By Xiumei Dong, Law360 Pulse | June 26, 2024, 11:56 AM EDT
Litigation-focused firms McKool Smith PC and Hueston Hennigan LLP have kicked off the summer by offering midyear bonuses to their hardworking attorneys. However, given the uneven demand across legal services, recruiters do not anticipate that major law firms will immediately follow suit.
Despite an uptick in lateral hiring for associates and a slight improvement in overall recruitment compared to the first half of the year, these industry observers pointed out that firms remain cautious due to slow market conditions.
"These firms are just being cautious right now because the market has been very mixed," Katherine Loanzon, a managing director at Kinney Recruiting, explained. "Some associates are busy, others aren't, and I think trying to provide the right balance is something the firms are constantly trying to do while also being financially responsible."
Loanzon further added that unless an elite law firm takes the lead, it's unlikely that many firms will rush to provide midyear bonuses to their attorneys.
Michelle Fivel, a founding partner of legal recruiting firm Hatch Henderson Fivel, echoed Loanzon's sentiment, noting that if a top law firm were to announce bonuses, it could trigger a domino effect among its competitors.
Fivel pointed out that the widespread midyear bonuses seen in previous years were typically in response to exceptionally busy periods, which isn't the case currently. Although some associates, particularly in finance, are extremely busy, she believes firms might be more inclined to reward these individuals confidentially rather than implement firmwide bonuses.
"The firms seem really busy across the board, and hiring is starting to pick up, which are all very positive signs as far as productivity is concerned and associate utilization," Fivel said. "But we're not looking at an extraordinary year as far as associate billables across the board."
Stephanie Biderman, a partner in the associate practice group of legal recruiting firm Major Lindsey & Africa, noted that bonuses from firms like McKool Smith and those reportedly handed out by Hueston Hennigan aren't entirely surprising, as these firms often give above-market year-end bonuses and have a history of rewarding associates during strong years.
Biderman further said that smaller firms can more easily distribute bonuses due to their limited number of associates, unlike larger firms with hundreds or thousands of associates, where the analysis becomes more complex. However, she acknowledged that the industry is closely watching these developments, prompting firm leaders to consider bonuses, though it won't necessarily lead to the widespread matching seen with salary increases.
"If these large firms decide to actually give a summer bonus, I would be very surprised if that bonus was given to everyone," Biderman added. "The same way that many of those firms have hours threshold requirements to get a year-end bonus, I would imagine we would see the same thing for summer bonuses because the goal is to reward your most productive associates."
According to a May report by Wells Fargo's legal specialty group, law firm revenue soared by 9.5% during the first quarter of 2024, driven by a nearly comparable 9% increase in billing rates compared to the same period in 2023.
And despite a modest 2% rise in overall billable hours, average billable hours per attorney edged up by 1% to 1,554 hours, with attorney hiring also increasing by 1% during the quarter compared to the same period in 2023, according to Wells Fargo.
In the lateral market, legal recruiters noted that litigation-oriented practices remain busy and active. Meanwhile, there is growing interest among firms in midlevel associates specializing in corporate practices such as mergers and acquisitions, capital markets, restructuring, and other areas of finance.
"What's been interesting is that the bar is high for those candidates; it really has to be someone who is well qualified," Biderman said, noting that many firms, having hired large summer classes, now feel well staffed at the junior level but are increasingly focused on bolstering their midlevel ranks with experienced talent.
--Editing by Robert Rudinger.
Read the original article here: https://www.law360.com/pulse/articles/1851857/biglaw-unlikely-to-follow-suit-on-midyear-bonuses
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