By Justin Henry | October 16, 2023 at 01:39 PM
Recruiters say it's unlikely that the high-water mark of 2021 will be surpassed any time soon.
What You Need to Know
The 15,109 lawyer moves tracked by Decipher in the first three quarters continues a decline from 2021 and 2022.
This downward trend is primarily caused by a downturn in associate hiring, as recruiters have noted a bifurcation between that area of hiring and that of partners.
According to moves tracked by Macrae, Bay Area partner hiring has reached a five-year low while in Washington, D.C., they're second only to 2021.
Lateral attorney moves in the first three quarters of 2023 have fallen for the second year in a row, though the volume of lawyer moves continues to significantly outpace 2020 and the years leading up to the pandemic, two recent surveys of the legal hiring market show.
While the frequency of lawyer moves in 2023 has significantly outpaced 2019 and 2020, the heights of 2021 and 2022 remain unmatched. That goes for both partner hiring and lawyer moves more broadly, according to studies by legal recruiter Macrae and hiring due-diligence provider Decipher.
The 15,109 lawyer moves tracked by Decipher in the first three quarters continues a decline from 2021’s 24,950 and 2022’s 24,033. A higher amount of the decline in all lawyer moves has come from a drop off in associate moves, down 47% from 2022 compared to a 17% drop in partner moves.
Partners and Associates Moving at Different Speeds
The fact that partner moves in just the third quarter continue to outpace the six-year average by 15% indicates the partner hiring environment continues to be “robust,” said Decipher chief data officer Greg Hamman. Data shows a “bifurcation” in the volume of associate and partner moves in just the third quarter, Hamman said, pointing to the 32% drop in associate moves from 2022’s third quarter to 2023’s. “I don’t think it’s outside the realm of possibility to say this is the busiest volume of lawyer moves we’ll ever see,” Hamman said. “With law firms managing headcount more precisely, you may not see the need for the sheer number of associates in 2021 and 2022…Pent up demand from 2020 and demand from clients was through the roof.” Jeffrey Lowe, founder and managing partner of Jeffrey Lowe Partners, added discussions about mergers between law firms and group moves at elite firms like Paul, Weiss, Rifkind, Wharton & Garrison have made the market “frothy, especially when you see the numbers that are being bandied about.” “I’ve talked to partners asking how they can get $15 to $20 million,” Lowe said. “It will push every firm to push up their upper limit.”
Recruiters say 2021 may be the year to beat for some time.
“A huge driver in 2021 was associate moves, which was the single greatest year ever, if not the single greatest year since the late dot com boom in the early 2000s,” Lowe said. “The spigot was essentially turned off, not overnight but fairly quickly in 2022. It became a buyers, not sellers market, for associates.”
Volume Varies by Geographic Markets
Data compiled by Macrae on Am Law 50 and Magic Circle partner hires in the seven markets where Macrae operates—Bay Area, New York, Washington, D.C., London, Paris, Brussels and Germany—follows a similar pattern.
Even though partner hiring in the first three quarters of 2023 fell 11% compared to the same stretch of time last year, which already registered a fall from 2021, there have been more partner hires this year than in 2019 and 2020, with the year of the COVID-19 pandemic the most depressed for lawyer hiring in the last several years, according to Macrae’s data.
According to Macrae’s data, New York falls in line with this trend, seeing a 30% drop in partner hires in in the first three quarters of 2023 compared to the same period last year, while still outpacing 2020 and the years leading up to the pandemic.
Jon Truster, a New York-based Macrae partner, said firms aren’t hiring non-equity partners as much because their attention has moved away from slowing corporate and finance practices. Yet Truster said there’s an expectation in private equity circles that the fourth quarter will see a pick-up in deal activity.
However, not all markets saw the same volume of moves. The Bay Area, for instance, finds partner moves at its lowest in five years. Jennifer Henderson, partner and co-founder of Hatch Henderson Fivel, said this was likely a result of the region’s tech-industry focus.
The market, Henderson said, is “heavily concentrated in emerging markets, new small tech companies and we’re not in an economic environment that supports getting those deals done right now.”
By contrast, Washington D.C. has seen the second-highest number of partner moves in five years, second only to 2021, which recruiters say is a reflection of the amount of regulatory work combined with the volume of government lawyers joining private practice. “D.C. has a lot of people who are moving from government,” Truster said.
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