ALM | Law.com Pro
Mid-Market Executive Briefing
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Strategic Guidance for Midsize Law Firms
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The First-Mover Advantage
Today, we are experiencing a phenomenon not to be experienced again in our lifetimes. February 22, 2022–written in the international day/month/year format, it is 22/02/2022, representing the last eight-digit palindrome until March 3, 3033.
In the spirit of the palindrome, our collective tenet is to build a briefing full of stats and discuss the legal markets that should be on many firms' radar, and for an even deeper level of analysis, we refer you to Legal Compass where you can pop any firm name or market into the search for a deeper dive. This paragraph parted ways with strong writing in favor of any chance to use as many palindromes as possible. Points for anyone who sends in a strong, legal-themed palindrome!
Now, to the point at hand. ALM recently released its annual report on the state of lateral hiring. For this report, ALM focuses on partner moves beginning October 1 and ending September 30. While some elements of partner joins and departures from Am Law 200 were unique due to the pandemic, some details remained the same.
Expansion of out-of-town firms into new markets doesn't, of course, magically create more lawyers in those markets. We are anecdotally seeing a number of firms transplant lawyers from existing locales to help launch office locations. That isn't a new trend, but does seem particularly popular lately, especially for elite firms that aren't as active in the lateral market and want to build new offices in their traditional mold. But on the whole, new firms hire from an existing talent pool. And that has consequences for all involved.
Let's start with a look at Big Law's lateral hiring in global markets because what has happened in more mature markets like London is a great example of the effects, over time, a market invasion can have. Internationally in 2021, NLJ 500 firms grew most in the UK, primarily London. Nearly 40% of all NLJ 500 international partner hires were in the UK. Both China and France were 8% of new partner hires, with Germany and Australia rounding out the top five at 7% and 6%, respectively.
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NLJ 500 firms continued growing in London, but not so much through new office openings, which, according to ALM Intelligence’s London-based Director of Legal Intelligence James Willer, increased roughly 18% between 2000 and 2020. But, the number of attorneys in London now part of an NLJ-500 firm increased nearly 200% since 2000. |
Through the data submitted by firms as part of the Am Law 200 and NLJ 500 surveys, through the close of fiscal 2020, no U.S.-based firm had more than 20% of their total lawyers in London, although a few were close. Over the last three NLJ reporting years (2018-2020), Kirkland & Ellis; Paul Hastings; Akin Gump Strauss Hauer & Feld; Simpson Thacher & Bartlett; and Latham & Watkins posted the highest annualized London growth. |
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In the U.S., the volume of new Am Law 200 partner hires remains heavily weighted to New York and Washington, D.C. The nation’s capital is among the leading markets for Am Law 200 partner hires in a typical year. In an election year, it is even more active. While the sheer number of partner hires in the usual markets often drive headlines, the percentage of Am Law 200 partner hires among the total number of Am Law 200 partners in each market is a far more telling metric. Of the top five markets by partner move percentage, four could be considered emerging legal markets. Nashville has been on many firms’ radar for a while. Last year, nearly 9% of the partners in Nashville changed firms. Austin continued expanding over the last decade, attracting Am Law firms ranked 1 to 198. Just over 8% of the Am Law 200 partners in Austin joined new firms last year.
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Raleigh is a market poised for more growth. Beyond Apple and Google announcing plans to bring close to 4,000 jobs to Raleigh, the city ranks as one of the top global cities for science. Nearly 8% of the Am Law 200 partners in Raleigh moved firms in 2021.
Kirkland & Ellis, Wilson Sonsini Goodrich & Rosati and Foley & Lardner were among the firms to open in Salt Lake City in the last 12 months. More than 7% of the Am Law 200 in Salt Lake City partners joined new firms in 2021.
We discussed the Silicon Slopes and Research Triangle in a briefing last October. Strategic Expansion
Emerging markets can be, and are, attractive to firms for various reasons. Moving into an emerging market earlier, before an onslaught of larger firms move in and drive up talent and real estate costs, can provide those firms a critical first-mover advantage. The “have-it-all-hubs” are not just attracting young professionals; they are also attracting entrepreneurs & capital funding. Nashville, Raleigh, Charlotte, Boulder/Denver, Portland, and more fit that description. We’ve mentioned Boise previously, and we’re still bullish on its’ growth as a legal market. Other cities mentioned in recent Law.com reporting as potential growth targets can be found here.
Regardless of the emerging market, Big Law is no longer just for “big markets.”
Questions we still have: How are firms paying and charging in these smaller markets? If pay scales are universal across a firm, how are they saving money in these locations? And if they aren't saving, are the clients paying for it, therefore putting the whole value proposition of secondary markets into question? And what will happen to these offices when a market turns? While the pandemic has given a great opportunity to expand traditional footprints, firms should still be thoughtful about the value proposition of the market, how it fits with the comp and rate models of the firm and how it can serve as a path to gain more marketshare. |
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In the Know
Exclusive Law.com Pro/GLL Advisers Dinner: Would your firm leadership be interested in joining us for an exclusive dinner in NYC March 17 where general counsel and law firm leaders will gather to hear from BBC security correspondent Frank Gardner. This complimentary event will be limited in seats and firm leaders are encouraged to bring a client with them. It will be a fun, engaging evening! Request an invite here.
How Have the Talent Wars Impacted You?: We encourage our Pro readers at law firms to take this anonymous survey, the aggregated results of which we can then share with you to give better insight into how the market is addressing and being impacted by the fierce competition for talent. Am Law 100/200 Early Reports: Financial results are beginning to trickle in and we are capturing all of the early reports here. This page is updated regularly.
Law Firm Strategy: Here are links to some of our latest pieces across Law.com on law firm strategy. All of our Pro content, including past briefings and webinars, can be accessed here. |
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