Tag Archives: Legal Recruiting

Business Planning for Senior Associates: Laying the Groundwork for Revenue Generation

If you’re a mid-level or senior associate with aspirations to remain in private practice long term, you already know that business development will be a factor in your ability to advance in the profession.  The early associate years are primarily about acquiring the core legal skills that enable you to practice competently and with relative independence.  But as you approach the window for promotion to counsel — and, ultimately, partner —  a solid legal toolkit is not enough.  Your firm must have confidence that you can make a material contribution to generating new business.

The good news is that business development doesn’t have to be intimidating.  If you lay the right foundation, it’s something that will start to happen naturally.  But the foundation is critical, and it requires a proactive investment on your part.  Business development planning is an iterative process, so the sooner you give it serious attention, the better placed you will be when your firm is considering you for promotion.  Do not wait until you are up for Counsel or Partner to get started.  To that end, here are some helpful tips.

Write a business plan and update it regularly.

Even as a mid-level associate, you need a business plan.  This is a living document that you should update at least annually.  Don’t wait until you are in the promotion window to do this!

A solid business plan will include details on what you have achieved to date, prospects you are actively working on, and your goals for the future.  List and quantify any matters you have originated, noting which business or client relationships would likely be portable in the event you switched firms.  List your business contacts, distinguishing between those to whom you are actively marketing and others in your broader network.  You should also make a list of attorneys who may be sources of referrals.

If you’re writing a business plan for the first time, you may have little to say about your (still nonexistent) book of business.  That’s totally fine!  Focus instead on spelling out the things you are doing to build your professional profile and lay the groundwork for future business development.  What organizations are you involved in?  Which articles have you published?  What about speaking opportunities?  If you don’t yet have experience in each of these categories, commit to building some in the next six months.

Foster a strong network, both in person and online.

It’s never too early to get serious about networking.  Relationships compound over time, often in unexpected ways, so there is substantial benefit to putting yourself out there early and maintaining an ongoing presence in the various communities with which you’re affiliated.  The range of opportunities for effective networking is wider than ever, both in person and online.  Remember that networking is about meeting and talking to people, without an immediate expectation of any concrete payoff.  So try to relax and be human about it!

One easy place to network is LinkedIn.  You can do it from anywhere, whenever you have a free moment.  LinkedIn is a great platform for marketing yourself as an expert in your field and making connections with prospective clients.  Low-effort ways to get started include sharing news about your firm and commenting on your connections’ posts.  As you grow more comfortable on the platform, start sharing your own insights relevant to your area of expertise.  In the process, you’ll find yourself staying in better touch with existing contacts, as well as expanding your network with new contacts.

And don’t forget about “internal networking” within your own law firm.  Getting to know attorneys outside of your practice group is key.  By gaining exposure to different practice areas, you lay the groundwork for future cross-selling.  A colleague who knows and trusts you is more likely to introduce you to clients and invite you on pitches.

If the concept of networking gives you anxiety, set yourself some small, achievable goals to help get more comfortable.  For example, if you go to a happy hour event, commit to making three new contacts and to making one LinkedIn post about the event.  And then vow to follow up with them.  The most important thing is to get started!

Leverage your mentors and learn from their experience.

If you’re a mid-level or senior associate, you likely have at least one or two mentors whom you trust to provide career advice.  (If you don’t, you should consider a lateral move to a firm more committed to mentorship!)  Business development is a great topic to explore with your mentors.  Ask about their experience generating revenue and the strategies that have worked best for them.  Share your business plan and ask for feedback.  Ask your mentors to include you in business development activities and pitches, where possible.  If you show that you’re committed to the business side of the firm, most partners will be happy to help you build the skills needed to become a revenue generator.

In addition to a mentor within your firm, assembling a group of other advisors who know the legal market and the profession is never a bad idea.  Forming a relationship with an experienced recruiter (even if you aren’t looking to lateral at this time), who knows the market, and will check in with you every six months or so to update you and provide advice, can only help you.  A good recruiter can provide you with solid business development tips, a business plan template, and can even offer edits to your plan.

Commit to stepping out of your comfort zone.

Many associates find business development intimidating because it is new and requires you to put yourself out there and risk rejection.  However, please rest assured that these are learnable skills, provided you have the right mindset.  Start by acknowledging that you must step out of your comfort zone to achieve success and move forward.  And keep in mind that building a book of business doesn’t happen overnight.  Good luck and remember that there are many experts eager to help you put yourself out there!

Navigating Multiple Potential Offers: Timing Challenges in the Lateral Market

Annual bonuses have hit the bank accounts of many law firm associates, kicking an already active lateral market into an even higher gear. With demand continuing to outpace supply, many lateral candidates can reasonably expect to receive offers from multiple firms. Unfortunately, the offers probably won’t arrive at the same time. Candidates often must make a decision about an offer in hand before receiving an answer from one or more other firms where they interview. This scenario begs the question: what should you do if you have received an offer from a less-preferred firm but have yet to hear from your preferred firm?

Each situation requires a case-by-case assessment, and a trusted recruiter can offer helpful individualized guidance. However, there are a few general principles that any lateral candidate should keep in mind.

Don’t underestimate the value of joining a firm that truly wants you

The clearest indication that a firm truly wants you is a decisive offer extended shortly after interviews. This is a strong signal that the firm will go above and beyond to integrate you into the practice, setting you up for success in your new role. It should also give you confidence that bumps along the road will be more easily manageable. For example, in the event your first performance review is less than perfect, you will be in a better headspace to receive criticism as genuinely constructive, rather than wondering if they even wanted you there in the first place. Given the sometimes cut-throat nature of law firm life, knowing that the team was thrilled to hire you can be critically important in helping you stay positive and confident through the inevitable ups and downs.

If the firm really wants you and also knows that you are considering other firms, you (or your recruiter) may be in a position to negotiate a signing bonus or, in the case of non-lockstep firms, a higher salary. Obviously, this will be valuable if you accept the offer. If you have doubts about your willingness to accept, even with an added financial incentive, you should be careful about potential damage to your reputation. It’s a bad look for a candidate to negotiate a robust signing bonus (either alone or through a recruiter), only to then decline the offer.

A full pipeline of work alleviates job security concerns

A prompt offer is a strong indication that the firm has immediate work for you to take on. This can mitigate concerns about failing to meet hours in a new group where you lack established relationships. Conversely, if a firm is slow to give you a decision, there is less certainty of an immediate need. If the practice group is not currently operating at full capacity, there is some risk that the firm will ultimately decide not to approve a hire — even if your interviewers judge you to be a great candidate.

There’s something reassuring about a confirmation that the role and the need are firm priorities. Even junior associates — who have experienced a remarkably strong market for the duration of their legal careers — sometimes fear that they will be “last in, first out” should the market sour and the firm start making cuts. This is rarely a serious risk in the current market, but knowing the practice you will be joining has a robust pipeline of work should put to rest any concerns about job security.

A less-preferred firm can sometimes be a stepping stone

In some cases, a less desirable firm may be a stepping stone to your preferred firm. This is particularly plausible where a candidate is seeking to transition to a new practice or subspecialty. If the less-preferred firm is offering a concrete opportunity to gain relevant experience in the new field, it may be wise to accept the offer and then re-apply to your preferred firm in the future, with a strengthened profile.

When accepting an offer, plan to say for at least a year

With rare exceptions, it is a major red flag to leave a firm after less than a year. Keep this in mind if considering the stepping stone approach. If you cannot see yourself sticking it out for a full year or more, you are better off declining the offer and taking your chances that a more attractive option will materialize soon. Of course, how you feel about your current firm is also an important factor. If you are not desperate to leave, you can be more selective and risk-tolerant in your lateral search.

Working through these issues with a trusted recruiter can be invaluable

There is a lot of upside to working through these timing issues with the help of an experienced recruiter. Candidates often focus on the recruiter’s role in helping secure interviews, but a recruiter with strong relationships can also add value as the candidate’s advocate after interviews have concluded. For example, recruiters are typically in a better position than candidates to exert pressure when a firm is delaying its decision. Your recruiter can have a candid conversation with the firm, conveying the message that you are strongly considering other options and will soon be off the market.

In addition, a trusted recruiter can be a helpful sounding board as you weigh the various factors and come to a decision about how best to proceed. Juggling actual and potential offers is rarely easy, but your recruiter can help you navigate the process as smoothly as possible.

The Great (Law Firm) Resignation: Why You Shouldn’t Take a Counter-Offer (Part II)

This year, as the Great Resignation takes its toll on law firms, the volume of departures has been especially high. But for lawyers who haven’t been through it before, the process of resigning can be daunting. At Lateral Link, we routinely advise candidates on their resignation timing and process, so we think now is an opportune time to share that knowledge more broadly.

On Tuesday, in Part I of this two-part series, we discussed how to resign properly, while managing the emotions that the resignation decision may trigger. Today, our topic is counter-offers and the promises that accompany them. What should you do if your employer responds to your resignation announcement with a seemingly attractive offer to stay at your current firm?

The logic of counter-offers

Employee turnover is expensive. Searching for a replacement and training the new hire to succeed in the role are both costly. In the interim, the firm may have to turn away work due to being short-staffed (or in most cases, push it on their current associates, causing severe burn out). Change is also risky: whereas a new employee has no easily observable track record, the employer knows the capabilities of its current staff.

These factors are doubly significant in a robust lateral market like the one we’re in now. Replacing you will not be easy, and it will probably take a long time. With that context, it’s no surprise that your employer would seek to talk you out of resigning. Pushback often comes in the form of questions like, “Can’t we persuade you to stay?” or “Can you think this over for a few days?”

The emotional appeal of a request to stay

Assuming you don’t hate your current job, an appeal to change your mind might cause you to think twice. We tend to view loyalty as an honorable quality, and it’s always nice to know that you’re wanted. Even on this dimension, however, it’s important to recognize that the consequences of declaring your intention to leave will linger. Once you announce your resignation, trust between you and your employer is broken. If you stay, your employer and co-workers may focus less on the sacrifice you’ve made in declining the new opportunity and more on the “lack of loyalty” you showed in submitting your resignation.

It’s also important to balance feeling flattered by the gesture of a counter-offer against the reality that it was only prompted by your threat to leave. If you were seen as such a valuable member of the team, why didn’t your employer proactively offer you better terms to remove the incentive to look elsewhere? If your employer is willing to offer a compensation increase or a promotion only after you announce your resignation, then the firm has been knowingly underpaying and undervaluing you, which demonstrates a clear lack of appreciation for your contributions.

Trust yourself

If you’ve thought the process through, chances are you would’ve already addressed your grievances with your current employer and for whatever reason, your employer failed to deliver. The fact that you decided to resign is a clear indication that you aren’t fully happy in your current role. True, a counter-offer could bring an attractive pay increase. But the work conditions that prompted your job search in the first place — poor partnership prospects, long hours, toxic culture, insufficient access to interesting work, and so forth — are unlikely to permanently change if you stay. You are an intelligent adult. You made your decision for a reason. The wisest course is to trust yourself.

Consider your future prospects

When you accept a counter-offer, it buys time for your employer to find your replacement. Sure, it’s possible the firm will let bygones be bygones and allow you to resume your prior career trajectory. But, with your loyalty now in question, it’s probable that your employer will look out for candidates to replace you and may terminate you once a suitable replacement is found. Even if your employer is not in a rush to get rid of you, the aborted resignation and residual doubt it creates are likely to factor in future promotion or lay-off decisions.

Don’t set yourself up for regret

Most employees who display momentary weakness and withdraw their resignation in the face of a counter-offer realize quickly that they have made a mistake. Promises made to keep them often turn out to be empty ones — a firm’s culture doesn’t change overnight. Worse, when a candidate realizes she should have followed through on her decision to leave, she may find that the firm she intended to join has filled its vacancies and moved on. Don’t let that happen to you.

A new year oftentimes means a new job for many people. If you need help navigating this “unprecedented” (yes, I said it) lateral hiring market, please feel free to contact me or any of my Lateral Link colleagues. In the meantime, here’s wishing that 2022 brings you new happiness, new goals, and new achievements. Cheers to the New Year!

The Great (Law Firm) Resignation – How to Resign (Part I)

We’ve all heard a lot this year about “The Great Resignation.” As is the case in many industries, law firms are contending with an unusual volume of resignations. In our role as recruiters, we at Lateral Link have a front row seat into both the mechanics of the resignation process and also the emotional angst that it sometimes entails. From uncertainty over the decision to resign to a lack of knowledge of how to give notice in a professional manner to anxiety over how to respond to a counter-offer, lawyers who are considering leaving their jobs have a lot on their mind.

This week we’re taking a look at some of these issues, in two parts. Today we address how to prepare for and execute a smooth resignation, while managing the emotions accompanying this process. On Thursday, we will discuss counter-offers.

Managing doubts about the decision to leave

For some people, the decision to resign is an easy one, but others really struggle with it. Perhaps it’s fear of the unknown, fear of burning bridges or disappointing people, or self-doubt about one’s ability to succeed elsewhere. If you experience this anxiety, keep in mind that it’s normal, and it doesn’t mean you’re making a bad decision. At the end of the day, you have to trust your gut. You’ve weighed the pros and cons and made a thoughtful determination about what’s best for you and your career. Be confident and comfortable in this choice and know that you are doing the right thing, even if the process isn’t a fun one.

Resigning is like ripping off a band aid — the fear is generally worse than the act itself. Nine times out of ten, your manager is an experienced professional and will have been in this situation before, so it will only be awkward if you make it that way. If you commit to leaving in the most professional and ethical way possible, the knowledge that you’re going about the process in the right way should help to calm your nerves.

Timing your resignation

Start by getting your ducks in a row prior to resigning. Do your best to tie up loose ends and stay on top of your workload to avoid a scramble when your last day comes.

Try to arrange it so that immediately before resigning, you have time to do whatever it is that helps you de-stress: meditation, deep breaths, exercise, or yoga can set you in the right frame of mind. Give notice first thing in the morning when your mind is clear, stress level is lower, and your boss is more likely to be around. If you wait until the end of the day, you may find your boss is distracted or busy with other matters.

Give at least two-weeks’ notice. Not offering any notice at all is completely unprofessional. Even if you think your employer will want you to leave immediately, it is customary to at least offer to stay on for two weeks to help transition your matters. Once you resign, leave promptly after your notice period ends. Each of us is fungible, so there is no good reason to stick around for an extra week or two.

Who to tell?

You should resign to just one person, preferably your direct supervisor or department head — even if you don’t like that person. There’s no need to reach out to several members of management, and you shouldn’t tip off your resignation to other colleagues beforehand.

Resign in person (or if necessary, via video). Don’t resign by e-mail, voice mail, or letter (unless a written resignation is also required). You must put your big kid pants on and summon up the courage to resign face-to-face.

What to say?

Keep it simple: “Karen, I want to let you know that I will be leaving Adam & Brown to join Cox & Smith. This was a very difficult decision to make. I’ve had a good experience here but I believe this is the right decision for me at this point in my career. I hope we can stay in touch.” Leave it at that.

You should be prepared for any reaction. Your boss may be supportive and collegial, cool and dismissive, skeptical, angry, or disinterested. Questions may range from “where are you going?” to “why are you leaving?” to “why didn’t you tell me you were unhappy?” Whatever the reaction, don’t take it personally. Be mindful that your boss has other matters to tend to besides your career plans.

Whatever you do, resist the urge to “send a message” with a proverbial mic drop. You can’t control your employer’s reaction, but you can control how you comport yourself. Don’t be petty or childish — keep things mature, professional, and courteous. Realize that you are likely to cross paths with these people again in the future. Passive-aggressive (or in some cases, just plain aggressive) actions may give you short-term satisfaction, but there’s a good chance you will regret them later. There is no upside to criticizing colleagues or the experience you’ve had. Take the high road and be complimentary — even if you don’t mean it.

What to do after you have given notice

Just as you should approach the resignation conversation professionally, you should behave in a professional manner during your notice period. Don’t gossip with colleagues who stop by for the blow by blow. Tell them you’d be pleased to stay in touch after you leave. Wind down, transition your matters, and move on.

Be sure to follow your firm’s guidelines on resignation and departure. Don’t be cute about files, forms, hard drive contents or anything else — it’s not worth the risk.

***

What if your firm tries to convince you to reconsider and makes you a counter-offer? How should you think through a potential decision to reverse course? We’ll talk about that in Part II of this series.

If you need help navigating this “unprecedented” (yes, I said it) lateral hiring market, please feel free to contact me or any of my Lateral Link colleagues.

Top 5 Holiday Gifts to Yourself in Biglaw

With the holidays approaching, now is a great time to reflect. Of course, the holidays are an opportunity to think about the important people in your life. Don’t forget to do that. But as we near the end of a very busy year for most Biglaw attorneys, you may also want to think a bit about yourself. How has this year gone for you? And how can you set yourself up for a strong 2022?

With that in mind, here are the top 5 holiday gifts to give yourself if you work in Biglaw.

Attend lots of holiday parties

Okay, not literally. Holiday parties can sometimes be a lot of fun, but you know what’s better than being hosted at a holiday party? Having firms flatter you, court you, and maybe throw a six-figure signing bonus at you! Just as your inbox will soon be brimming with party invitations, there will be no shortage of firms seeking to host you if you decide to start the lateral interview process. The market remains exceptionally hot, so you’d be wise to accept a few invitations and see how it goes.

Make your shopping list

In case you aren’t sure you want to stick with your current firm, now is as good a time as any to think broadly about your goals and make a list of your ideal employers. Are you drawn to big firms? Boutiques? In-house roles? There’s no wrong answers, but just as with holiday gifts, your list isn’t going to make itself!

Consider whether your firm has been naughty or nice

At a time when attorneys have a lot of options, it’s worth reflecting on how your firm has been treating you lately. Has it paid special bonuses in line with the top of the market? Is it promising a flexible remote work policy in 2022? If your firm hasn’t been showing much appreciation of your efforts, there’s a good chance some other firm is ready to treat you right.

Send your holiday cards

After two years of relative isolation, there’s nothing like a personal touch to let your clients and other professional contacts know you’re thinking of them. So send a card or pick up the phone and give someone a call. They’ll be happy to hear from you. And it’s a good investment in your future. From winning at business development to receiving a heads up about intriguing professional opportunities, a strong network will pay continuing and sometimes unexpected benefits in the years to come.

Ensure you have a happy New Year’s Eve

You know what sets you up for a great New Year’s Eve celebration, besides plenty of champagne? Having secured a fat year-end bonus. If your firm pays at 1950 hours and you’re at 1820, it’s time to hustle! Don’t let yourself fall just short of a $50k or more bonus. The champagne will taste sweeter with an extra five-figure check in the bank!

* * *

We at Lateral Link wish you and your loved ones a joyous and healthy holiday season. If you think a new role could help you have a happier 2022, or even if you’d just like some more information about what’s going on in this crazy lateral market, we invite you to contact us.

Movers, Shakers & Rainmakers: A New Legal Industry Podcast

Are you a lawyer? Someone who hires lawyers? Do you care about the latest trends in Biglaw? If so, you should be listening to Movers, Shakers & Rainmakers, a new podcast from Lateral Link. Hosted by Zach Sandberg and David Lat, the podcast provides a coast-to-coast view of what is happening in Biglaw. From major lateral partner moves to intriguing office openings to emerging legal industry trends, the podcast fills you in and lets you know what to expect.

So who are Zach and David, and why should you care what they think?

Zach Sandberg is a Senior Director based in Lateral Link’s Los Angeles office. He focuses on placing attorneys at premier firms and corporations throughout California and the West Coast. With about a decade of experience in legal recruiting, Zach draws on his wide network of law firm sources to gain insight into the latest Biglaw trends.

David Lat likely needs no introduction. A renowned legal industry writer best known for founding Above The Law, David is an alum of Yale Law School, Wachtell, the Department of Justice, and Lateral Link. His latest project is Original Jurisdiction, a Substack newsletter that “aspires to be a source of incisive, fair-minded, and occasionally entertaining commentary about law and the legal profession.” David’s connections within the broader legal industry are second to none.

The hosts typically begin with news about notable lateral moves and office openings, then spend the majority of the episode covering a broader industry trend. For example, in the most recent episode (Episode 5), Zach and David discuss Davis Polk’s lateral hire of Cleary Gottlieb tax partner Corey Goodman and reflect on the retention challenge for Cleary’s lockstep model, versus Davis Polk’s newly more flexible compensation system. They also address the move of a highly-pedigreed five-partner litigation group from Munger Tolles to Wilson Sonsini and discuss Wilson Sonsoni’s opening of a Salt Lake City office. The majority of the episode is devoted to the growing trend of virtual law firms. Noting that a virtual firm, FisherBroyles, recently entered the AmLaw 200 for the first time, the hosts compare the economics of virtual firms to the traditional Biglaw model. They discuss the type of partner for whom the virtual firm model might be most advantageous, the extent to which virtual firms will appeal to associates, and the outlook for continued virtual firm growth.

In Episode 4, Zach and David cover former Delaware Chancellor Andre Bouchard’s decision to join Paul, Weiss as a litigation partner in the Wilmington office, as well as Crowell & Moring’s office opening in Denver. They also talk about the notable uptick in 2021 of cross-border lateral hires of international associates by U.S. Biglaw offices. The hosts explain what is driving that trend, which countries are most favored for cross-border lateral hires, and whether the American Biglaw market is likely to remain open to international associates in the longer term.

Movers, Shakers & Rainmakers has already addressed several timely topics, including Biglaw Office Openings, the Attorney Talent War, and the Future of Work. But the podcast remains a work in progress, by design. Zach and David are actively soliciting feedback from listeners about the topics they should cover. The goal is for the podcast to be as useful and informative as possible. The target audience is busy, and that’s why the hosts decided an audio format would be best. With a run-time around 30 minutes, the idea is to produce a product that busy lawyers can consume while on the go.

If you have suggestions for topics that Movers, Shakers & Rainmakers should cover, please reach out to Zach Sandberg or David Lat, and let them know what you’d like to hear discussed!

For now, a new edition of Movers, Shakers & Rainmakers is being released every two weeks. If you’d like to be notified when a new episode is available, please sign up here.

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.

Why Use a Recruiter in a Hot Lateral Market?

Everyone knows by now that the lateral market for law firm associates is unusually hot. Firms are routinely offering associates five-figure signing bonuses, and in some special cases bonuses are as high as $150,000. Firms are also increasing commissions for recruiters assisting with lateral placements in certain practice areas, in some cases doubling the usual rates.

With so many firms looking to hire laterals, a candidate might be tempted to think recruiters are unnecessary in this market. In the narrowest sense, that may be true: many candidates could likely land a lateral offer on their own. But the better question is: will the services of a skilled recruiter make it more likely that you will find the best lateral fit? The answer is unequivocally yes.

Who needs a recruiter?

For some lateral searches, the need for a recruiter is obvious. Partner moves are the best example. Competing offers are the only way to achieve a material compensation boost as a partner, and a recruiter plays an essential role in creating that market.

For associates, the value of a recruiter is less in stoking a bidding war and more in mitigating the asymmetry of information that lateral candidates face. As partner moves have become more frequent, the rankings and assessments available through annually updated sources such as Vault and Chambers are less likely to align with the current reality. In contrast, well-informed recruiters like Lateral Link are in a strong position to explain the market in real time. For example, we frequently know that a firm is about to gain a key partner in advance of the public announcement. We can therefore anticipate that the firm will need lateral associates in the relevant practice area and position our associate candidates accordingly. Candidates who choose not to work with a recruiter inevitably will have less information and will make less informed decisions in this highly fluid and dynamic market.

There is no downside

Candidates sometimes worry that firms will be less enthusiastic about hiring them as a lateral associate if the firm has to pay a placement fee to a recruiter. Although this concern may seem superficially reasonable, it does not reflect the market reality. To understand why, it helps to think through the economics of the law firm business model.

Associates are profit centers for law firms. For every day that a firm has fewer lawyers than necessary to meet the full demand for its services, the firm is losing profit. In a robust market for legal services, firms have a strong incentive to fill empty seats as soon as they can find a qualified candidate—in the context of the profit the firm is forgoing by not having that seat filled, a recruiter fee is basically a rounding error.

We can illustrate more precisely with a stylized example. Let’s assume that a firm seeking to hire a lateral associate expects to collect on 1600 of the associate’s billed hours, at an average rate of $625/hour. That will generate an annual contribution to the firm’s gross revenue of $1 million. Assume the associate’s base salary is $240,000 and that the firm must pay a recruiter 25% of the base, $60,000, as a placement fee. This amounts to a 6% transaction fee on the revenue the associate produces in her first year with the firm.

6% of the year equates to just over three weeks. If relying on a recruiter enables the firm to fill the seat 22 days sooner than it could have otherwise, the firm will come out ahead. Sure, the firm could refuse to work with recruiters, advertise vacancies on its website, wait for candidates to apply directly, then sort through the applications to identify the promising candidates. But in the current hot market that would be a totally irrational strategy. The fact that firms are not just willing to work with recruiters right now but are in many cases increasing the fees that they offer is proof of this basic economic logic.

In summary, there is no downside to using a recruiter and plenty of upside. Firms will not shy away from hiring you due to the placement fee. And you will benefit from non-public information about the market, increasing your likelihood of landing with the firm that best fits your unique selection criteria.