Q4 Overview
Q4 2024 brought a renewed sense of optimism to the US legal market. Clients, especially at the top 30 firms, are excited about a strengthening lateral hiring market. They anticipate a busier 2025, with many describing the current environment as reminiscent of pre-2021 activity levels.
One notable development during the quarter was Cravath’s announcement of additional “special bonuses” in November, which was quickly followed by other firms. These bonuses echoed the measures taken during the competitive lateral hiring market of 2021 and signalled an upcoming surge in hiring demand.
Key Hiring Trends
Transactional practices continued to dominate lateral hiring activity, driven by increased business transactions, private equity buy-outs, and a general uptick in deal-making. However, what stood out this quarter was the broad geographic spread of hiring activity. Beyond traditional financial hubs like New York and Chicago, significant lateral hiring was reported in cities such as Denver, Atlanta, Houston, Wilmington, Dallas, Austin, Los Angeles, and San Francisco. This marks a departure from past trends, with lateral hiring now more evenly distributed across the US.
Mid-level associates, particularly in transactional roles, were highly sought after. These candidates hit the “sweet spot” for many firms, as they can contribute immediately without the higher costs or near-partnership timelines associated with senior hires. This level of demand reflects firms’ strategic efforts to prepare for an expected surge in workflow as 2025 approaches.
Another unexpected development was the sustained strength of litigation hiring. Typically, as transactional hiring picks up, litigation hiring takes a backseat as firms shift their priorities. Yet this quarter saw consistent or even increased demand for litigation associates at both elite Top 50 firms and mid-sized firms, indicating that firms are balancing growth across multiple practice areas.
Sector and Role Dynamics
The industries driving the most notable hiring activity were those tied to financial transactions:
- Leveraged Finance: With businesses looking to refinance expensive loans taken during 2023 and early 2024, hiring in this area surged. The fall in interest rates played a key role in driving this demand.
- Private Equity Buy-Outs: Renewed business confidence and realistic valuations fueled increased hiring activity as lending for buy-outs became more affordable.
- Project Finance: Activity in this area saw significant growth as large energy and infrastructure projects gained approval, spanning renewables and oil & gas sectors.
Firms also reported notable shortages of talent in critical areas such as Fund Finance and Project Finance, particularly at the elite Top 50 level. This scarcity of experienced associates has required firms to innovate their hiring strategies, including offering incentives like signing bonuses and expanded relocation packages to attract top talent.
Additionally, mid-sized and regional firms faced growing challenges in retaining talent, as larger firms expanded into new regions post-pandemic. These smaller firms have increasingly had to compete on both pay and benefits to mitigate the loss of associates to elite firms offering higher compensation.
Compensation Developments
Compensation trends in Q4 highlighted the competitive nature of the legal recruitment market. Signing bonuses returned as a common feature of offers, particularly in high-demand transactional areas like M&A, Finance, and Private Equity. Unlike previous years, these bonuses were positioned as incentives rather than solely to offset prorated year-end bonuses.
Top 20 firms led the charge in offering competitive packages, but mid-sized and regional firms also raised their pay scales. The presence of elite lockstep-paying firms in emerging markets has forced smaller firms to increase compensation to retain and attract talent.
Despite these developments, the market faced shortages of associate talent in key areas such as Project Finance, Fund Finance, and Leveraged Finance, particularly at elite Top 50 firms.
Key Takeaways
- Q4 2024 set the stage for a potentially transformative 2025. The legal market is poised for significant growth, particularly in transactional practices such as M&A, Capital Markets, and Finance.
- Renewed private equity activity, falling interest rates, and deregulation are expected to drive this momentum.
- Staying competitive in an increasingly talent-scarce market will be critical for law firms. Streamlining hiring processes and planning ahead for areas of expected growth will be essential to securing top candidates.
- While the signs point to a busy 2025 for lateral hiring, firms and candidates should proceed with measured optimism. Strategic planning and flexibility will be essential to navigating this evolving landscape effectively.
Q4 Overview
Q4 2024 brought a renewed sense of optimism to the US legal market. Clients, especially at the top 30 firms, are excited about a strengthening lateral hiring market. They anticipate a busier 2025, with many describing the current environment as reminiscent of pre-2021 activity levels.
One notable development during the quarter was Cravath’s announcement of additional “special bonuses” in November, which was quickly followed by other firms. These bonuses echoed the measures taken during the competitive lateral hiring market of 2021 and signalled an upcoming surge in hiring demand.
Key Hiring Trends
Transactional practices continued to dominate lateral hiring activity, driven by increased business transactions, private equity buy-outs, and a general uptick in deal-making. However, what stood out this quarter was the broad geographic spread of hiring activity. Beyond traditional financial hubs like New York and Chicago, significant lateral hiring was reported in cities such as Denver, Atlanta, Houston, Wilmington, Dallas, Austin, Los Angeles, and San Francisco. This marks a departure from past trends, with lateral hiring now more evenly distributed across the US.
Mid-level associates, particularly in transactional roles, were highly sought after. These candidates hit the “sweet spot” for many firms, as they can contribute immediately without the higher costs or near-partnership timelines associated with senior hires. This level of demand reflects firms’ strategic efforts to prepare for an expected surge in workflow as 2025 approaches.
Another unexpected development was the sustained strength of litigation hiring. Typically, as transactional hiring picks up, litigation hiring takes a backseat as firms shift their priorities. Yet this quarter saw consistent or even increased demand for litigation associates at both elite Top 50 firms and mid-sized firms, indicating that firms are balancing growth across multiple practice areas.
Sector and Role Dynamics
The industries driving the most notable hiring activity were those tied to financial transactions:
- Leveraged Finance: With businesses looking to refinance expensive loans taken during 2023 and early 2024, hiring in this area surged. The fall in interest rates played a key role in driving this demand.
- Private Equity Buy-Outs: Renewed business confidence and realistic valuations fueled increased hiring activity as lending for buy-outs became more affordable.
- Project Finance: Activity in this area saw significant growth as large energy and infrastructure projects gained approval, spanning renewables and oil & gas sectors.
Firms also reported notable shortages of talent in critical areas such as Fund Finance and Project Finance, particularly at the elite Top 50 level. This scarcity of experienced associates has required firms to innovate their hiring strategies, including offering incentives like signing bonuses and expanded relocation packages to attract top talent.
Additionally, mid-sized and regional firms faced growing challenges in retaining talent, as larger firms expanded into new regions post-pandemic. These smaller firms have increasingly had to compete on both pay and benefits to mitigate the loss of associates to elite firms offering higher compensation.
Compensation Developments
Compensation trends in Q4 highlighted the competitive nature of the legal recruitment market. Signing bonuses returned as a common feature of offers, particularly in high-demand transactional areas like M&A, Finance, and Private Equity. Unlike previous years, these bonuses were positioned as incentives rather than solely to offset prorated year-end bonuses.
Top 20 firms led the charge in offering competitive packages, but mid-sized and regional firms also raised their pay scales. The presence of elite lockstep-paying firms in emerging markets has forced smaller firms to increase compensation to retain and attract talent.
Despite these developments, the market faced shortages of associate talent in key areas such as Project Finance, Fund Finance, and Leveraged Finance, particularly at elite Top 50 firms.
Key Takeaways
- Q4 2024 set the stage for a potentially transformative 2025. The legal market is poised for significant growth, particularly in transactional practices such as M&A, Capital Markets, and Finance.
- Renewed private equity activity, falling interest rates, and deregulation are expected to drive this momentum.
- Staying competitive in an increasingly talent-scarce market will be critical for law firms. Streamlining hiring processes and planning ahead for areas of expected growth will be essential to securing top candidates.
- While the signs point to a busy 2025 for lateral hiring, firms and candidates should proceed with measured optimism. Strategic planning and flexibility will be essential to navigating this evolving landscape effectively.
Salaries
| Role New York, DC, San Fran: The Elite (AmLaw 100) |
Private Practice – US Firm Permanent Salary Per Annum US$ Range (Base Salary) |
|---|---|
| Partner (Equity) | 1.4m (average total comp) |
| Counsel / Salaried Partner | 450 – 700k |
| 8th year | 365 – 425k |
| 7th year | 350 – 420k |
| 6th year | 330 – 390k |
| 5th year | 305 – 365k |
| 4th year | 275 – 310k |
| 3rd year | 240 – 260k |
| 2nd year | 215 – 235k |
| 1st year | 205 – 225k |
| New York: Mid Market (AmLaw 100 -200) |
Private Practice – US Firm Permanent Salary Per Annum US$ Range (Base Salary) |
|---|---|
| Partner (Equity) | 800k (average total comp) |
| Counsel / Salaried Partner | 315 – 450k |
| 8th year | 300 – 415k |
| 7th year | 275 – 400k |
| 6th year | 255 – 370k |
| 5th year | 240 – 345k |
| 4th year | 225 – 295k |
| 3rd year | 200 – 250k |
| 2nd year | 180 – 225k |
| 1st year | 150 – 215k |