track record to get offers for equity at the outset. Conversely, a former equity partner can reliably expect equity partnership offers, particularly where the partner is not seeking to ascend the AmLaw ranks significantly. (A candidate who was an equity partner at a small law firm may not be competitive for equity offers at top AmLaw firms.)

For former non-equity partners, a stint in government can be the perfect springboard to equity partnership. Candidates exiting government roles sometimes mention their non-equity status at their former law firm as the main factor motivating them to seek partnership opportunities at other firms.

What about more typical government lawyers?

For government lawyers who do not fit into the rarified categories described above, but are nevertheless committing to becoming a partner, there is still hope. It may be advisable to pursue opportunities at smaller or less prestigious firms, remembering that the first destination post-government need not be the last. Sometimes, an interim move to a lower-ranked firm can enable a candidate to lay the foundation for a second move in three or so years to join a stronger firm. Flexibility and strategic planning are especially important for lawyers in this situation.

Overwhelming Demand for Legal Services: Implications for Attorney Job Searches

Law firm deal and case volumes have grown dramatically in 2021.  The increased demand for legal services has reshaped the law firm compensation and hiring landscape, with firms struggling to retain and expand their mid-level associate ranks.  Law firm associates are now in the driver’s seat, with many new factors to consider.

Increased Demand, Increased Hiring

The demand for legal services, particularly for Am Law 200 corporate transactional practice areas, has been unprecedently strong this year.  As the Economist recently noted, “Nearly 16,000 {M&A} deals involving at least one American party have been announced in the first six months of this year, roughly half as many again as in the same periods in 2016–20.”  U.S. M&A deal value in the first half of 2021 was 264% greater than the first half of last year according to Forbes.

The deal influx has sharply increased demand for junior through mid-level law firm corporate associates.  According to Leopard Solutions data, there were 1,375 lateral corporate associates hired into Am Law 200 firms in the U.S. in the first seven months of 2021.  This is a 163% year-over-year increase compared to the first seven months of 2020, when just 523 U.S. lateral corporate associates were hired into Am Law 200 firms in the U.S.

Base Compensation Increases Have Not Been Uniform

In an environment of exceptional demand for junior through mid-level associates in busy transactional practice areas, as well as for commercial and patent litigation associates, firms have had to make changes to recruit and retain top talent­.  Base compensation is on the rise: the new associate market salary scale ranges from just over $200K (first year)­ to $365K (eighth year).

The salary scale increase has boosted compensation across the board.  Notably, some previously below-market firms are moving to full market lockstep, with some firms in cities such as Atlanta instituting New York market salary scale for the first time.  Large firms that remain below the current market salary scale tend to fall into three categories.  Many firms have increased first-year associate salaries to $202.5K or $205K but pay between $15K and $25K less than market for mid-level and senior associates.  Most of the below-market Am Law 100 firms are in this first category. The second category includes firms that are on (or slightly above) the 2018 market scale, which paid salaries ranging from $190K to $340K.  A third category consists of firms that fall below the 2018 scale and start first-year associates at a base salary range of $160K to $180K.

In this new landscape, the income disparity between associates at market and below-market firms has expanded.  Prior to 2021, Am Law 200 and regional firms paying below-market compensation were still relatively close to the market salary scale, often paying slightly compressed salaries for mid-level and senior associates and year-end bonuses 15% to 30% below-market.  Associates at below-market firms were generally receiving base salaries in the range of $15K to $20K less than peer associates at their same year level at market compensation firms.  That disparity has now widened to more like $30K to $35K.  Notably, in the months leading up to the June 2021 market salary scale increase, some below-market firms had just increased their compensation to be more competitive with the previous 2018 market salary scale, only to have the market scale increase again.  Factoring in special bonuses (which many below-market firms are not distributing), and market year-end bonuses, we are now looking at well over six-figure compensation discrepancies.

Admittedly, there are often some upsides to working at a firm with below market compensation, such as better work-life balance, more client contact, better partnership prospects, and/or substantive responsibility on cases and matters.  However, for some associates, the compensation gap now may be too significant to justify staying.  The reality is that many firms at or near the current market salary scale offer associates a reasonable schedule and the aforementioned non-pecuniary benefits.

Special Bonuses, Signing Bonuses, Retention Bonuses, and More

In this tight labor market, base salary increases are just one component.  Firms have paid special bonuses to associates, ranging from $12K (first year) to $64K (eighth year).  Firms are also seeking to recruit and retain top talent with a range of signing and retention bonuses, not to mention more flexible approaches to remote work.

Consistent with previous years, firms are addressing the disincentive for lateral associate candidates to leave behind their annual bonuses at their current firms.  Most firms are offering true-up signing and/or guaranteed year-end bonuses totaling or exceeding the amount of lateral hires’ anticipated year-end bonuses.  Firms that were previously reluctant to offer true-up signing or guaranteed bonuses are now offering this benefit out of the gate.  In addition, firms are offering non-pro-rated special bonuses (first and second tranches distributed in the spring and fall, respectively).  This incentive can particularly attract associates at non-special bonus firms to start on or before special bonus distribution dates.  One caveat is that firms generally will not pay special bonus tranches to lateral associates who have already collected a bonus from their current firm.  In other words, no double dipping.

Firms are also now customarily offering additional signing bonuses on top of true-up year-end and special bonuses.  Depending on the practice area, candidate, and year level, these extra signing bonuses can range from high five to low six figures.  As an industry-wide practice, this was extremely rare prior to the start of the most recent recovery in late 2020.  Signing bonuses are often contingent on a specific start date in the interest of expediting support to busy practice groups.  There is also usually a claw-back provision in the offer requiring full or pro-rata repayment if the associate departs quickly (typically within six or twelve months).

To retain associates in busy practice groups, firms are offering similarly sized retention bonus to some associates. The terms require the recipient to remain at the firm for a set duration, enforced through a claw-back clause.  Naturally, we are also seeing more law firms making counteroffers to associates who give notice, with perks including retention bonuses and partnership promotions.  We caution candidates not to entertain counteroffers for several reasons.  First, a counteroffer is unlikely to address underlying dissatisfying factors, such as the scope of practice offerings or work environment.  Second, there is a risk that the firm will hold the attempt to leave against associates in future promotion decisions.

Additionally, firms have adapted by adjusting work arrangements and offering partial or fully remote schedules to associates with coveted mid-level experience.  Some firms are offering fully remote work arrangements for associates based in geographic markets where the firm does not have a physical office, as we recently covered in more detail.  This can be especially beneficial for associates in cities with a lower cost of living, as it may offer a rare opportunity to earn New York market scale.  This may represent a six-figure salary bump, relative to the market scale where the associate resides.  (That said, fully remote work is still not the norm for most open associate positions, as we recently discussed.)

The current job market is particularly conducive for associates looking to relocate to another city or to upgrade to a more prestigious firm.  The time frame for a move to a new city is unusually flexible, with firms being amenable to associates working remotely for a significant period (often for the remainder of 2021) as they plan their move.  Associates seeking to upgrade to a higher-ranked or more desirable firm are benefitting from increased flexibility on academic or peer-firm background requirements.  We are seeing prestigious Vault 30 firms hiring associates below typical law school grade cut-offs or from more regional firms, provided the associate has the right substantive experience.  This window of opportunity to join a firm that may have previously seemed out of reach may narrow in the near future.  We anticipate a potentially more crowded associate applicant pool when firms return to the office.  Associates who prefer to evaluate firms in-person, or who favor in-person onboarding for lateral integration purposes, may enter the lateral market at that time.

While there are numerous considerations unique to each individual attorney job search, the current state of the market heavily favors lateral associate jobseekers and merits a thorough and introspective assessment.  If you are interested in hearing more about the market or are considering exploring other opportunities, Lateral Link is happy to assist.

Is it Better to Be an Equity Partner or Non-Equity Partner?

Last week we reviewed the evolution of law firm partnership economics, from the early days of a single-tier, all-equity partnership, to the emergence of a non-equity partner track, to the increasingly complex range of current partnership arrangements. We pointed out that as the economic models of partnership have grown increasingly complex and differentiated, so have the implications for current and potential partners.

This week we’re going to delve into those implications and challenge the traditional assumption that equity partnership is necessarily more attractive than non-equity partnership. On balance, equity partnership is likely still more rewarding in most cases. But for lawyers in certain situations, non-equity arrangements can have strong appeal.

Benefits of equity

Plenty of lawyers still aspire to become equity partners, and for good reason. Equity partnership slots are increasingly scarce, and in a profession that greatly values prestige and status, securing partnership shares is viewed as the pinnacle. The equity partners of a growing and profitable firm can expect to take home an outsized share of the financial rewards. Holding equity also gives a partner a stronger voice in firm governance in the form of voting rights.

Voting rights and partner compensation are often closely connected. For example, one factor that contributes to the equity partnership’s outsized compensation share is origination credit. It is common for firms to structure origination credit formulas to reward equity partners more than their non-equity colleagues. Senior lawyers often pursue equity partner opportunities to receive greater origination credit for their matters. Having input into how the formulas that award origination credit are constructed is an example of the potential value of voting rights.

Downsides of equity 

It’s easy to focus on the considerable benefits of becoming an equity partner, but there are also some real downsides that should not be overlooked. Most notably, the boost in status that comes with being named an equity partner is paired with a sizable financial hit in the form of a required capital contribution. This contribution is typically in the range of 25 to 35 percent of annual compensation, but at some firms it can amount to 50 percent or more. Regardless, it’s a lot of money to fork over to the firm, especially for lawyers who are still relatively early in their careers. And getting the capital contribution back may not be so simple. Under the rules of many partnership agreements, the firm is not obligated to return the money until years after an equity partner’s exit. Less significant, but still worth noting: equity partners must pay for their own benefits. 

Another factor to consider is that equity partners’ voting rights are diminishing at many firms. Historically, a wide range of decisions—ranging from lateral partnership hires to office lease renewals—required a vote of the full equity partnership. As the size and geographic spread of partnerships has expanded, many firms have determined that it is more practical to delegate most decisions to a small committee or even to the sole discretion of the firm’s Chair. From an efficiency perspective, this is largely a positive development, but one side effect is reduced influence for equity partners who are not in top leadership posts. With respect to an increasingly broad set of issues, these partners are treated more like employees than owners.

When is non-equity best?

Weighing the benefits and downsides, non-equity partnership looks relatively appealing in some scenarios. The opportunity to avoid a substantial capital contribution can be a selling point to both the youngest and oldest partners. At the younger end, partners may not yet have built up enough of an investment portfolio to feel comfortable allocating such a large sum to an illiquid investment in the firm.

At the senior end of the spectrum, a departing equity partner who is contemplating one more short stint at another firm before retirement may be attracted to the simplicity of a non-equity arrangement. Partners in this situation have nothing to prove by again becoming equity partners. They may instead place more value on gaining the flexibility to invest in other ways the capital contribution that their prior firm will return to them. The opportunity to avoid assuming liability for the new firm’s debts is another benefit.

For partners in certain niche practices that do not entail a large standalone book of business, non-equity partnership can also make more sense. Practices such as Tax and Trusts & Estates often function as service providers to other practices in the firm, such that the firm’s origination credit formulas may not greatly reward the partners who specialize in these niche areas. A non-equity partnership arrangement that properly values these partners’ contributions may be the right answer.

A compromise approach: from non-equity to equity

For many partners, the best approach may be to split the difference by pursuing non-equity partnership opportunities that are likely to lead to equity partnership later. This enables the partner to delay the capital contribution hit, while preserving the opportunity to capitalize fully on client relationships as the partner’s book of business expands. Obviously, a partner hoping to go this route must first assess whether the firm offers a real and viable track from non-equity to equity. Where this pathway really does exist, it can offer the best of both worlds.