As we closed the books on 2023 and headed into this year, a new picture emerged in lateral law firm hiring. Moving further from the historical hiring frenzy of 2021 and 2022, we could see a trend other than quarterly and year-over-year decreases—an obvious conclusion when comparisons are tied to record numbers.
Across the board last year, lateral moves tracked by Decipher Investigative Intelligence increased by at least 32 percent compared to the three-year pre-pandemic average of 2017-2019. Not only has that outsized post-COVID growth trajectory continued, it has created year-over-year growth through the first quarter of 2024, exceeding our annual projections.
Overall in Q1, our data shows lateral moves increased 34 percent compared to 2023, including a 70 percent increase in associate hiring, and by 44 percent when compared to the pre-pandemic average.
Q1 Moves by Title
| Title | 2023 Q1 | 2024 Q1 | 2024 vs 2023 | Avg(2017-2024) | 2024 vs Avg | Pre-P Avg | 2024 vs Pre-P |
|---|---|---|---|---|---|---|---|
| Partner | 1,402 | 1,592 | 14% | 1,234.4 | 29% | 1,005.3 | 58% |
| Associate | 1,551 | 2,629 | 70% | 2,746.7 | -4% | 1,987.7 | 32% |
| Other | 1,289 | 1,451 | 13% | 1,294.7 | 12% | 946.0 | 53% |
| Totals | 4,242 | 5,672 | 34% | 5,275.9 | 8% | 3,939.0 | 44% |
Another associate hiring boom?
While the number of overall lateral moves in Q1 follows our projections and the previous year’s trends, the jump in associate hiring may seem surprising. A few caveats:
- While significant, Q1 data is sometimes inflated. For example, partner hires increased 20 percent in the first quarter of 2020, the pandemic hit, and hiring dropped.
- While the numbers are encouraging, expectations need to be tempered because there is a significant amount of economic, political, and global security risk. See the above example.
- There’s another explanation, and it ties back to the associate gold rush of 2021 and 2022.
We’ve written before about how law firms paid associates considerably higher than market rates during 2021 and 2022 to meet historic levels of demand. In response to bloated spending budgets, many firms in the past year reduced incoming associate classes and laid off higher paid and superfluous associates. The increased hiring we’re seeing in Q1 likely stems from these laid-off associates finding new firms, as well as firms realizing, somewhat surprisingly, that demand for legal services still remains high: They still need more lawyers to do the work; and they can not only hire them but remain profitable doing so.
Speaking of demand
It’s not just associates. Q1 partner moves are up 14 percent year-over-year, up 29 percent compared to the seven-year average (2017-2023), and up a whopping 58 percent over the three-year pre-pandemic average (2017-2019).
Demand is playing a role in these moves. A Wells Fargo survey of law firm performance shows a 2 percent increase in billable hours logged for Q1 following a 0.6 percent increase for all of 2023 for the AmLaw 200. Revenue increased 9.5 percent in Q1 across all AmLaw 200 firms as well.
Q1’s partner moves highlight the fact that law firms are still hiring and filling revenue-generating positions at a torrid pace. It’s the easiest and quickest way to revenue growth without the need for incremental rate increases (which no one, especially corporate clients, wants to handle).
Lateral moves by location
So where is the greatest demand for legal talent? Only four markets saw year-over-year partner move decreases in Q1: Nashville (down 39 percent), Minneapolis (22 percent), San Francisco (20 percent) and Seattle (9 percent). While notable, there’s not much cause for alarm: it’s important to note the small sample size of these markets, the largest of which, San Francisco, averaged 40.7 partner moves over the past seven Q1s and logged 39 moves this year compared to 49, 46, 40, 43, 31, 44, and 31 over the previous first quarters. It’s a similar numbers story for the other three cities at the bottom of the Q1 charts.
As for locations showing the most partner demand in Q1: Charlotte, San Diego, Philadelphia, Denver, and Silicon Valley reported greater than 41 percent increases in Q1 partner hires compared to the seven-year average.
Q1 Partner moves by location
Compared to 7-year average
Charlotte +80%
San Diego +80%
Denver +52%
Philadelphia +51%
Silicon Valley +41%
Seattle -17%
Austin -10%
Minneapolis -10%
Dallas -9%
Nashville -5%
San Francisco -4%
Associate demand was up in every market in Q1 compared to a year ago, including triple-digit increases in Nashville (220 percent), Charlotte (141 percent), and Atlanta (103 percent). Other markets aren’t replenishing their talent as quickly: Associate hiring was up year-over-year but down compared to the seven-year average in six markets.
Q1 Associate moves by location
| Market | 2024 vs Avg | 2024 vs 2023 |
|---|---|---|
| Dallas | -26% | 28% |
| New York | -21% | 6% |
| Minneapolis | -18% | Flat |
| Houston | -13% | 4% |
| Denver | -11% | 8% |
| Boston | -2% | 31% |
Partner moves by practice areas
Where are law firms seeing more demand? Trusts & Estates, Banking, and Labor & Employment are the practice areas generating the most work in Q1. Partner hires increased across all practice areas in Q1, both year-over-year and compared to the seven-year average, with the biggest increases coming in these disciplines:
- Trusts & Estates 48%
- Intellectual Property 47%
- Banking & Finance 33%
- Labor & Employment 31%
- Litigation 30%
For associates, some practice areas are seeing demand bounce back quicker than others. Only four practice areas saw more associates hired year-over-year and compared to the seven year average:
- Trusts & Estates, up 36% over average and 72% over 2023
- Antitrust & Competition, up 30% and 9%
- Banking & Finance, up 28% and 16%
- Bankruptcy & Restructuring, up 3% and 15%
Practices where associates aren’t needed as badly:
- Corporate & Transactions, down 29% over average, but up 6% over 2023
- Intellectual Property, down 24% over average, up up 8% over 2023
- Litigation, down 17% over average but up 7% over 2023
- Compliance/Regulatory, down 1% over average and down 23% over 2023
What This Means for You
Even if your firm reduced associate headcount over the past 18 months, you may be seeing greater demand and the need for hiring. Our projections anticipate lateral movement to remain lively throughout 2024, even if not at the torrid pace of Q1.
Data is critical at all stages of the lateral recruitment pipeline: to identify strategic candidates, to assess candidates’ books of business and cultural compatibility, and finally, to provide realistic benchmarks for compensation.
Is your firm ready for a more purposeful, profitable growth strategy? Contact us today.
