Attorney demands in the legal departments of businesses nationwide are similarly on the rise. Above all, the demand exceeds the supply for corporate, commercial transactions, health care, compliance, privacy, and employment lawyers across the country and in this region.
In response to these needs, in May 2021 elite law firms in New York, the District of Columbia and other major cities began paying substantial signing and other bonuses for top candidates willing to change law firms. They also announced COVID-related bonuses to retain top talent.
In early June, these same law firms increased first-year associate salaries to $205,000 and adjusted associate salaries upward so that some 8th-year associates will be pulling in $365,000 or more in base compensation.
The war for talent has had a ripple effect on large and small markets across the country. Law firms and many in-house legal departments are finding that they are losing the ability to attract and retain top talent in one of the most demanding markets in recent history.
Below are seven key consequences of these talent wars we have observed in the first half of 2021:
- COVID restlessness. After adjusting their work and personal lives to the restrictions of COVID-19, lawyers at all levels are reimagining their careers. They are seeking advice about the market, looking for change and expressing enthusiasm for taking calculated risks. They are returning the headhunter calls they may have dismissed before. Many lawyers are moving to other positions they perceive are a better fit for them. This includes a significant increase in partners with portable business leaving firms they have been with for years. The lawyers we have placed in businesses and in law firms report a renewed enthusiasm and a life-changing sense of gratitude for their workplace change after more than a year of feeling stifled by the pandemic.
- Opportunities abound in BigLaw for associates. BigLaw associates are moving to other BigLaw firms in record numbers. As the elite AmLaw firms in D.C. and Maryland exhaust associate recruitment efforts from other top firms, they are hiring lawyers from AmLaw 150 to AmLaw 250 firms because the need for lawyers in key practice areas exceeds the demand.
- AmLaw 200 firms increase comp as their associates depart for BigLaw opportunities. Some AmLaw 200/250 firms have announced they will increase or have increased salaries for associates. Others have announced midyear bonuses. But the salary gap continues to widen, and many firms whose compensation lags behind the top-paying firms are losing strong associates to elite firms in major commerce centers.
- Departures create opportunities for lawyers in smaller firms. Amlaw 200 and midsized firms are finding replacements from lawyers in smaller firms who have had solid training. Those lawyers will also receive a significant increase in compensation moving from a small firm to a midsized firm. And the small firms are recruiting from even smaller firms.
- Salary pressure forces some small firms to increase compensation. The salary increases among the elite firms not only impact the AmLaw 200 firms but they are also are placing pressure on small firms to increase their base compensation, even if just slightly.
- The law firm salary wars impact in-house legal departments. In-house legal departments have also been impacted by these BigLaw salary hikes. We have experienced an increase of candidates withdrawing from the recruitment process due to compensation issues. In response, some businesses have increased their compensation packages to attract the ideal candidates. Culture, flexibility involving work from home options, and opportunity for advancement are also key drivers that have afforded some businesses to land great talent.
- Work from home flexibility is a key driver for many lawyers. The pandemic forced lawyers to find a way to work seamlessly from home while balancing other responsibilities. This lifestyle change has become the new normal. At least some WFH flexibility is a factor for many attorneys contemplating a move. A question lawyers uniformly ask us about is the prospective employer’s current and future work from home policy.
Many firms and business have shared their return-to-office policies, which include a hybrid in-office/WFH policy. Others have announced they will be requiring lawyers to return to the office full-time at some point. Still others are taking a wait-and-see approach, given the changing circumstances.
In this hot attorney market, candidates have become more discerning about potential opportunities. Money is a key driver. But money alone may not move the needle enough to convince some lawyers to jump to a new opportunity. Career trajectory, culture fit, and diversity, for example, also influence a candidate’s decision-making. Increasingly, a flexibility regarding work from home options, including a willingness to consider hybrid office/home arrangements, has become a necessity for some lawyers to make a change.
