Law360: Recruiters Predict Domino Effect After Milbank Midyear Bonus

Xiumei Dong | August 9, 2024, 3:39 PM EDT

As Milbank LLP becomes the latest law firm to award midyear bonuses, legal recruiters anticipate a ripple effect, with other major firms expected to follow suit in announcing similar bonus payments for their attorneys.

According to legal recruiters who spoke with Law360 Pulse, the Manhattan-based firm's decision to offer bonuses of up to $25,000 to associates and special counsel is seen as a strategic move to retain talent amid heightened recruitment activities in the legal market.

"When a firm like Milbank or one of its peer firms makes these types of announcements, we will see their peers following," said Katherine Loanzon, a managing director at Kinney Recruiting.

Milbank was the first to raise its associate salary scale last year, setting off a wave of moves by competitors to match the new rates. The firm's latest move to offer midyear bonuses follows similar actions by litigation firms McKool Smith and Hueston Hennigan LLP, which recently awarded bonuses to their attorneys in recognition of their efforts.

Michelle Fivel, a founding partner of legal recruiting firm Hatch Henderson Fivel, noted that partners across firms are reporting exceptionally high levels of activity, with associates working at full capacity or beyond. Given the intense workload and revenue generation, it is unsurprising that firms are rewarding their associates with bonuses.

"Milbank has come out as a leader in these sorts of moves," Fivel said. "So I do think the other firms that are competitors and peers of Milbank will follow suit, and I would guess fairly quickly."

Despite a slow start to the year, recent data from Firm Prospects LLC show that lateral recruitment at law firms gained more solid footing in the second quarter, with associate lateral hiring rebounding by 7% quarter-over-quarter and counsel hires rising by 13%, while partner lateral hires fell by 16%.

According to recruiters, there has been a noticeable uptick in associate hiring in recent months, with heightened demand in corporate practices such as structured finance, capital markets, mergers and acquisitions, as well as litigation.

Ru Bhatt, a partner with Major Lindsey & Africa's associate practice group, added that some firms are once again willing to offer sign-on bonuses to attract top talent, especially in high-demand areas like mergers and acquisitions.

Fivel also noted that more firms are willing to provide sign-on bonuses. However, she explained that these bonuses are typically designed to compensate incoming associates for any potential loss of bonuses from their previous firms.

"It's not a situation where, back in 2021, it was almost given that sign-on bonuses were happening, and there were certainly associates that were moving and getting significant sign-on bonuses over and above what they would have gotten had they stayed at their current firm," Fivel added, explaining that today's bonuses are often negotiated on a case-by-case basis and are intended to offset any financial disadvantage associated with moving firms.

With growing optimism in the legal hiring market and an anticipated increase in corporate work, Kirkland & Ellis LLP and Allen Overy Shearman Sterling were also recently reported to offer $50,000 bonuses to employees who refer lawyers who are hired at their firms.

Looking ahead, recruiters anticipate that associate lateral hiring will gain more momentum in the latter half of the year, with many potential moves likely to be announced early next year.

"Like in most years, I do expect there to be significant shifts in moves that happen over the year, even if they don't get announced until early 2025," Bhatt said. "People are already starting to figure out what moves they want to make."

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