Lateral associate hiring market cools in 2022,?but partner moves outpace 2021

After an unprecedented increase of 111% in 2021, the 2022 lateral hiring market produced mixed results according to the latest analyses from NALP’s Survey on 2022 Lateral Hiring. Overall lateral hiring fell by 11.5%, but that decline was driven by a cooling-off in the lateral associate market, which decreased by nearly 20% as compared to 2021, following a 149% year-over-year gain in 2021. Lateral hiring of both partners (+5.5%) and other lawyers (+9.5%) increased somewhat during calendar year 2022; however, that was not enough to make up for the drop in lateral associate hiring. Hiring varied across firm sizes, regions, and cities included in the analyses, with firms of 250 or fewer lawyers seeming to take advantage of the overall pull back in lateral hiring across larger-sized firms in 2022.

“The fact that the 2022 lateral hiring market cooled from its red-hot state in 2021 is not surprising. Last year was a progressively challenging year for law firms, with many closing out the year down in profits and over-leveraged on talent. Several of the markets that were particularly robust in 2021 fell significantly, including New York and Boston. The news, however, is not all bad. The shifting market was a boon for firms of 250 or fewer lawyers, which struggled to compete with larger firms during the hiring frenzy of 2021. These smaller firms appeared to have capitalized on the lack of positions at larger firms to acquire new talent. Associate hiring was up nearly 12% and partner hiring up 56% for firms of 250 or fewer lawyers, significantly outpacing larger firms and the reverse of what we saw last year,” said NALP Executive Director Nikia L. Gray.

“Additionally, while associate hiring decreased at the firms of 251 or more lawyers, partner hiring either stayed relatively level or increased modestly in firms of more than 500 lawyers, suggesting that these firms may be looking to supplement falling billable hours with the acquisition of new books of business. With the legal industry preparing for a rocky 2023, I expect we’ll continue to see firms exercising caution when it comes to lateral hiring and that the market for lateral associates in particular will cool a bit further,” she adds.

NALP’s 2022 analyses include more than 8,100 lateral lawyer hires from 511 offices/firms. Overall, 50% of offices reported a decrease in lateral hiring, 9% reported no change, and 41% reported an increase.

Key findings:

• The overall volume of lateral hiring declined by 11.5% compared with 2021 in these same offices/firms, with a median of 6.0 and an average of 15.9 lateral hires per office/firm. This dip in lateral hiring was largely driven by a fall-off in the lateral associate market, which declined by 19.6%. In contrast, lateral partner hiring was up by 5.5%.?

• The average number of lateral associates hired per office/firm in 2022 was 10.1 and the median was 4.0 compared to an average of 2.9 and a median of 1.0 for lateral partner hires. Lateral associate hiring accounted for 63.5% of lateral hiring in 2022 and lateral partner hiring accounted for 18.0%. Other lateral hiring comprised 18.5% of lateral hiring.?

• Changes in lateral hiring as compared to 2021 varied considerably by firm size. In firms of 250 or fewer lawyers, lateral hiring was up by 24.0% overall, driven by a 56.0% increase in partner lateral hiring. By firm size, these smallest firms were the only group to report an aggregate increase in lateral hiring, as well as an increase in associate lateral hiring (+11.5%). In contrast, firms of more than 700 lawyers experienced the largest overall decline in lateral hiring (-16.5%), fueled by a nearly 25% decrease in associate lateral hiring.?

• Among offices reporting activity for a single office, offices averaged from 0.9 to 1.6 lateral partner hires depending on firm size, whereas associate lateral hiring averages ranged from 3.9 to 5.6 per office.?

• On a regional basis, the level of lateral hiring per office was highest in the Northeast — largely driven by the New York City market — with a median of 8.0 and an average of 13.5 lateral hires in 2022. However, in terms of aggregate volume change, lateral hiring fell the most in the Northeast (-23.3%).?

• Among cities reporting at least 50 lateral hires in 2022, the percent change in lateral hiring from 2021 ranged from a decline of 46% in Boston, MA to an increase of 75% in Salt Lake City, UT.?

• Regionally, lateral associate hiring was down the most in the Northeast (-27.5%) and West/Rocky Mountain (-26.9%) regions for survey respondents that could provide individual office-level data.?

• Although overall partner lateral hiring increased somewhat, this was not the case across every firm size, region, and city. While firms of 250 or fewer lawyers reported a 56.0% increase in partner lateral hiring, firms of 251-500 lawyers experienced a 17.0% decline. Regionally, lateral partner hiring fell by more than 14% in the Mid-Atlantic region, while it grew by almost 16% in the West/Rocky Mountain region. By city, year-over-year changes in lateral partner hiring ranged from declines of 50% in Pittsburgh, PA and San Diego, CA to increases of 200% in Wilmington, DE and Charlotte, NC.?

• NALP also asked offices about the hiring of any lateral lawyers who were located outside of the firm’s geographic area and were allowed to work remotely without relocating. Overall, 16.1% of offices/firms reported hiring lateral partners who did not need to relocate (up from 15.3% in 2021), 19.3% reported hiring lateral associates who did not need to relocate (down from 22.7% in 2021), and 24.6% reported hiring other lateral lawyers who did not need to relocate (up from 23.4% in 2021).

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