After a year of low replenishment for partners and senior counsel, we will soon begin to see how much lateral movement may be ahead for lawyers with books of business in the range of their annual compensation. Attorneys who bring in revenues in excess of $1 million will continue to be in high demand by recruiters, but it’s less clear what will happen to lawyers with books of business in the range of $300k to $500k. At these levels, recruiters are less likely to be involved, so these lawyers tend to get what they can negotiate.
Historically, boutiques and mid-sized firms have been bullish in hiring such lawyers because their books of business cover their compensation, making them largely self-financing. Over the next 6-9 months, we expect to see an unprecedented amount of lateral activity in this range.
Many lawyers went through 2020 unsure of their future compensation and with their roles disturbed as firms scrambled to reduce expenses ahead of predicted economic shocks. This turbulence has left many partners with mid-sized books of business rethinking their current positions. Likewise, mid-sized firms are facing a greater range of potential outcomes. Some have taken huge hits to cash flow, and some aren’t going to make it. That won’t stop firms from exploring hiring laterals, in the hopes of finding a white knight.
In this kind of environment, law firms and lawyers need to be much more careful and discerning. The number of bad situations and dubious options is likely to grow, so lawyers and firms have to be prepared to ask the difficult questions and devote more energy to due diligence.