One of the most significant trends of late has been record numbers of partner hires at City law firms. Following the associate surge that was seen both during and after the COVID-19 pandemic, partner level moves have certainly been top of every major firm’s recruitment focus.
Having substantially boosted their associate capacity, firms are trying to tackle the reduced workflows that have been observed recently by bringing in rainmakers from rivals. In what has become an ever increasingly competitive talent market, this is seen as the most straightforward method to increase market share.
Despite the often-protracted nature of significant partner moves, with negotiations sometimes continuing over several months, there is no other lever available that has such an immediate impact.
By far the easiest way for law firms to increase both workflow and their respective market share is to hire partners who can bring business with them.
This is a pattern that looks set to continue, which we anticipate will mean another record year for partner moves, overtaking levels seen last year. The pandemic created a pent-up demand, one which meant the immediate priority in the aftermath was a flurry of hiring associates.
Now that the world has moved on, Big Law is trying to redress a bottom- heavy employee balance created by the recruitment priorities of 2021 and 2022.
Most partners are now well aware of their value in the market, poised to land extremely favorable terms based on their status as highly desired commodities. Many had their highest paying years in 2021 and 2022 and then saw this reduced last year.
With a stable client base, lawyers can now negotiate very generous pay packages based on a list of clients that, to law firms, represent a highly valuable asset.
Some areas of legal practice have seen even more marked movement than others over this busy period for partner hires. The main beneficiaries have been those working in litigation.
There has already been considerable activity in partner hires in the first few weeks of this year in other fields of the law.
Another widely observed major development last year was people trying to buy their way into litigation via mergers and acquisitions.
There are already positive indications that hiring activity overall is on the increase, with many firms recovered from a poor start to 2023 and, as a consequence, now in growth mode.
Risk aversion prompted by pessimistic expectations of an impending recession in the U.K. has given way to a widespread feeling of confidence. The turbulence in the economic landscape that caused many firms to pause recruitment has largely been replaced by a frantic surge in activity. Markets improved considerably once firms realized the outlook was not as bleak as had been anticipated.
It comes on the back of an uptick in workflow toward the end of 2023, which in turn created a renewed confidence to hire in certain areas, such as competition, employment, financial regulation and private equity.
This is especially the case among the large U.S. firms that invested heavily in their financial teams during 2022. Despite experiencing a growth pause last year, there is an expectation that M&A deal flow will steadily rise throughout 2024 and into 2025.
There are certain areas in particular where growth shows no signs of slowing down, such as competition and employment. Both of these markets are intrinsically linked to M&A and private equity, and many firms have been playing catch-up over the last two years with regard to developing these practices.
Salaries, meanwhile, continue to increase at a significant rate, and this is something that is not likely to slow at all in 2024, as companies struggle to attract the top candidates they need in an ever more competitive market. Indeed, in contrast to prior to the pandemic, some firms have increased pay multiple times in a year to ensure they remain competitive.
The trend of employers hiring immediately heading into the bonus season in the last quarter of 2023, matching bonus payments of a target lawyer’s existing firm, is indicative of how the normal conventions have shifted since COVID-19.
There is pressure on British firms to raise new qualifiers’ pay to match what U.S. firms offer in London. Firms are also now starting to become more
creative with the benefits they offer in a bid to stop the race of growing salaries.
Evidence suggests that even associate candidates now have more power than ever when negotiating a new role. The competitive talent market means that a small but significant proportion of potential incoming associates demand to know whether firms meet their environment, social and governance standards before accepting an offer, for example.
This is a radical change for an industry that has historically taken a seen- but-not-heard approach to junior practitioners. In a few cases, we have seen candidates turn down generous offers because firms do not match up to their ethical and social standards.
More frequently, interviewees have demonstrated a desire to understand whether a prospective firm’s diversity and inclusion statements are backed by affirmative action. Candidates are asking for data on partner progression for men and women within a team and gender splits more than ever before.
Candidates are now very aware of not just wanting to see that one person has been pushed into a position of power; they are asking more about how ESG filters down throughout a business.
For employers, talent acquisition is going to be a key challenge going forward. Post-COVID-19, workloads have increased across the board and firms that were previously able to offer a great work-life balance or would describe themselves as family-friendly are quickly evaporating.
This is now causing candidates to evaluate more carefully: If they are going to be working significantly increased hours, then they will be looking for commensurate remuneration.
As such, we have seen large numbers of partners migrate away from Silver Circle firms and other high-ranking West End firms in pursuit of closer parity between work and pay.
James Lavan is executive director at Buchanan Law.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.