Record-Breaking Transactional Hiring by Law Firms in 2021

Much has been said and written about the robust lateral hiring of 2021, and it was, in fact, a very busy year.  For example, Firm Prospects tracked 27,245 attorneys moves in 2021, as compared to 17,383 in 2020 and 22,362 in 2019, a 56% and 22% increase, respectively.  What really stands out about 2021, however, is not necessarily the total number of hires but rather the unprecedented demand for transactional attorneys.

Unprecedented Spike in Demand

Generally speaking, hiring by AmLaw 200 law firms tracks with the broader practice-area demographics of the attorneys within its ranks, save for small upticks/drops in hiring of attorneys with certain specializations driven by demand in various sectors or by market conditions.  For example, in the middle of the pandemic, there was a slight uptick in hiring of bankruptcy attorneys as well as a slight bump in demand for employment attorneys due to conditions created by COVID.  This trend can be seen in the first three years of Figure 1., below.

The highlighted portion of Figure 1., however, shows the sharp deviation from the proportional hiring that Firm Prospects tracked in the three years leading up to 2021. By way of example, looking at the two largest practice areas within which AmLaw 200 attorneys practice, litigation and corporate, which make up 34% and 19% of AmLaw 200 attorneys, respectively, the true demand for transactional attorneys in 2021 becomes apparent: there are 76% more litigation attorneys in the AmLaw 200 than there are corporate attorneys, yet in the second and third quarters of 2021 firms hired nearly 10% more corporate attorneys.

Corporate Attorneys Hired at a Rate of 2X Litigators and IP Attorneys

Figure 2., below, displays the same hires covered in Figure 1., above, for the four largest practice areas in the AmLaw 200: litigation, corporate, intellectual property and employment.  Rather than presenting the data as aggregate hires, however, Figure 2. displays the data as a percentage of total attorneys in those practice.  For example, at the peak of hiring in the second quarter of 2021, Firm Prospects tracked 1040 corporate hires out of ~22,600 corporate attorneys in our database, for a total of ~4.6% of  all corporate attorneys.  In that same quarter, only 2.3% of litigators and IP attorneys moved and 3.57% of employment attorneys moved.  Thus, the data show that corporate attorneys were hired twice as frequently as litigators or intellectual property attorneys and just under 30% more frequently than employment attorneys.

SPAC IPOs and Tech M&A Driving Demand

Much of the demand for corporate attorneys in 2021 can be tied back to record levels of tech M&A deals and the boom in SPAC IPOs.  As the below chart from PitchBook shows, SPAC IPOs more than doubled from Q4 of 2020 to Q1 of 2021, coinciding with the ramp up in corporate attorney hiring that started in Q1 of 2021 and peaked in Q1 of the same year.  It will be interesting to see what happens in light of the slowdown in SPAC activity, particularly if there is a drop-off in tech M&A deals in 2022 as well.

 

2021 SPAC Market Trends: Down in the Third Quarter? | Mayer Brown Free Writings + Perspectives - JDSupra

Associate Hiring and Attrition at “Top 25” Law Firms

There was a time when lateral moves by law firm partners got most of the attention from the legal media.  As record numbers of associates switch law firms, however, legal publications have started to focus their attention on associate hiring.  By way of example, in recent months Firm Prospects has worked with various reporters on stories covering law firm associate hiring here, here, here and here.  Accordingly, we thought it would be interesting to take a broad look at the associate hiring and attrition rates at the twenty-five largest firms based on gross revenue (the “Top 25”).

Over the past twelve months, Firm Prospects tracked 4,458 associate hires and 3,935 associate departures, for a net gain of 658 associates at the Top 25, which equates to a 4.4% increase in total associates.  As seen in Figure 1., below, hiring varied greatly among these firms, with Kirkland & Ellis hiring 613 associates, at the high end, and Norton Rose Fulbright hiring 46 associates, at the low end. The average number of hires within the Top 25 was 178.

Figure 2., below, shows that Kirkland & Ellis and Norton Rose Fulbright were at opposite end of the attrition spectrum, too, with 323 and 55 departing U.S. associates, respectively. The mean level of attrition among these firms was 157 associates over the previous 12 month period.

Figure 3., below, shows the net associate hiring/attrition for the Top 25.  Kirkland saw the largest net gain in its associate ranks, followed by Cooley, Goodwin, and Latham, with net associate gains of 151, 129 and 106, respectively.  On a percentage basis, however, Kirkland, Cooley and Goodwin saw almost identical associate gains with all three firms hovering around 21% increases in their associate ranks as compared to one year ago.
It’s important to note that the above analysis is not intended to be a list of “winners” and “losers” based on total associate hires or net gains/losses within associate ranks. Whether a firm has been successful or not in expanding/contracting their associate ranks over the past year depends upon how that firm is attempting to position itself in the current market.  What we do know is that, as the data show, Top 25 firms are taking very different approaches in the current, high-demand-for-associates, market.