The Churn

September 15, 2010 4:21 PM

Trading Places: Another Record Year for Laterals?

Posted by Ross Todd

Holiday weeks are traditionally slow for news. So with both Labor Day and Rosh Hashanah landing on the calendar last week, The Am Law Daily was surprised by a deluge of press releases from law firms touting new partner hires. In a typical week, we receive about 20 such announcements at [email protected]. Last week we got close to 40.

Not a very scientific way to gauge lateral hiring volume, we know. But when we called a half-dozen legal recruiters to test our hunch that lateral hiring is taking off, all of them told us that indeed there has been an uptick in lateral moves over the same time period last year. And last year already set records for lateral activity, according to The American Lawyer's 2010 Lateral Report.

Last week's bonanza of lateral annoucements began making more sense when we asked recruiters what was behind the increase. Bobbie McMorrow of McMorrow Savarese in Santa Ynez, Calif., told us to remember that many of the hires announced last week have been in the works for the better part of the year. With the close of the third quarter, she says, partners have a better idea of how things are shaping up for themselves and their firms.

"In a lot of cases right now what you're seeing is people getting very realistic about what their law firm looks like at the end of 2010," McMorrow says. She says partners are starting to find out about compensation--whether they will have points cut or their firm will make its projected numbers. With such knowledge in hand, it's easier for partners to make the jump to a new firm.

On a similar note, Chicago recruiter Kay Hoppe says that what lies at the root of many moves "is the marriage of necessity and opportunity." Law firms are still cutting partners who are not producing, she says, and partners who are being "squeezed, warned, and literally let go" are eager to cut deals. As to the impact of the economy on Chicago firms, she says, "I think it’s worse than anybody is admitting. I think there's a lot of anxiety in the hearts of firm leaders if they're being totally honest."

Firm leaders aren't the only anxious ones. Southern California recruiter Michael Patrick says the past four partner placements he's made have involved recruiting a partner out of a firm in the top 35 of The Am Law 100 and moving them to a firm in the lower 50. He says since clients are pushing their lawyers to lower rates, partners are moving to firms which are more flexible about meeting clients' demands. Indeed, half of his recent placements have taken a cut in compensation to get to a place with better prospects for practice development.

"People are no longer moving to amplify their comp," Patrick says. "They're moving to survive."

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