Are associates in demand again? Well, not at historic 2021-2022 levels, but data tracked by Decipher Investigative Intelligence showed a whopping 70 percent more associates hired in Q1 this year compared to last year’s first quarter.
Partner moves are up too: a 14 percent year-over-year increase in Q1. These numbers show demand for legal services remains high amid reports that billing rates are on the rise as well.
So where can law firms looking to fill demand expect to compete for (and ultimately pay more) for talent? Here are insights into practice areas and locations for Q1 lateral moves that can help law firm leaders understand where they might have the best leverage when making hires.
Where are the associates going?
Over the past 18 months, many firms reduced incoming associate classes in anticipation of decreased demand, let go of higher paid and superfluous associates that were hired during the boom of 2021-2022, and optimized headcount by eliminating associate positions in superfluous practice areas. The recent lateral moves numbers indicate that it’s likely that these laid-off associates found new homes in Q1. In terms of regionality, Chicago and locations on the West Coast saw the most associate hires, followed closely by East Coast cities.
Chicago and the West Coast
- Chicago: 222 associates hired in Q1, a 30% year-over-year increase and 76% jump from last year.
- California saw associate gains as well: San Diego (up 45% over average), Silicon Valley (up 30%), San Francisco (up 9%), and Los Angeles (up 8%).
East Coast movers
- New York added 499 associates, a 6% increase year-over-year. While down 21% over average, that includes the outsized associate boom years.
- Washington, D.C. added 219, a 5% increase over average and 9% year-over year.
- Like NYC, Boston’s associate hiring was down compared to the average (2%) but up (31%) over 2023.
- Philadelphia: 20% more hires over average and 77% year-over-year increase.
- Atlanta: 8% average increase and 103% year-over-year.
While none of the locations tracked by Decipher showed a year-over-year drop in associate hires in Q1, these four cities aren’t bouncing back as quickly as higher-priced locations on the coasts:
- Dallas, down 26% vs. average but up 28% vs 2023
- Minneapolis, down 18% vs. average and flat year-over-year
- Houston, down 13% but up 4% compared to last Q1
- Denver, down 11% compared to average but up 8% year-over-year
Partners in demand in the largest markets
When it comes to partner moves, only four cities saw a year-over-year decline in Q1 hires. Partners were in high demand in the high-rent districts of New York, Washington, D.C., Chicago, and Los Angeles.
Practice areas in demand
As deal activity increases and firms expand their deployment of artificial intelligence, law firms should expect to pay more for Banking & Finance talent: 311 partners in this practice area were hired in Q1, 87 percent more than the 7-year average of 166.4 and 33 percent more than in the first quarter of 2023. On the associate side, 525 finance lawyers were hired in Q1, up 16 percent from last year and 28 percent over average.
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, these 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%
While down 17 percent compared to average, the sheer number of litigation associates hired in Q1—696, a 7 percent year-over-year increase—shows demand for this talent is ramping up as well.
What this means for you
With billing rates growing and demand for work still high, law firms are continuing to turn to lateral hires—especially at the partner level—as a way to quickly and efficiently increase profits. But lateral partner failure rates remain high: 48 percent leave their new firm within five years and 62 percent fail to bring their promised book of business. Furthermore, for associate hires, firms don’t want to repeat history by overpaying for talent in competitive markets without considering how it affects probability and efficiency.
Given the stakes, it is imperative that your firm protect its investments in lateral hires – both from financial and cultural risk – by conducting at least some level of thorough due diligence on potential candidates. Decipher provides exclusive and actionable intelligence about lateral candidates to law firm hiring leaders that allows them to make informed decisions. To learn more about Decipher’s strategies and solutions, contact us today.
