Almost three years ago, we reported a continued pattern of more and more “lateral hiring” alongside an increased attrition rate at law firms, despite lateral hiring having dipped a bit due to the COVID-19 outbreak. Rather than hiring entry level associates, most firms were hiring more experienced attorneys—which was a bit of bad news for law students. This was tied to the fact that firms were bleeding attorneys, with 18% of attorneys leaving every year.
But in the past year or two, that lateral hiring pattern seems to have taken a 180. Now, it’s down way more than ever, and across the board. Partners, associates, and even law students can expect a tougher market as far as law firms go. Let’s take a look at what lateral hiring is in law firms, and how the numbers have been playing out lately.
What Is Lateral Hiring?
Lateral hiring refers to the process of recruiting a professional who is already working in the same or similar role and has the relevant experience and skills for the position being filled. Unlike traditional hiring practices where candidates may start in entry-level positions and work their way up within a company, lateral hiring typically involves bringing someone in at a mid-level or senior position from another organization.
Companies might choose to engage in lateral hiring for several reasons. They may be looking for someone who can hit the ground running with minimal training, or they may need a professional who brings a fresh perspective from their experiences in other workplaces. Lateral hires often have a developed skill set and industry knowledge that can be beneficial to the hiring organization.
Law Firm Laterals
Lateral hiring within private law firms typically involves hiring experienced attorneys from other firms to fill mid-level to senior associate positions or partnership roles. This practice is quite common in the legal industry, as firms often seek to expand their expertise, enter new practice areas, or strengthen existing ones by bringing in attorneys with established client relationships and reputations in specific fields of law.
The need for lateral hiring usually arises when a firm’s management recognizes a need for expertise in a specific area of law or the opportunity to grow their client base by hiring an attorney with a strong portfolio. Firms may use in-house recruiters, but more often they employ legal search firms (headhunters) who specialize in identifying potential candidates. These recruiters often have extensive networks and understand the legal market well.
For the candidate, lateral hiring can mean the potential for a better salary, but also more responsibilities. Negotiations on compensation, benefits, and possibly a partnership track or equity stake can be a complex part of the lateral hiring process. Law firms may offer competitive packages to attract top talent.
Lateral hiring can significantly impact a law firm's market position, as bringing on attorneys with strong legal expertise and client relationships can lead to new business and increased revenues. However, it's not without risks, as cultural misalignment or failed expectations can result in costly turnover. Law firms must carefully manage the integration process to ensure that lateral hires contribute positively to the firm's long-term success.
Lateral Hires at All-time Low
The National Association for Law Placement (NALP) collects data on law firm hiring and employment trends. According to the NALP’s most recent report, which covered 2023 data, lateral hires across the board have tanked lately.
In 2021, lateral hiring seemed to be skyrocketing (up 111%) as the lateral associate market was up. The following year, when the market for lateral associates had cooled off, the hiring of lateral associates dipped by almost 20%. Though the hiring of lateral partners and other lawyers was still up, overall lateral hires were down.
Now, the report from 2023 shows that for the second year in a row, overall lateral hires for firms are decreasing. The average and median number of lateral attorneys hired last year were the lowest since 2010, when hiring across industries had tanked from the Great Recession. Not only did lateral associates fall more than double the 2022 rate, but last year, lateral partner hiring was down for the first time as well, by 10%.
New Grads, Brace Yourself
What does this mean for law students? Well, last year, we saw a decrease in summer associate recruiting. Last month, NALP reported that full-time offers to summer associates at firms were the lowest since 2012, down 19% from the previous year. Recruiting hit an 11-year low last year, with firms collectively extending 19% fewer offers than in 2022. That, combined with the recent decrease in lateral hires, seems to indicate that law firms see less demand in the near future and are planning their hiring accordingly.
Related Resources
- Have Law Firms Achieved Gender Parity? Partially. (FindLaw's Practice of Law)
- Legal Jobs Near All-Time High Even as Industry Is Adapting (FindLaw's Practice of Law)
- Washington State Waives Bar Exam Requirement (FindLaw's Practice of Law)
