Tag Archives: Market Update

An Update on the Chicago Lateral Attorney Hiring Market

Although corporate activity has retrenched from record highs in 2021, the Chicago legal economy and attorney job market remain robust, underscoring the variance between the strong labor market and the challenges of high inflation and a volatile stock market.

2021 Was a Record Year for Chicago Lateral Attorney Hiring

Like other major markets, Chicago experienced unprecedented law firm lateral attorney hiring during the 2021 economic recovery.  The surge of transactional work stretched the attorney benches of leading large and midsize law firms in Chicago, the third-largest legal economy in the U.S.  Corporate, lending, and real estate transactions significantly outpaced the number of available attorneys (mainly associates) needed to handle the matters.  M&A deals reached record highs in 2021—especially private equity-related transactions.  Notably, Chicago’s Kirkland & Ellis led all firms globally in 2021 as the top dealmaker advising companies on M&A transactions totaling over $443 billion.[1]  Similarly, litigation saw an uptick in attorney hiring as courts worked through an extensive backlog of cases that were on hold during the pandemic.

The top Am Law-ranked, regional, and midsize law firms in Chicago hired a whopping 1586 lateral attorneys between January 1, 2021, and December 31, 2021 (1103 associates, 311 partners, and 172 counsels).[2]  This was a 70% increase over the 933 Chicago lateral attorneys hired in 2020.  Markedly, associate hiring increased by 94%. Compared to the pre-pandemic economy, 2021 Chicago law firm lateral attorney hiring was 57% greater than the five-year average of lateral attorneys hired between 2015 and 2019, when firms hired an average of 1011 lateral attorneys annually.  The difference is even starker when comparing associates only: Chicago lateral associate hiring in 2021 was 78% higher than the five-year average between 2015 and 2019.  The leading practice areas driving the 2021 hiring boom were corporate (M&A, capital markets, and fund formation), finance, litigation, real estate, and IP (litigation and prosecution).

Sustained Hiring Strength in 2022

Turning to 2022, M&A and other corporate transactions have slowed down from last year, but corporate activity has not fully retreated. Rather, it has returned to pre-pandemic levels, which were still high by historical standards.  For the time being, the Chicago legal economy and lateral attorney hiring continue to perform strongly.  In the first half of 2022, there were 805 lateral attorneys hired by top Am Law-ranked, regional, and midsize law firms in Chicago.  This is actually ahead of the pace of Chicago lateral attorney hiring during the same period in 2021.  Notably, lateral hiring increased in the second quarter of 2022 (451 hires), compared to the first quarter (354 hires).

Core transactional practices continue to drive the Chicago legal economy, including large cap and upper middle-market private equity M&A and fund formation, strategic M&A, commercial finance, and real estate transactions.  In the first half of 2022, Chicago firms hired 201 corporate and finance lateral attorneys, which was an increase from the 163 hires in the first half of 2021.  Real Estate had 66 lateral attorney hires in the first half of 2022, as compared to 43 hires during this period in 2021.  One impact of financial market volatility and other economic factors on corporate practice groups in Chicago and globally is a slowdown in capital markets.  Equity offerings have sharply declined with U.S. IPO volume down 95% from this point last year, but the majority of Chicago capital markets practices are debt focused.  While debt issuance has decreased, it has generally retrenched to pre-pandemic levels.

Leading Chicago commercial litigation and white-collar investigations practice groups have also maintained a busy pace in 2022, with strength in class action, securities, antitrust, FCPA, False Claims Act, and products liability cases.  Breach of contract matters have also increased, with an uptick in COVID-related business and supply chain disruption disputes.  There were 320 litigation lateral attorney hires in Chicago in the first half of 2022, an increase from 271 hires in the first half of 2021.  IP associate hiring has grown substantially, with particular demand for associates with pharmaceutical, biotech, electrical engineering, and computer science degrees.  As a major tech company and start-up hub, Chicago is seeing an increase in tech transactions (licensing, software, and joint ventures), data privacy, and cybersecurity associate positions.  Chicago law firms hired 75 IP lateral attorneys in the first half of 2022, as compared to 58 IP lateral attorneys in the first half of 2021.  We have also recently seen more associate openings in restructuring practice groups, though not at the high levels that typically accompany a recession. 

Before the pandemic, there was a sustained deficit of midlevel corporate, finance, real estate, and IP associates due to insufficient hiring in these areas through summer associate programs in earlier years.  Further, the limited number of law students matriculating with the most desirable engineering and life science degrees has always driven IP associate shortages.  Early 2020 COVID-related hiring freezes and layoffs further compounded these associate scarcities, pushing firms to their absolute maximum work capacity in 2021 and continuing into 2022.  Chicago lateral attorney hiring persistence correlates with strong national job growth in the legal sector, which in June added “35,200 more jobs than in June of 2021,”[3] as reported in the ABA Journal. The sector has grown to a total of 1,185,600 jobs, exceeding the record highs prior to the Great Recession.[4]  However, we could potentially see more of an impact from the economy on hiring in the coming months—decreases in corporate legal work typically lag a few months behind actual reduction in corporate activity.

We are still seeing new associate positions open daily and are currently working on a range of posted and unposted associate searches in these and other practice areas with prominent large and midsize firms in Chicago. 

With increased lateral associate demand in 2021, we saw significant compensation increases at Chicago law firms.  Currently, most of the top Chicago Am Law 100 firms have adopted the Cravath market-level base and bonus scales.  There are, however, many firms in Chicago with lower compensation scales, thereby creating major associate income disparities.  Many large Am Law-ranked Chicago firms remain on the 2021 market base salary scale with at or below market bonuses.  Some firms are even below last year’s market compensation scales.  This can create large income disparities between associates, in some cases reaching as high as six figures.  The potential for a substantial compensation increase creates a strong incentive for associates to lateral.  Signing bonuses for associates in high-demand practice areas are still common, though somewhat less frequent than in 2021.  On the return-to-office front, most firms have now implemented a 2–3 day per week in-office policy.  Firms are generally moving away from fully remote positions, but many transactional practice groups are still offering these roles, which are particularly attractive to associates earning Cravath-level salaries and bonuses while living in lower-cost cities.

Chicago also continues to be an attractive market for law firm expansion, with many firms opening new Chicago offices in the past few years.  Most recently, Norton Rose Fulbright launched their Chicago office in April 2022 and now has 16 attorneys with capabilities in tech transactions, data privacy, litigation, labor and employment, and energy transactions.

We anticipate steady continued lateral attorney hiring in the near term in Chicago.  If you are an attorney considering a lateral move in Chicago or elsewhere, having a local recruiter who is dedicated to the specific market is critical.  At Lateral Link, we are both a leading international search firm and a team of expert recruiters individually dedicated to specific cities and regions. Our recruiters effectively leverage their local market intelligence and strong firm relationships to facilitate a successful lateral search and interview process.

[1] Kirkland Passes Wachtell as Big Law’s Top Global Dealmaker (1), Bloomberg Law, January 6, 2022, https://news.bloomberglaw.com/business-and-practice/kirkland-bests-wachtell-for-top-dealmaker-spot-among-law-firms

[2] All the statistics cited in this post, except as specifically noted otherwise, are from the Leopard Solutions database. Not all firms may report data, and there may also be a delay in reporting.

[3] Legal jobs continued upward climb in June; sector adds 92,300 jobs since pandemic low July 8, 2022, ABA Journal, Debra Cassens Weiss July 8, 2022, https://www.abajournal.com/web/article/legal-jobs-continued-upward-climb-in-june-adding-92300-jobs-since-pandemic-low

[4] Number of U.S. legal jobs now exceeds pre-Great Recession record high, Reuters, Sara Merken, July 8, 2022, https://www.reuters.com/legal/legalindustry/number-us-legal-jobs-now-exceeds-pre-great-recession-record-high-2022-07-08/

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

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

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

Litigation rises as transactional starts to slow

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

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

Many opportunities in niche practices

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

Who is best placed to make a move?

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

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

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

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

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

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

The state of the lateral market

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

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

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

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

Is recession a concern?

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

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

A remarkable range of opportunities

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

Record-High Demand for Environmental Attorneys

The increasing concerns about climate change and the rising prominence of broader Environmental, Social, and Governance (ESG) factors have become dominant themes in business. Around the world, both private markets and governments are intensely focused on sustainability. Blackrock CEO Larry Fink captured the mood in his 2022 Annual Letter to CEOs, predicting: “The next 1,000 unicorns won’t be search engines or social media companies, they’ll be sustainable, scalable innovators – startups that help the world decarbonize and make the energy transition affordable for all consumers.”

Growing recognition of a business imperative for ESG has sharply increased demand for environmental attorneys. ESG has been a part of the corporate landscape for years, but until recently, environmental and social issues were largely limited to law firm specialty practices, such as environmental groups. In contrast, today we see a broadening of ESG-related legal matters across numerous practice areas including M&A, litigation, and regulatory.

A “whole of government” approach

With President Biden regularly emphasizing the importance of climate and ESG issues, federal agencies are taking a “whole of government” approach. The Securities and Exchange Commission (SEC) established a Climate and ESG Task Force in March 2021, which has focused both on issuers’ disclosures about ESG and climate matters and on compliance programs for registered investment advisers marketing ESG funds. The SEC is considering new rulemaking in this area, with the aim of ensuring consistency and comparability in public company disclosures and facilitating investment managers’ ability to evaluate potential ESG investments. Speaking in July 2021, SEC Chair Gary Gensler advocated the benefits of corporate disclosure of climate-related risks and stated that he had directed SEC staff to develop a mandatory climate risk disclosure rule proposal.

The Environmental Protection Agency (EPA) has established an interagency task force on hydrofluorocarbons (HFCs), noting that “global phasedown of HFCs is expected to avoid up to 0.5 °C of global warming by 2100.” The taskforce seeks to combat the illegal trade, production, use or sale of HFCs, and is taking measures to support the transition to HFC alternatives, reclamation, and recycling. The Environment and Natural Resources Division of the Department of Justice has sought to address climate change in part by bringing Clean Air Act cases related to the use of flares to burn off volatile organic compounds, toxics and other pollutants in waste gases.

Growing public demand and awareness

Though the regulatory developments are of central interest to attorneys, it is also important to note the rising support for ESG principles among the broader public. This is reflected in extraordinary growth of investor interest in ESG-focused products. Morningstar data shows that in the first three quarters of 2021, over $54 billion flowed into ESG funds, eclipsing the total for all of 2020. The 2020 flow of $51 billion was itself a record, more than doubling the total flow in 2019. Environmental justice topics are increasingly the subject of media attention, helping to drive greater public awareness. Corporations must be cognizant of this broader trend in the public mood as they formulate their business strategies and anticipate potential risks.

Ideal conditions for environmental attorneys

Now, more than ever, clients and law firms need environmental attorneys who can navigate an expanding and fast-changing maze of environmental laws. The eruption of client demand has created a surge of new positions for environmental attorneys at all levels, from junior environmental associates to senior environmental partners. Firms and clients are seeking lawyers who understand the Clean Air Act, in particular, but can also advise on a wide array of Environmental, Social, and Corporate Governance issues.

In the current market, environmental attorneys are uniquely positioned to take their practices to the next level. With more environmental matters to pitch to clients than ever before, the opportunities to expand are everywhere. Robust demand for environmental attorneys is enabling lawyers with experience in this field to make impressive lateral moves, either to more prestigious firms or to higher-ranked environmental practices.

Lateral Link has experience placing environmental attorneys across the top practices in the field. We are happy to offer our advice about your individual circumstances, even if you are not ready to make an immediate move. We welcome you to contact Amy to discuss your options.