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.