By Xiumei Dong, Law360 | July 12, 2024, 16:55:51
After a slower first quarter, lateral recruitment at law firms appeared to find more solid footing in the second quarter, with both associate and counsel hires showing signs of recovery from the previous quarter, according to recent data provided by legal data company Firm Prospects LLC.
Overall lateral hiring at law firms continued to decline in the second quarter, falling by 2% quarter-over-quarter to 4,917 hires, according to industry data provided by Firm Prospects to Law360 Pulse on Wednesday that tracks lateral moves among 3,500 firms.
However, this decline is much more modest than the 12% quarter-over-quarter drop observed in the first quarter. In total, these law firms hired 9,939 attorneys in the first half of this year, representing a nearly 4% increase compared to the number of attorneys hired during the same period last year.
"It's all moving slow and steady still," said Adam Oliver, Firm Prospects' CEO and co-founder. Despite a decline compared to the previous quarter, Oliver pointed out that overall hiring is still 6% higher than the same period last year, suggesting that hiring is returning to prepandemic "normal" levels, with corporate hiring on the rise and fewer litigation hires.
"I think on the corporate side, the banking side, we'll continue to see a bit of an uptick as companies, private equity firms, if they start to anticipate that there's more money available at a lower rate, they might be more interested in more acquisitions, more deals, which could result in an uptick," Oliver said.
He expects "a slow and steady uptick" in lateral hiring in the third quarter, with hopes that it will pick up momentum going into the fourth quarter and into early 2025.
Following a steep decline in the first quarter, the hiring of associate attorneys rebounded by 7% in the second quarter to 1,552, according to Firm Prospects. Meanwhile, partner lateral hires, which had seen a notable increase in the previous quarter, decreased by 16% to 1,248 hires in the second quarter.
Despite these fluctuations, both associate and partner lateral hires remained higher than in the same quarter last year, with increases of 9% and 4%, respectively. Counsel lateral hires also showed significant gains in the second quarter, jumping by 13% quarter-over-quarter and increasing by 25% compared to the same period last year.
The lateral hiring figures align with the observations of legal recruiters who have spoken with Law360 Pulse. They indicated a steady increase in demand for associate candidates in the job market, while lateral partner recruitment has remained stable.
Michelle Fivel, a founding partner of legal recruiting firm Hatch Henderson Fivel LLC, explained that the rise in associate hiring reflects heightened market demand and increased workload within law firms. She also anticipates growing demand for transactional practices as firms experience an uptick in deal volume.
Fivel further noted that law firms' recent lateral hiring has targeted "superstar" M&A associates and mid-level associates who can manage substantial responsibilities and lead deals with minimal supervision. However, once the market picks up the "baseline level", she anticipates firms will speed up their hiring processes, conduct less due diligence, and broaden candidate criteria to include both junior and senior associates.
"They will become more open-minded with respect to the credentials and the training of the associates that they hire when things get to be very busy," Fivel said.
According to Firm Prospects' data, law firms saw a modest 0.7% increase in hiring for corporate practice attorneys during the second quarter compared to the previous quarter. Compared to the same period last year, hiring in corporate practices also rose 16%, reflecting a rebound from a period of reduced hiring due to a slowdown in deal activities.
Meanwhile, recruitment in litigation, which remains the practice area with the highest number of lateral hires across the industry, declined by almost 5% compared to the previous quarter. However, it still maintained a 8% increase compared to the same quarter last year.
Lateral hiring in other high-demand practice areas such as labor and employment, real estate, insurance, and banking also showed an uptick compared to the previous quarter. However, hiring for intellectual property and trusts and estates continued to decline.
According to Katherine Loanzon, a managing director at Kinney Recruiting, firms are strategically hiring in anticipation of upcoming activity increases over the next six months. However, she noted that they are proceeding cautiously, taking extra time to conduct due diligence and ensure that new hires are the right fit for their firms.
Meanwhile, John Cashman, president of legal consulting and recruiting firm Major Lindsey & Africa, pointed out that firms have picked up the pace of associate hiring over the past two months. He identified strong demand in litigation, tax, and corporate finance, along with an uptick in M&A, general corporate law, and private equity sectors over the past few weeks.
Looking ahead, Cashman anticipates ongoing growth in partner hiring across various practices, noting increased interest from both firms and partners in making moves. He also predicts that the demand for associates will continue to grow, saying it was "pretty frothy" in the first two quarters and is likely to persist into the next quarter.
According to Firm Prospects' data, midlevel associates, particularly those from the 2019 to 2022 classes, make up the largest group of those who moved in the second quarter. Additionally, associate hiring at Top 200 law firms saw a notable increase, with a 14% rise from the previous quarter and a 28% increase compared to the same period last year.
The Top 200 law firms were also responsible for the majority — nearly 60% – of all the lateral hires in the second quarter, which represented a 10% increase from the first quarter and a 25% jump from the same quarter last year.
--Editing by Alex Hubbard.
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