Another victim of the COVID-19 pandemic appears to be lateral hiring among law firms, which fell more than 30% overall during 2020 after reaching record levels in 2018 and 2019, according to a new report by the National Association of Law Placement.
Associate lateral hiring plummeted 33.3% in 2020 while partner lateral hiring fell 23.5% compared to the previous year, the NALP survey reported. Overall lateral hiring was off 30.2% by law firms, which is the sharpest decline since the hiring of experienced lawyers tumbled 52% in 2009 at the height of the Great Recession.
“This news may seem to be at odds with people’s current experience in the market, where the competition for lateral associates is reportedly red hot, but in July of 2021 the legal services industry is in a very different place than it was in calendar year 2020,” NALP Executive Director James Leipold said in a news release. “During the period measured, many law firms had implemented austerity measures, including salary cuts and postponements or reductions in partner draws, and it was unclear what the impact of the pandemic would be on the demand for legal services.”
Of the 42 Midwestern offices for various law firms included in the NALP survey, overall lateral hiring dropped 32.9% in 2020 from 2019. Hiring of partner laterals fell 27.6% and associate laterals nosedived by 36.7%.
Offices in Chicago fared the best in the Midwest, with 33.3% reporting a decrease in lateral hiring of 30% or more. This compares to 80% of the offices in Minneapolis reporting a decline, 40% in Missouri and 57.1% in Ohio.
From 2012 through 2019, percent changes in lateral hiring year-over-year ranged from losses of about 11% in 2016 to gains of 14.4% in 2018. The lateral market slipped 0.7% in 2019.
Leipold expects the 2020 decreases to be temporary.
“As we would learn in the law firm year-end financial reporting cycle this past spring, many law firms did very well in 2020, with a combination of cost savings and more robust demand for legal services than anticipated driving relatively large revenue and profit gains,” Leipold said. “… The impact of the COVID-19 pandemic on law firm lateral hiring was significant, and produced a marked decrease in volume, albeit one that is likely to be quite brief in duration, with overall lateral lawyer hiring volume likely to show significant gains in 2021.”