Dan Roe & Mimi Lamare | July 17, 2024 at 03:36 AM
What You Need to Know
Kirkland & Ellis recently renewed a $50,000 referral bonus until January amid heightened demand.
Referral bonus amounts tend to fluctuate with lateral hiring demand, recruiters said.
The $50,000 bonus is above average for Big Law but not the highest a firm has offered.
Kirkland & Ellis’ move to renew its $50,000 associate referral bonuses underlines the heightened demand for talent now amid an uptick in deal work this year, industry observers say. It’s also a move that may encourage other law firms to implement their own referral bonuses, if they haven’t already, some sources added.
According to a person with knowledge of the situation, increased demand led Kirkland to recently extend its $50,000 bonuses for associate referrals. Installed in October 2023, the $50,000 bonus was renewed until January 2025. The referral bonus was previously $25,000, according to the source.
A Kirkland representative declined to comment.
Kirkland’s referral bonuses were matched or exceeded by competitors during the peak of associate demand in 2021 and 2022. But, in 2024, the average range for most firms’ referral bonuses is between $20,000 to $40,000, according to Matt Schwartz, a recruiting partner at legal recruiting firm Garrison.
With Kirkland’s latest moves, other firms will follow suit and give out referral bonuses soon, if they are not already, according to some legal recruiters and consultants, including Howard Rosenberg, a partner and head of the talent intelligence & acquisitions group at the growth advisory firm Baretz + Brunelle.
Still, others were unsure how many would follow. Schwartz said that two elite D.C. firms that he spoke to Tuesday said that they were very unlikely to follow in Kirkland’s footsteps to offer over $40,000 in referral bonuses.
Recruiters noted that referral bonuses fluctuate with hiring demand, so $50,000 stands out in today’s market. While firms used to give out $6,000 to $10,000 for referral bonuses years ago, firms are clearly raising the stakes, Rosenberg said.
The $50,000 sum represents the high end of Big Law referral bonuses, although it isn’t the historic peak. Willkie, Farr & Gallagher was offering $75,000 in early 2022, Business Insider reported at the time. In 2021, Paul Hastings and Goodwin Procter were offering $50,000 and $30,000 respectively for referrals, the Financial Times reported in early 2023.
None of the above firms responded to American Lawyer questions about whether their referral bonuses remained as high today.
Sources, however, all agreed that the deal activity lately is driving demand for associates, even if it hasn’t reached 2021 levels. According to the London Stock Exchange Group (LSEG), worldwide M&A activity saw an increase of 18% compared with year-ago levels and had the strongest opening six-month period for deal-making since 2022. While the number of worldwide deals dropped, the number of mega deals (over $10 billion in value) climbed, LSEG said.
Legal industry sources expect deal work activity to continue on the uptick, even with uncertainty from geopolitical conflicts and 2024 elections.
Stephanie Biderman, a partner at Major, Lindsey & Africa who recruits associates, said her firm clients have been forecasting a return of M&A deal flow in the fourth quarter of this year.
“The expectation is deals are going to pick up,” said recruiter Michelle Fivel of Hatch Henderson Fivel. “Kirkland is always trying to make sure it’s at the top of the market where compensation is concerned, so when things do pick up, they are in the best position to hire the lateral talent they want.”
“It’s not surprising to anyone,” said Scott Yaccarino, co-founder of Empire Search Partners, referencing Kirkland’s referral bonus. “Demand for talent has exceeded supply for some time. Seeing Kirkland’s [investments to] maximize the amount of great talent they’re seeing makes sense.”
Katherine Loanzon, a partner at Kinney Recruiting, noted that it may be “that Kirkland is upping the ante because they see an increased fee from recruiters” and the firm projects an increased need for lateral hires. “They think that this might be a good way to find that talent through the internal referrals,” she said.
Loanzon said that referral bonuses are part of an effort by firms to cut costs by moving away from hiring outside recruiting companies to find talent. By comparison, referral associate bonuses are very cost-effective in their search for the most gifted lawyers, Rosenberg said.
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