Legal News

In a Counterintuitive Twist: Lateral Moves Are All the Rage

By Nathan Koppel

The nation’s largest firms hired partners from other large firms at a record pace last year. All told, 2,509 partners moved laterally between Am Law 200 firms, according to the February issue of the American Lawyer magazine.

Here’s a summary of the findings from the magazine’s editor Aric Press.

At first blush, it makes no sense. Firms are firing lawyers and cutting costs at a record pace. And lateral partner hiring is a costly proposition. Typically, newbie partners take months of ramp-up time before they can turn a profit. “Economic downturns are supposed to be times when partners hunker down and firms become more conservative and less willing to take on newcomers,” Press says.

Yet, even in these woeful times, there was a 4% increase in partners jumping ship from one big firm to another. And this figure, Press says, doesn’t even taken into account the hundreds of partners who were hired in the wake of meltdowns at Heller, Thelen and Thacher Profitt. (Am Law’s lateral survey only tracks movement through September 30.)

So what gives? How can there be so much hiring activity? Part of it can be chalked up to skittishness. Lawyers are scared of being one of the last on a sinking ship–and are eager to move to firms perceived strong enough to weather the storm. “Accidental laterals,” e.g., lawyers who have been pushed out of their firms, are also driving the spike in movement, Press says.

And then there are the carnivores–firms that see the downturn as a prime opportunity to lure partners from weaker competitors.

Is all of this partner movement good or bad for BigLaw? It’s good for the talent, allowing many partners to command big salary premiums on the open market. But it has also helped foster a cut-throat environment, with firms focused intensely on boosting profits so that they will be in the running for star partners.

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Full post as published by Law Blog - WSJ.com on January 29, 2009 (boomark / email).