Welcome to the latest round-up of lateral partner moves in the legal market from Edwards Gibson; where we look back at announced partner-level recruitment activity in London over the past two months and give you a ‘who’s moved where’ update.
Unsurprisingly, in view of the unfolding Global economic Götterdämmerung unleashed by Covid-19, the number of partner moves in this edition (54) is down 28% on the same period last year and nearly a quarter lower than the statistical average for the past 5 years (71).
Nevertheless, at a time when many law firms are war-gaming truly dramatic falls in revenue and managing partners are grappling with cash conservation, hire freezes, furloughs and capital calls – not to mention that London, like New York and almost every other legal hub in the world, has been in lockdown – it is perhaps surprising that the market for lateral hires has remained as robust as it has. Indeed, whilst our records show that lateral recruitment for this period is the second slowest this decade, it is actually 8% higher than the same period in 2015.
The seeming resilience of the market - at least for transactional lawyers - is likely due, in large part, to a lag effect reflecting processes which were completed, or in very advanced stages, prior to the impact of Covid-19. It is likely that our next edition (May-June) will better reflect the current market froideur and record more significant year-on-year reductions in lateral recruitment as the combination of economic, and practical, problems caused by the current lockdown begin to feed through.
In the meantime, this edition of partner moves remains jam-packed with interesting hires. Of note, two firms - DWF and US headquartered Orrick - hired five-partners a-piece, the latter scooping up a four-partner energy sector team from Watson Farley Williams. Also, in a rare team hire for Forsters, the West End firm welcomed a three-lawyer real estate team into its partnership from Orrick.
Top partner recruiters in London March – April 2020
|Morrison & Foerster||3|
Also of note in this edition
- Five firms: Ashurst, DLA, DWF, Greenberg Traurig and Mayer Brown, hired laterals whose practices were primarily restructuring or insolvency related;
- 22% of all laterals were non-partners moving into partnership;
- A record 44% of the total moves we recorded were female.
Lateral hire market outlook
At the time of writing, many law firms have instigated formal or informal hiring freezes. However, whilst opportunistic hiring of transactional partners is unlikely to be of too much interest to law firm management in the short term, in the medium term, it is likely that an otherwise sharp drop in London lateral recruitment will be mitigated by two main factors:
- An increase in Covid-induced workflow. Most employment and property litigation specialists are already reporting skyrocketing utilization rates. More significantly, a cornucopia of matters - from fraud and anti-trust to complex refinancings, as well as a sharp and sustained elevation in English law governed disputes - are likely to arise from a combination of hastily drafted legislation allied to the foreseen and unforeseen impacts of Covid-19 on virtually every major economic actor in the Western world. More obviously, restructuring/insolvency partners - who were already finding themselves de rigueur prior to Covid-19 - are likely to become increasingly sought after as the lock-down induced economic shock waves increasingly find their mark. If law firms are unable to re-tool their existing resources in time to take advantage of the above, they will need to hire laterally;
- Disruption induced voluntary and involuntary movement of partners/teams. Whilst most law firm partners – even those who are likely to be very busy – will probably see their compensation fall over the next 12-24 months, in many instances busy, profitable, teams will not want to be tied to an underperforming law firm – particularly one which requires a significant increase in capital contributions. Equally, many law firms will themselves shed underperforming partners (and practices) who will resurface at new homes. Finally, and most dramatically, if the current global GDP projections prove accurate, it is probable that a number of mid-tier law firms may collapse and/or, in the case of some US headquartered law firms, close loss-making London operations over the next 12-24 months. This will inevitably enable other firms to opportunistically cherry-pick from the resulting flotsam and jetsam at a discount.
In absolute terms, full-service law firms are set to have a very challenging time. For most, revenue and profits will fall and certain practice areas will wither entirely - with potentially devastating consequences for thousands of individual lawyers and legal service personnel. Nevertheless, in relative terms, providing their clients remain solvent and are willing to pay, law firms are likely to whether the storm far better than most. As they say – “what doesn’t kill you …”
Please do not hesitate to contact us if you would like to discuss this article or any other aspect of the market in more depth.
Scott Gibson, Director firstname.lastname@example.org or +44 (0)7788 454 080
Sloane Poulton, Director email@example.com or +44 (0)7967 603 402
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