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Law360 (November 16, 2020, 7:11 PM EST) -- When coronavirus cases surged in early spring, many law firms paused associate hiring due to the uncertainties looming ahead, but now legal recruiters expect firms to be on the forefront again in battling for up-and-coming talent.
With partners working around the clock to help clients navigate the emerging legal needs sparked by COVID-19, recruiters said they anticipate firms will get more aggressive with their recruiting efforts for mid- and senior-level associates, particularly those who can hit the ground running.
"They want somebody to be able to just jump in and get started, rather than junior associates who they're having to handhold," said Summer Eberhard, a managing director in the associate practice group at Major Lindsey & Africa who specializes in representing attorneys in Northern California and the Pacific Northwest.
According to Eberhard, several BigLaw firms, particularly those in the Bay Area, have already resumed lateral hiring for mid- and senior-level associates. Eberhard and her New York-based colleague Ru Bhatt, also a managing director in MLA's associate practice group, expect the hiring activities to "stay robust" for the rest of this year and into next year.
"You have to remember that in early 2020, the market was very hot. There were significant needs at almost every major law firm," Bhatt said. "Obviously, when the pandemic hit, they slowed down quite a bit, but at the end of the day now, those firms are having an even stronger need for well-trained associates."
On the West Coast, law firms that have strong technology practices are moving ahead with the lateral associates hiring, Eberhard said. Meanwhile, firms on the East Coast tend to hire for private equity, litigation, capital markets and technology, according to Bhatt.
"A lot of firms have kind of settled into the new normal. They have assessed what type of work is going to come in, how much work is going to come in, and their financial position and a lot of these firms realize the work has not slowed down and it's probably picked up for a lot of them," Eberhard said. "So they've been able to move full steam ahead."
The pandemic did slow associate hiring at many firms. According to data collected and analyzed by competitive intelligence firm Decipher, associate lateral moves dropped to 6,253 for the first nine months of 2020, a 32% decrease compared to the same period last year.
However, the drop-off isn't necessarily bad news for associates who are looking to move, said Michael Ellenhorn, who runs Decipher. Firms that have weathered the pandemic better than others are now likely to place a higher premium on experienced associates given the disturbances caused by the virus, including telework, lack of training for junior associates and bar exam chaos, he said.
"In some cases, firms will rely much less on younger associates and rely or train their focus on the lateral associate market, because effectively what they need is capable, trained lateral associates that came of age in their careers before the pandemic hit," Ellenhorn said. "Those individuals will be very highly valued."
Getting a Head Start in the Bonus War
A roster of top-tier firms have already hit the gas pedal in the legal talent battle by offering "special pandemic bonuses" in early fall. The list includes Latham & Watkins LLP, the second-largest law firm in the U.S. per the Law360 400, which in late October announced surprise associate bonuses of up to $40,000.
"We're in a very fortunate position currently, and the demand for our services remains very strong across transactional litigation and regulatory services, particularly in light of the uncertainties that are brought by COVID," said Julie Crisp, partner and vice chair of Latham's recruiting committee.
So far, in 2020, Latham has added 32 partners, 10 counsel and 135 lateral associates, according to data provided by the firm. Among the firm's latest additions in the U.S. are finance partner David Penna from the U.S. International Development Finance Corp, former Kirkland & Ellis LLP tax partner Jennifer Pepin and sports and entertainment partner and 2018 Law360 Rising Star Frank Saviano from Proskauer Rose LLP.
"We look for folks that are mature that have experience in the work industry, depending on the level we're bringing in at, combined with the ability to really work in a rigorous, professional environment," Crisp told Law360.
With many more firms betting on year-end bonuses to attract and retain talent, Baker McKenzie, for the first time kicked off the season by announcing bonuses up to $100,000 and higher, getting ahead of previous bonus trendsetters Milbank LLP and Cravath Swaine & Moore LLP.
So far, no other firms have matched Baker McKenzie's scale. However, industry experts are expecting the momentum to pick up sooner rather than later, as many firms that skipped the fall bonus have indicated they'll likely increase their bonus amounts at year-end.
"There are some firms that did not give COVID bonuses; some of those firms are at the top of the market, otherwise. I anticipate them to take care of their associates at the end of this year," said MLA's Bhatt, noting that some associates are waiting on year-end bonuses to determine whether or not to jump ship next year.
Supply of 'Qualified' Associates Falls Short
Law firms have for years now increasingly been looking at lateral associates to build out their practices, according to a study released last month by the NALP Foundation for Law Career Research and Education and MLA, which surveyed more than 800 law firms between 2012 and 2018.
While entry-level hiring out of law school used to be the most prevalent way to hire associates, the study found that lateral associate hiring began to slowly match or outpace entry-level hiring for nearly all of the six-year time frame. The data showed that for every 20 associates hired by law firms, about 15 left.
"For firms who are looking to focus their hiring on specific practice areas, lateral hiring makes sense because a lateral associate will have experience in that area, and will have focused their attention on that area in their career," said Fiona Trevelyan Hornblower, president and CEO of the NALP Foundation.
However, because of the disruption caused by the coronavirus pandemic, many law firms have narrowed their searches to high-demand practices, such as bankruptcy and restructuring, data privacy and health care, Bhatt and Eberhard pointed out.
"There is less supply of qualified associates that are interested in making a move," Bhatt said, adding that many of the top candidates are "wary of" making a move now due to lingering concerns about the pandemic and professional development.
"The number of roles has definitely significantly decreased," Eberhard added. "Whereas there's a lot of attorneys on the market, but they're all not necessarily qualified for those particular roles, and so firms are being incredibly picky because they can."
To meet their needs, Bhatt said many BigLaw firms have extended their associate search to secondary legal markets, giving associates the flexibility to work in less expensive geographic areas while getting paid at the top firm rate.
"Because there's less of a supply, if you're a strong associate in some other geographic area, there's less of a risk right now to apply in the sense that eventually you would need to move to the area where you are," he said. "So firms are kind of open to people sitting elsewhere, at least in the short term."
--Additional reporting by Justin Wise. Editing by Alanna Weissman.
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