Lateral lawyer moves in Q2 2023 truly show a tale of two cities: Partners continued to move at a brisk pace, while associate moves dropped more than 40 percent.
Taken as a whole, lateral lawyer hiring has stabilized from the talent race of 2022; lawyer moves are down 33 percent from last year, but are up 2 percent from the previous six-year average. But it’s imperative to take a closer look: By examining the data, you can see starkly divergent trends between partners and associates.
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Let’s dive in.
Don’t let doom-and-gloom headlines fool you: 2023 is still on pace to be a historic year for lateral partner moves.
To be sure, 2022 was an extraordinary, record-breaking year, but Q2 moves were only off 4 percent from last year – and partner moves are up 20 percent compared to the previous six-year average. If we remove 2022 and its chaos from the data set, the second quarter of 2023 posted the most partner moves since 2017.
Major Market Moves
- Only one market, Chicago, outperformed last year’s numbers; partner moves were up 7 percent in Q2 2023. Fueling these spikes were several large team moves and acquisitions that drove up hiring numbers.
- Four markets outperformed the previous six-year average: Chicago (up 83 percent); Atlanta (up 26 percent); Boston (up 7 percent); and New York (up 6 percent). This shows firms are redoubling their hiring efforts in high-growth markets, particularly those centered around technology, life sciences, manufacturing, consumer goods and private equity.
- For the most part, secondary markets fared better than major markets, with five cities (Nashville, Charlotte, Seattle, San Diego and Phoenix) up 40 percent or more than their previous six-year average. This comes as firms seek growth opportunities that expand their geographic footprints and establish new revenue capabilities in key sectors, such as healthcare (Nashville), banking and finance (Charlotte) and life sciences (San Diego).
- Three practice areas saw Q2 partner moves increase over the record levels of 2022: Litigation (up 13 percent); Trust and Estates (9 percent) and Employment (5 percent). Recruiting activity among Litigation and Employment, specifically, suggests firms may be scaling up for a recession to prepare for increased layoffs by their clients.
- In the partner ranks, most practice areas saw an increase in moves over the previous six-year average. Among the most active: Real Estate (up 93 percent), Trust and Estates (52 percent) and Tax (49 percent). The boom in Real Estate parallels the mass changes in the sector, as return-to-work orders disrupt the remote work trend.
- The three practice areas that did not see an increase – Bankruptcy, Compliance and IP – scaled up in previous quarters; firms now appear to be at capacity.
The associate arms race is officially over, with associate moves in Q2 2023 down a steep 43 percent from 2022 and 5 percent from the six-year average. In the second quarter, associates were the only level to drop below the six-year average.
This comes as firms continue to seek equilibrium and rebalance their headcounts; we expect hiring may pick up near the end of the year, though certainly not to 2022 levels. Specifically, the COVID “talent gap” – which resulted in several successive classes of associates that were remotely trained, either in law school or at a firm – could escalate demand for mid-level associates with four to six years of experience. Firms have largely employed a “wait and see” strategy when it comes to associate hires, as they seek to assess legal demand for Q3, Q4 and into 2024.
- Every major market experienced at least a 45 percent decrease in the number of associate moves from 2022.
- When you compare associate movement in these markets with the previous six-year average, the drops are less significant, yet only one city – New York – saw an increase over six-year averages. Growth in New York, which is up 5 percent from Q2 2022, has been driven by firms redoubling efforts in the country’s largest legal market – and is likely linked to the lateral growth among Litigation partners.
- Three markets experienced only slight decreases (those of 15 percent or less) from the previous six-year average: Houston, Miami and Washington DC.
- Every secondary market experienced at least a 30 percent decrease in associates moves from the same period in 2022.
- Three markets saw increases in associate moves over the previous six-year average: San Diego, Charlotte and Phoenix.
- Every practice area saw large drops from 2022 levels, ranging from 34 to 56 percent.
- Five practice areas drew more activity than the previous six-year average: Real Estate (up 21 percent); Bankruptcy (16 percent); Litigation (3 percent); Employment (2 percent) and Compliance (1 percent). Each of these saw increases in movement at the partner level.
Takeaways for Law Firm Leaders
- Partners poised for near-record movement: While the market overall appears to have stabilized, lateral partner movement remains near historic levels, up 20 percent over the previous six-year average. Firms have realized that growth starts and ends with equity partner acquisitions. In periods of high activity, it’s especially critical for law firms to practice due diligence and adhere to their strategic plans – and not to be caught up by quick pop-up hires.
- Associates have lost the hot hand: Again, associates were the only level where lateral moves dropped below the previous six-year average, and associate lateral hiring fell more than 40 percent from the same time last year. With fewer opportunities for newer lawyers, firms should reassess their associate hiring practices and ensure they have shelved any bad post-COVID habits, such as same-day offers.