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Quarter 4 Overview
Overall, the data suggests that hiring levels remained flat during Q4, with perhaps a slight uptick on Q3. However, these figures are based on the date of ‘entrance’ or start dates of the lateral candidates. At this time of year, many laterals who accept offers wait to receive their end of year bonus before joining. This means that if the numbers are slightly higher than Q3, it might actually suggest a much greater increase in movement and offer acceptances.
As predicted earlier in the year, we saw a much greater percentage of offers made per candidates interviewed. This can be attributed to a combination of an increase in market positivity/sentiment and firms moving more towards growth hiring rather than simply ‘strategic replacements’ alone. In addition, we have also seen a greater number of offer acceptances. The reason for this is that far fewer candidates are making a financial ‘loss’, compared with moving earlier in the year, due to their ability to wait and receive their full bonuses before starting at their new firm.
The general picture is that things are improving in the lateral hiring market. Job openings are continuing to increase and firms are starting to turn their attention back towards growth objectives, not just ‘steadying the ship’. As such, firms must quickly start to become competitive with their hiring if they don’t want to be left behind.
Hiring Activity
It has been an interesting year for partner hiring, with lots of high-profile lateral moves taking place, and this hasn’t slowed down in Q4. This is likely to be primarily due to firms starting to adjust to a model of ‘buying’ functions or teams that they don’t already have, rather than growing them from the ground up.
This model can be particularly effective for firms that are expanding to geographies where they don’t already have a presence, as it enables them to compete quickly and ‘hit the ground running’ in that market. In an age of firm expansion across the country, this is something that is especially prevalent.
We are also seeing more and more variation in partnership compensation models between firms. This, coupled with an overall lower loyalty to employers in recent times, has led to an increase in lateral partner movement.
Skill in Demand
As we have seen throughout the year, Litigators remained in high demand in Q4. In fact, it could be said that IP Litigation has remained ‘practice area of the year’. In terms of new areas that have started to get busier, Technology/IP Transactions started to see some movement. Investment Funds also began to increase and finally we saw a slightly more meaningful rise to M&A and Capital Markets hiring, which is particularly encouraging going into 2024.
Salary Levels
Perhaps surprisingly (and somewhat against predictions), there have been some salary changes in Q4. Despite not seeing any all year coupled with the fact that the latest rises won’t actually take effect until January 2024, it was still unexpected to see any sort of increase announcement to the top ‘market scale’ during 2023, especially after such an intense round of increases during 2022.
As an example, on November 7th, Milbank announced a rise in base compensation of $10,000 for associates at all levels, starting from January 1st, 2024. Notably, Quinn Emanuel also announced special Fall bonuses. Many firms are now expected to follow suit and we may even see a further rise in base compensation.
Forecast for Quarter 1 2024
Looking ahead, an increase in hiring is expected during the first quarter. The key reason for this is that, in the short term, a lot of lateral candidates collect their year-end bonuses and then consider a move, or simply start at firms for which they had already accepted offers during Q4. More generally, we expect transactional practice groups to continue to move their hiring forward as there has been a gradual but encouragingly increase in the number of transactions in the market.
Hiring across ‘elite’/AmLaw100 firms is anticipated to see the biggest increase. These firms have been slower to hire all year after some frenzied hiring activity during 2021 and 2022. Now, with a return to growth and a little more market stability, ‘elite’ firms are beginning to position themselves for more hiring at both the associate and partnership levels.
With regard to skill sets, earlier in the year more senior strategic hires at the associate level were the priority as firms looked for a ‘sure thing’ in uncertain times. Now we are seeing an escalation in hiring sentiment towards more junior candidates as work-load increases. In terms of practice areas, litigators at all levels have been in high demand for most of 2023, but it is likely that we will start to see a return in demand for associates in transactional areas.
Turning to salaries, those at the top market rate are already due to increase following Milbank’s announcement in November. The question now is whether others will follow their lead: it could well be that we will start to see a stream of ‘price matches’ on the top market salaries from other AmLaw100 firms as we go into 2024.
In terms of challenges facing candidates in Q1 2024, although there will be an uptick in the overall numbers of jobs available next year, there will also be a general growth in lateral movement as confidence starts to return to the market. This will lead to more competition for the top roles available. For firms, with an already scarce talent pool in the space, as demand for laterals starts to increase going into next year this scarcity of supply of top candidates will become more prevalent. This means firms will have to be even more competitive from both an offer and attractiveness perspective to compete effectively with competitors.
Overall, 2023 has certainly marked an interesting year for the legal space. This has been the year of ‘reconciliation’ or correction from the high levels of demand during 2021 and 2022. As we move into 2024, we are already seeing signs of improvement, including top market salary increases, and it seems likely we can look forward with optimism to a better year.
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Quarter 4 Overview
Overall, the data suggests that hiring levels remained flat during Q4, with perhaps a slight uptick on Q3. However, these figures are based on the date of ‘entrance’ or start dates of the lateral candidates. At this time of year, many laterals who accept offers wait to receive their end of year bonus before joining. This means that if the numbers are slightly higher than Q3, it might actually suggest a much greater increase in movement and offer acceptances.
As predicted earlier in the year, we saw a much greater percentage of offers made per candidates interviewed. This can be attributed to a combination of an increase in market positivity/sentiment and firms moving more towards growth hiring rather than simply ‘strategic replacements’ alone. In addition, we have also seen a greater number of offer acceptances. The reason for this is that far fewer candidates are making a financial ‘loss’, compared with moving earlier in the year, due to their ability to wait and receive their full bonuses before starting at their new firm.
The general picture is that things are improving in the lateral hiring market. Job openings are continuing to increase and firms are starting to turn their attention back towards growth objectives, not just ‘steadying the ship’. As such, firms must quickly start to become competitive with their hiring if they don’t want to be left behind.
Hiring Activity
It has been an interesting year for partner hiring, with lots of high-profile lateral moves taking place, and this hasn’t slowed down in Q4. This is likely to be primarily due to firms starting to adjust to a model of ‘buying’ functions or teams that they don’t already have, rather than growing them from the ground up.
This model can be particularly effective for firms that are expanding to geographies where they don’t already have a presence, as it enables them to compete quickly and ‘hit the ground running’ in that market. In an age of firm expansion across the country, this is something that is especially prevalent.
We are also seeing more and more variation in partnership compensation models between firms. This, coupled with an overall lower loyalty to employers in recent times, has led to an increase in lateral partner movement.
Skill in Demand
As we have seen throughout the year, Litigators remained in high demand in Q4. In fact, it could be said that IP Litigation has remained ‘practice area of the year’. In terms of new areas that have started to get busier, Technology/IP Transactions started to see some movement. Investment Funds also began to increase and finally we saw a slightly more meaningful rise to M&A and Capital Markets hiring, which is particularly encouraging going into 2024.
Salary Levels
Perhaps surprisingly (and somewhat against predictions), there have been some salary changes in Q4. Despite not seeing any all year coupled with the fact that the latest rises won’t actually take effect until January 2024, it was still unexpected to see any sort of increase announcement to the top ‘market scale’ during 2023, especially after such an intense round of increases during 2022.
As an example, on November 7th, Milbank announced a rise in base compensation of $10,000 for associates at all levels, starting from January 1st, 2024. Notably, Quinn Emanuel also announced special Fall bonuses. Many firms are now expected to follow suit and we may even see a further rise in base compensation.
Forecast for Quarter 1 2024
Looking ahead, an increase in hiring is expected during the first quarter. The key reason for this is that, in the short term, a lot of lateral candidates collect their year-end bonuses and then consider a move, or simply start at firms for which they had already accepted offers during Q4. More generally, we expect transactional practice groups to continue to move their hiring forward as there has been a gradual but encouragingly increase in the number of transactions in the market.
Hiring across ‘elite’/AmLaw100 firms is anticipated to see the biggest increase. These firms have been slower to hire all year after some frenzied hiring activity during 2021 and 2022. Now, with a return to growth and a little more market stability, ‘elite’ firms are beginning to position themselves for more hiring at both the associate and partnership levels.
With regard to skill sets, earlier in the year more senior strategic hires at the associate level were the priority as firms looked for a ‘sure thing’ in uncertain times. Now we are seeing an escalation in hiring sentiment towards more junior candidates as work-load increases. In terms of practice areas, litigators at all levels have been in high demand for most of 2023, but it is likely that we will start to see a return in demand for associates in transactional areas.
Turning to salaries, those at the top market rate are already due to increase following Milbank’s announcement in November. The question now is whether others will follow their lead: it could well be that we will start to see a stream of ‘price matches’ on the top market salaries from other AmLaw100 firms as we go into 2024.
In terms of challenges facing candidates in Q1 2024, although there will be an uptick in the overall numbers of jobs available next year, there will also be a general growth in lateral movement as confidence starts to return to the market. This will lead to more competition for the top roles available. For firms, with an already scarce talent pool in the space, as demand for laterals starts to increase going into next year this scarcity of supply of top candidates will become more prevalent. This means firms will have to be even more competitive from both an offer and attractiveness perspective to compete effectively with competitors.
Overall, 2023 has certainly marked an interesting year for the legal space. This has been the year of ‘reconciliation’ or correction from the high levels of demand during 2021 and 2022. As we move into 2024, we are already seeing signs of improvement, including top market salary increases, and it seems likely we can look forward with optimism to a better year.
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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 | 400 – 550k |
| 8th year | 365 – 415k |
| 7th year | 350 – 400k |
| 6th year | 330 – 370k |
| 5th year | 305 – 345k |
| 4th year | 275 – 295k |
| 3rd year | 240 – 250k |
| 2nd year | 215 – 225k |
| 1st year | 205 – 215k |
| 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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