The legal industry saw a significant slowdown in lateral hiring of junior lawyers at large firms in 2022, according to the National Association for Law Placement’s (NALP) annual lateral report released on Wednesday. Lateral moves between firms decreased by 12%, with associate hires falling by 20% and partner and non-associate lateral hires increasing by 6% and 10%, respectively.
The dramatic decrease in associate lateral moves came after a 111% increase in 2021 due to an upsurge in corporate deals, pushing demand for legal services to record highs. The trend was particularly noticeable in New York and Boston, where the competition for lawyers was especially fierce during the boom period. In contrast, the sustained demand for lateral partners suggests that firms seek to replace decreased billable hours with new businesses.
NALP Executive Director Nikia Gray commented in the report: “Last year was a progressively challenging year for law firms, with many closing out the year down in profits and over-leveraged on talent. The fact that the 2022 lateral hiring market cooled from its red-hot state in 2021 is not surprising.”
However, the overall lateral numbers don’t tell the whole story. Firms with less than 250 lawyers increased their lateral hiring across the board. Associate lateral moves increased by 12%, while partner moves increased by 56%.
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Smaller ones have acquired new talent by taking advantage of the lack of positions at larger firms. Gray pointed out: “These smaller firms appeared to have capitalized on the lack of positions at larger firms to acquire new talent.” Firms with fewer than 250 lawyers struggled to compete during the 2021 lateral hiring frenzy, making the latest increase in lateral activity all the more impressive.
The NALP report reflects a changing climate in the legal industry where competition for legal talent is increasing. Firms are increasingly inclined to hire associates and non-associates from smaller firms. This trend will likely continue in subsequent years as large firms look for ways to accommodate the influx of legal business and the demand for more efficient services. As such, smaller firms may benefit from increased lateral activity as larger firms look to them for new talent and fresh ideas.
In conclusion, the 2022 lateral hiring market is a clear sign that the legal industry is adapting to changing times, with large firms seeking out talent from smaller ones and firms of all sizes shifting their focus to efficiency. As the industry continues its journey towards new practices, legal professionals will benefit from increased demand for lateral hires in the future.
The NALP report provides a fascinating insight into current trends in the legal sector and highlights both the opportunities available to smaller firms and the challenges ahead for larger ones. With the legal industry in flux, it is clear that lateral hiring will remain an essential factor in shaping the profession’s landscape in years to come.