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Welcome to our Law.com Barometer newsletter, powered by the ALM Global Newsroom in advance of Legalweek 2021. Each week this newsletter will bring you the trends, disruptions and shifts our reporters and editors are tracking through coverage spanning every beat and region across the ALM Global Newsroom. The micro-topic coverage will help you monitor the changing landscape of the legal industry and prepare you to participate in the events taking place at the year-long #Legalweek21.
The Shift: Today’s Lateral Market is High-Risk, High Reward
Industry-wide, law firms have had a lower appetite for lateral hires during the pandemic. Hiring in bread-and-butter practices such as corporate M&A and litigation has slowed dramatically. Lateral moves have cratered by about 30%, with drops in nearly all practices.
Still, a set of firms in the Am Law 200 have remained active in lateral partner hiring or have become even more active, such as King & Spalding, DLA Piper, Cozen O’Connor, Greenberg Traurig, FisherBroyles, Armstrong Teasdale and McDermott Will & Emery. And, in a remote working environment, more firms are willing to consider new hires outside of their office locations.
The Conversation
Firms have taken less of a chance on hiring partners with smaller books of business or so-called service partners. Recruiters have noticed a slowdown with one-off partner moves. Instead, firms are looking for proven winners amid a recession.
That’s where lateral groups of partners come in, which some law firm leaders view as having more portable business. Some firms, including several of those above, have taken advantage of the recession dynamics this year to snag high-profile partner groups from their competitors and from firms viewed as less resilient in this environment.
For instance, King & Spalding has added at least 20 lawyers from Boies Schiller Flexner since April, in a year when the litigation firm’s leaders point to a restructuring. McDermott added a seven-lawyer team from Hughes Hubbard & Reed, which laid off more than 30 people this year, American Lawyer reported.
“With the displacement in the market now, top-level talent is evaluating where they want to be and are looking for quality opportunities at firms that are steady and want to grow,” said DLA Piper U.S. chair-elect Frank Ryan.
Some of these opportunities may not have arisen any other year. “It’s a little bit of the pandemic and a little bit of where we are now as a firm. People get introspective, asking if now is the time to go and do something else. Absent the pandemic, I don’t think we have these same looks,” said Ira Coleman, McDermott’s chair.
The Significance
Firms that can afford it are embracing opportunistic hiring — and profiting from it. Sources have previously told American Lawyer, for instance, that Karen Dunn and Bill Isaacson’s book of business has hovered around $50 million. The two moved from Boies Schiller to Paul, Weiss, Rifkind, Wharton & Garrison this year, along with at least six other lawyers.
Some firms have taken the opportunity to expand into lucrative practices. For instance, Greenberg Traurig snagged from Bryan Cave Leighton Paisner an eight-attorney group in data privacy and cybersecurity — a practice area in high demand amid the move to remote work and new California privacy requirements. White & Case in the last month added four partners from Sidley Austin in restructuring — the practice perhaps most in demand during a recession.
The flip side of the coin: Some firms have to dole out very competitive pay packages to existing partners to motivate them to stay during rocky times, consultants have said.
And as some firms embrace lateral hiring, several others are seeing high partner losses, likely due to a mix of lateral moves, retirements and taking advantage of the climate to eliminate unproductive partners. Kirkland & Ellis, Akerman, Holland & Knight and Polsinelli were among the firms with the most partner exits this year, besides Boies Schiller.
The Information
Want to know more? Here's what we've discovered in the ALM Global Newsroom: Dragged Down by Finance and Energy, the Lateral Market Has Cratered Opportunity in Crisis: These Firms Seized on an Unusual Lateral Hiring Market in 2020 Hire Up: Big Firms Hire Groups of Laterals As Firms Weigh Hiring Partners Outside of Footprint, Tax Challenges Await In 2020, These Big Firms Have Seen the Most Partner Exits Greenberg Traurig Hires New Data Privacy Leaders, Recruiting From Bryan Cave Uncertainty Looms Over Boies Schiller After Dunn and Isaacson's Exit Down a Quarter of Its Partnership, Boies Schiller's Leaders Expect More Changes Hughes Hubbard, Amid Mounting Challenges, Undergoes 'Rebuilding' More Cuts Coming as Firms Slim Down to Keep Partner Pockets FullFor more information on the Legalweek(year) virtual experience, visit legalweekshow.com or follow @Legalweekshow and engage with #Legalweek21 and #Legalweekyear for updates.
The Forecast
The lateral moves in 2020 — whether in partner arrivals or exits — will have a long-term effect on firms’ financials and will help fuel the widening profit divide in the legal industry. Law firms that can afford to recruit star partners with portable business will come out in an even stronger position after the recession, partly thanks to adding books of business and building strength in expertise. Those firms that have seen a series of involuntary exits will be in a more vulnerable position and more likely to feel the effects of a down economy, potentially spurring more departures.
Christine Simmons is an editor for business of law news and also writes about the New York legal community. Email her at csimmons@alm.com and find her on Twitter @chlsimmons
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