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Q2 Overview
In quarter two, hiring levels for lateral attorneys increased significantly, particularly in major legal markets like New York, Chicago, and Washington DC. This surge reflects a growing demand for experienced legal professionals in these key areas, driven by an uptick in transactional activity and a more optimistic economic outlook.
Key Trends and Market Changes
Early Quarter Trends: Associate hiring had slowed down towards the end of Q1 and failed to gain momentum in traditional legal hubs such as New York, DC, Chicago, and Boston. The market was initially cautious, reflecting broader economic uncertainties and firms’ conservative approaches to expanding their workforce.
Mid to Late Quarter Surge: However, by mid-Q2, lateral hiring began to recover robustly. Major markets experienced a notable increase in hiring numbers, especially for lateral moves. This resurgence in lateral hiring indicates that firms are becoming more confident in their growth prospects and are actively seeking to strengthen their teams with experienced talent.
Hiring Levels: Larger firms, particularly those in the AmLaw50, ramped up their lateral hiring to levels reminiscent of pre-2023 when the lateral market was much more active. This trend is a strong indicator of renewed confidence within the top-tier firms, which are often the first to react to and reflect broader market changes.
Strategic Expansion: These firms are strategically expanding their associate ranks to manage increasing workloads and capitalize on emerging opportunities. Their hiring patterns suggest a focus on building depth in key practice areas to enhance their competitive position.
Active Hiring Industries
Lateral Hiring Peak: Lateral hiring in corporate and transactional practice groups reached a new high for the year in May, driven by month-on-month gains. This peak was influenced by a resurgence in deal-making activities, which typically drive hiring in these areas.
Economic Impact: The increase in deal-making, particularly in mergers and acquisitions (M&A), leveraged finance, and private equity, has been a positive indicator for the broader market. It reflects growing economic confidence and the willingness of businesses to engage in significant transactions, which require robust legal support.
Specialised Finance Roles: There was a significant rise in hiring for specialised finance roles, including Fund Finance, Leveraged Finance, and sponsor-focused finance. These areas saw a notable increase in demand due to the complexities and opportunities presented by current market conditions.
M&A Boost: M&A hiring also saw a boost as firms sought to build teams capable of handling a rising volume of transactions. The need for legal expertise in structuring and negotiating deals has driven demand for skilled professionals in these areas.
Steady Demand: Hiring in litigation and contentious practices remained high, though it did not exhibit significant growth. The demand for litigation support continues to be strong, driven by ongoing legal disputes and regulatory challenges, but it has remained relatively stable compared to the explosive growth seen in transactional areas.
In-Demand Professionals and Skills
Increased Demand: There has been a notable increase in demand for mid-level and junior associates, particularly those with experience in transactional practice areas. As firms enter ‘growth mode’ and transactional activities rise, there is a pressing need for talented associates who can manage increasing workloads.
Skill Set Requirements: Firms are looking for associates in their 2nd to 5th years who can contribute effectively to complex transactions and support senior attorneys. These professionals are valued for their ability to handle detailed legal work and assist in driving deal processes forward.
AmLaw50 Focus: Larger AmLaw50 firms are expanding their associate base to ensure they have the capacity to handle growing transactional work. This expansion is particularly focused on transactional practices where the need for junior and mid-level associates is most acute.
Growth Areas: The focus on transactional associates reflects broader economic trends, where increased deal-making and corporate activities drive demand for legal expertise in these areas.
Salary Trends
General Stability: Compensation levels remained stable during Q2. Most major law firms had already increased their pay scales in January to align with the top ‘market’ rates, and further adjustments were not anticipated within the quarter.
Competitive Landscape: The stability in compensation reflects a competitive but balanced market where firms are maintaining attractive pay packages to retain and attract talent without significant additional increases.
Increased Offers: There has been an increase in offers for lateral partners, especially those with a strong client following in Private Equity (PE), M&A, and Finance. This trend indicates a competitive market for top talent, where firms are willing to offer higher payouts or compensation to secure partners with valuable client relationships.
Optimistic Growth: The increase in partner compensation reflects a more optimistic view of growth prospects in these areas. Firms are positioning themselves to capture new business and expand their market presence by investing in partners with proven track records.
Shortage of Skills
High Demand: There has been a significant shortage of associates with expertise in structured finance and securitization relative to the recent increase in demand. This shortage is notable even in major markets where the talent pool for these specialised roles is already limited.
Client Needs: The rapid increase in client mandates in these areas has outpaced the available talent, creating a gap between demand and supply.
Restructuring Associates: There is also a shortage of restructuring associates, reflecting ongoing needs for expertise in managing financial restructurings and insolvencies.
IP Litigators and Antitrust Attorneys: IP litigators and antitrust attorneys, particularly in Washington DC, are in short supply compared to the growing demand for their skills in handling complex intellectual property and competition law issues.
Key Takeaways
Market Revival: The legal hiring market is experiencing a revival, with activity approaching levels seen before 2023. Law firms are increasing their hiring efforts, particularly in lateral markets, to keep up with rising deal-making activities and improved economic conditions.
Strategic Investments: This trend is a positive sign for market sentiment and law firm growth, suggesting that firms are strategically investing in talent to enhance their capabilities and capture new business opportunities.
Rising Opportunities: There are increasing opportunities in the legal sector, especially for those with experience in transactional work and other in-demand areas. Candidates should be well-prepared for interviews with a strong understanding of the firm’s culture, market position, and specific needs.
Competitive Edge: To stand out, candidates need to demonstrate how their skills and experiences align with the firm’s strategic goals and contribute to its growth. Thorough preparation and a clear presentation of their value proposition are essential for success.
Forecast for Q3 2024
Sustained Increase: We expect hiring activity to continue its upward trend in Q3 2024. The patterns observed in the first half of the year indicate ongoing growth in hiring across various practice groups, driven by the sustained demand for legal services and specialised expertise.
Key Areas: Major legal markets are likely to see new highs in lateral hiring, especially in transactional areas like M&A, finance, and private equity. The momentum from Q2 is expected to carry forward, reflecting broader economic recovery and increasing business activities.
Most In-Demand Professionals and Skills
High Demand: Associates in transactional areas such as M&A and leveraged finance will remain in high demand. Firms are looking for mid-level professionals with strong experience in these areas to manage complex transactions and support growing deal volumes.
Skill Requirements: Candidates with a track record of handling significant transactions and who can navigate the intricacies of deal-making will be particularly sought after.
Rising Need: There is a growing need for antitrust specialists, especially in DC, due to increased regulatory scrutiny and the need for expertise in merger control and litigation. Firms are looking to strengthen their capabilities in these areas to address evolving regulatory challenges.
Active Hiring Industries
Leading the Charge: AmLaw50 firms and other large ‘big-law’ firms will be the most active in lateral hiring, especially at the associate level. As transactional levels increase and deal-making rises, these firms will likely expand their associate ranks to handle the workload in corporate and transactional practice groups.
Strategic Focus: These firms are strategically focusing on areas where they expect the most growth, positioning themselves to capture a larger share of the market by investing in key talent.
Salary Expectations
General Trends: Salaries are expected to remain stable or potentially increase due to continued demand in the market. The recent adjustments to the top ‘market’ rates have set a high bar, and firms are likely to maintain or enhance these pay levels to stay competitive.
Partner Compensation: Partner compensation is expected to continue rising, with firms offering attractive packages to secure top lateral partners. The competition for partners with strong client followings is likely to intensify.
Challenges for Candidates
Mid-Year Decisions: Candidates will face the challenge of deciding whether to change jobs now before the end-of-year rush or wait until the end of the year to collect bonuses and secure promotions. This typical mid-year dilemma requires careful consideration of career trajectories and market opportunities.
Weighing Options: Candidates need to weigh the immediate benefits of a job change against the potential rewards of staying put to adapt to new technologies will be highly valued.
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Q2 Overview
In quarter two, hiring levels for lateral attorneys increased significantly, particularly in major legal markets like New York, Chicago, and Washington DC. This surge reflects a growing demand for experienced legal professionals in these key areas, driven by an uptick in transactional activity and a more optimistic economic outlook.
Key Trends and Market Changes
Early Quarter Trends: Associate hiring had slowed down towards the end of Q1 and failed to gain momentum in traditional legal hubs such as New York, DC, Chicago, and Boston. The market was initially cautious, reflecting broader economic uncertainties and firms’ conservative approaches to expanding their workforce.
Mid to Late Quarter Surge: However, by mid-Q2, lateral hiring began to recover robustly. Major markets experienced a notable increase in hiring numbers, especially for lateral moves. This resurgence in lateral hiring indicates that firms are becoming more confident in their growth prospects and are actively seeking to strengthen their teams with experienced talent.
Hiring Levels: Larger firms, particularly those in the AmLaw50, ramped up their lateral hiring to levels reminiscent of pre-2023 when the lateral market was much more active. This trend is a strong indicator of renewed confidence within the top-tier firms, which are often the first to react to and reflect broader market changes.
Strategic Expansion: These firms are strategically expanding their associate ranks to manage increasing workloads and capitalize on emerging opportunities. Their hiring patterns suggest a focus on building depth in key practice areas to enhance their competitive position.
Active Hiring Industries
Lateral Hiring Peak: Lateral hiring in corporate and transactional practice groups reached a new high for the year in May, driven by month-on-month gains. This peak was influenced by a resurgence in deal-making activities, which typically drive hiring in these areas.
Economic Impact: The increase in deal-making, particularly in mergers and acquisitions (M&A), leveraged finance, and private equity, has been a positive indicator for the broader market. It reflects growing economic confidence and the willingness of businesses to engage in significant transactions, which require robust legal support.
Specialised Finance Roles: There was a significant rise in hiring for specialised finance roles, including Fund Finance, Leveraged Finance, and sponsor-focused finance. These areas saw a notable increase in demand due to the complexities and opportunities presented by current market conditions.
M&A Boost: M&A hiring also saw a boost as firms sought to build teams capable of handling a rising volume of transactions. The need for legal expertise in structuring and negotiating deals has driven demand for skilled professionals in these areas.
Steady Demand: Hiring in litigation and contentious practices remained high, though it did not exhibit significant growth. The demand for litigation support continues to be strong, driven by ongoing legal disputes and regulatory challenges, but it has remained relatively stable compared to the explosive growth seen in transactional areas.
In-Demand Professionals and Skills
Increased Demand: There has been a notable increase in demand for mid-level and junior associates, particularly those with experience in transactional practice areas. As firms enter ‘growth mode’ and transactional activities rise, there is a pressing need for talented associates who can manage increasing workloads.
Skill Set Requirements: Firms are looking for associates in their 2nd to 5th years who can contribute effectively to complex transactions and support senior attorneys. These professionals are valued for their ability to handle detailed legal work and assist in driving deal processes forward.
AmLaw50 Focus: Larger AmLaw50 firms are expanding their associate base to ensure they have the capacity to handle growing transactional work. This expansion is particularly focused on transactional practices where the need for junior and mid-level associates is most acute.
Growth Areas: The focus on transactional associates reflects broader economic trends, where increased deal-making and corporate activities drive demand for legal expertise in these areas.
Salary Trends
General Stability: Compensation levels remained stable during Q2. Most major law firms had already increased their pay scales in January to align with the top ‘market’ rates, and further adjustments were not anticipated within the quarter.
Competitive Landscape: The stability in compensation reflects a competitive but balanced market where firms are maintaining attractive pay packages to retain and attract talent without significant additional increases.
Increased Offers: There has been an increase in offers for lateral partners, especially those with a strong client following in Private Equity (PE), M&A, and Finance. This trend indicates a competitive market for top talent, where firms are willing to offer higher payouts or compensation to secure partners with valuable client relationships.
Optimistic Growth: The increase in partner compensation reflects a more optimistic view of growth prospects in these areas. Firms are positioning themselves to capture new business and expand their market presence by investing in partners with proven track records.
Shortage of Skills
High Demand: There has been a significant shortage of associates with expertise in structured finance and securitization relative to the recent increase in demand. This shortage is notable even in major markets where the talent pool for these specialised roles is already limited.
Client Needs: The rapid increase in client mandates in these areas has outpaced the available talent, creating a gap between demand and supply.
Restructuring Associates: There is also a shortage of restructuring associates, reflecting ongoing needs for expertise in managing financial restructurings and insolvencies.
IP Litigators and Antitrust Attorneys: IP litigators and antitrust attorneys, particularly in Washington DC, are in short supply compared to the growing demand for their skills in handling complex intellectual property and competition law issues.
Key Takeaways
Market Revival: The legal hiring market is experiencing a revival, with activity approaching levels seen before 2023. Law firms are increasing their hiring efforts, particularly in lateral markets, to keep up with rising deal-making activities and improved economic conditions.
Strategic Investments: This trend is a positive sign for market sentiment and law firm growth, suggesting that firms are strategically investing in talent to enhance their capabilities and capture new business opportunities.
Rising Opportunities: There are increasing opportunities in the legal sector, especially for those with experience in transactional work and other in-demand areas. Candidates should be well-prepared for interviews with a strong understanding of the firm’s culture, market position, and specific needs.
Competitive Edge: To stand out, candidates need to demonstrate how their skills and experiences align with the firm’s strategic goals and contribute to its growth. Thorough preparation and a clear presentation of their value proposition are essential for success.
Forecast for Q3 2024
Sustained Increase: We expect hiring activity to continue its upward trend in Q3 2024. The patterns observed in the first half of the year indicate ongoing growth in hiring across various practice groups, driven by the sustained demand for legal services and specialised expertise.
Key Areas: Major legal markets are likely to see new highs in lateral hiring, especially in transactional areas like M&A, finance, and private equity. The momentum from Q2 is expected to carry forward, reflecting broader economic recovery and increasing business activities.
Most In-Demand Professionals and Skills
High Demand: Associates in transactional areas such as M&A and leveraged finance will remain in high demand. Firms are looking for mid-level professionals with strong experience in these areas to manage complex transactions and support growing deal volumes.
Skill Requirements: Candidates with a track record of handling significant transactions and who can navigate the intricacies of deal-making will be particularly sought after.
Rising Need: There is a growing need for antitrust specialists, especially in DC, due to increased regulatory scrutiny and the need for expertise in merger control and litigation. Firms are looking to strengthen their capabilities in these areas to address evolving regulatory challenges.
Active Hiring Industries
Leading the Charge: AmLaw50 firms and other large ‘big-law’ firms will be the most active in lateral hiring, especially at the associate level. As transactional levels increase and deal-making rises, these firms will likely expand their associate ranks to handle the workload in corporate and transactional practice groups.
Strategic Focus: These firms are strategically focusing on areas where they expect the most growth, positioning themselves to capture a larger share of the market by investing in key talent.
Salary Expectations
General Trends: Salaries are expected to remain stable or potentially increase due to continued demand in the market. The recent adjustments to the top ‘market’ rates have set a high bar, and firms are likely to maintain or enhance these pay levels to stay competitive.
Partner Compensation: Partner compensation is expected to continue rising, with firms offering attractive packages to secure top lateral partners. The competition for partners with strong client followings is likely to intensify.
Challenges for Candidates
Mid-Year Decisions: Candidates will face the challenge of deciding whether to change jobs now before the end-of-year rush or wait until the end of the year to collect bonuses and secure promotions. This typical mid-year dilemma requires careful consideration of career trajectories and market opportunities.
Weighing Options: Candidates need to weigh the immediate benefits of a job change against the potential rewards of staying put to adapt to new technologies will be highly valued.
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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 |
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