Lateral Hiring After COVID: How the Cost-Cutting Moves of 2020 May Bring a Lateral Exodus in 2021

It’s been a year and a half since the first COVID-19 lockdowns changed everything.

To be sure, many effects of the pandemic are far more profound than adjustments to the way we work. Yet for those of us in legal– many of whom are hustling to meet the industry’s double-digit increase in demand – it’s critical to understand how COVID has changed the business.

Specifically, while 96 percent of law firms say lateral hiring is a major part of their growth strategy, COVID has made recruitment faster and riskier. And the firms that were quick to make cost-saving moves early in the pandemic now may see unprecedented levels of partner departures.

Lateral Hiring is Faster: Law firm lateral hiring is moving faster than ever. According to Decipher analysis, candidates that had been taking four to six months to court are now being hired in four to six weeks.

While these hires are happening at warp speed, they also are happening virtually: less than one-quarter of AmLaw 200 firms have announced return-to-office plans. This means Zoom recruitment endures – along with the myriad problems it brings. It’s much harder to scout issues with demeanor on videoconference, and it’s much harder to get candid feedback from interviewers without the opportunity for quick hallway conversations.

The law firms that remain committed to remote and hybrid work must also remain committed to a purposeful recruiting process. This means recognizing the limitations of videoconferencing; seeking internal and external feedback along the way; and above all, staying focused and deliberate.

Lateral Hiring is Riskier: Since the pandemic, more than half (52 percent) of the candidates screened by Decipher have surfaced red flags, such as questionable legal skills, overstated books of business, challenging personalities, significant tax liens, undisclosed outside business interests, bankruptcies, conflicts, unethical behavior and more. Before COVID, the average red flag rate was 34 percent.

Notably for law firms’ bottom lines, many of these candidates inflated their books of business. Before the pandemic, the average candidate’s book of business was $1.2 million; during the pandemic, that grew to $2.4 million.

To be sure, some rainmakers have had terrific years, but given that Big Law’s 2021 revenue is up 14 percent, it’s suspicious to see a 95 percent jump in the average (alleged) book of business.

Each failed lateral can cost a firm upwards of $1.5 million – and that’s not counting damage done to reputation or culture. Even in a bull market, due diligence remains essential. Law firms must insist on a complete Lateral Partner Questionnaire, and law firms must conduct thorough due diligence.

Lateral Hiring and the Consequences of Cost-Cutting: Throughout 2020, Decipher tracked the AmLaw 200 firms that made budgetary moves in response to economic uncertainty, from compensation cuts to furloughs and layoffs. One year later, as legal demand stabilized, then ballooned, we are tracking lateral movement in and out of these firms.

The data is very clear: Much like in 2008, the firms that cut the most stand to suffer the most.

For context, it is helpful to view the firms in two categories:

  • Law firms that cut due to actual cost concerns. These were generally lower-tier AmLaw 200 firms that worried about the long-term ramifications of pandemic-related stressors. These firms generally cut both compensation and
  • Law firms that cut because they wanted to get rid of dead weight. These higher-level, more financially stable firms took to heart Winston Churchill’s advice to never let a good crisis go to waste, and they trimmed the ranks of underperforming lawyers.


Compensation. According to Decipher data, last year, in response to the pandemic, 35 percent of AmLaw 200 firms reduced equity partner compensation; 28 percent reduced non-equity partner compensation; and 35 percent reduced associate compensation.

While not all compensation moves make the news, of the firms that publicly announced compensation restoration, only two-thirds fully restored pay for equity partners.

As a group, the firms that cut equity partner compensation by 33 percent or more (nine firms total) are on pace to lose 36 percent more partners in 2021 than the previous four-year average.

The associate losses are even more staggering: As a group, AmLaw 200 firms that cut compensation by 33 percent or more are on pace to lose 51 percent more associates in 2021 than the previous four-year average.

Furloughs and Layoffs. In addition to compensation cuts, many law firms initiated layoffs or furloughs in response to the pandemic:

  • 31 percent of the AmLaw 200 furloughed and/or laid off attorneys and/or staff;
  • 21 percent laid off attorneys and/or staff; and
  • 20 percent furloughed attorneys and/or staff.


As a group, firms that laid off more than 40 attorneys and/or staff are on pace to lose 82 percent more partners in 2021 than the previous four-year average. (This is in addition to the layoffs reported during the pandemic.)

Meanwhile, as a group, AmLaw 200 firms that laid off more than 40 attorneys and/or staff are on pace to lose 52 percent more associates in 2021 than the previous four-year average, consistent with the statistic on associate movement related to compensation cuts. (We call 2021 “The Year of the Associate” for good reason. Learn more here.)

Now, many of these firms are attempting to play catchup in the legal talent market. This will be tough: The market is strained by a glut of legal work, and the talent pool is both expensive and suspect. (Recall that one of every two lateral partner candidates has a serious red flag.)

What should law firm leaders do now?

  • Get back to basics. Even if you are still recruiting by Zoom, try to make the process feel as authentic as it would in your office. Videoconferencing can err on the side of efficiency – but it is imperative that you get to know the candidates as people, and that you give yourself and your colleagues a chance to get a gut feel. Build in time to establish rapport with some small talk, and build in time to collect meaningful feedback from the interviewers.
  • Be purposeful in your hiring. Do not get caught up in the headlines. Do not get bamboozled by a lateral candidate promising an inflated book of business. Before engaging in aggressive negotiations, check your growth strategy. Does this hire help you accomplish the firm’s objectives, or is this just an attractive nuisance?
  • Be consistent with your hiring standards. Every lateral candidate must complete a thorough questionnaire. (Even the associates. Download our Lateral Associate Questionnaire here.) Insist on full completion; about 30 percent of the lateral partner questionnaires submitted to Decipher are incomplete. Meanwhile, nearly 20 percent of lateral partner candidates neglect to provide a comprehensive list of their clients to their prospective firms. If they are willing to be evasive or misleading about the clients they have represented, what else might they be less than forthright about?


Above all, do not skip due diligence. Slow and steady hiring will help lower your risk, but there is no substitute for a comprehensive due diligence program. With the cost of one failed lateral partner hitting $1.5 million or more, this is no place for blind trust.

Without due diligence, you are left with only the word of your candidates and the references they have specifically selected. Without due diligence in 2021, you are likely to pay a premium for candidates with a 50 percent chance of serious red flags. Without due diligence, you risk your firm’s ROI, revenue and reputation.

Decipher reduces law firms’ lateral hire risks and costs by providing deep-dive intelligence about prospective laterals – before they are hired. We help our clients grow safely and more efficiently. To learn more, contact us today.

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