NALP Bulletin+
July/August 2021

After remaining relatively steady in 2019, lateral hiring fell by more than 30% overall in 2020, driven in large part by the impact of the COVID-19 pandemic on recruiting. This steep fall-off in 2020 was experienced across all firm sizes, regions, and cities included in NALP's analysis of the Survey of Legal Employers on Recruiting from 2020-21, although some offices saw larger decreases than others. The analysis also examines comparisons from the annual survey dating back to 2003.

This year's survey saw the largest decline in lateral hiring since the peak of the Great Recession in 2009, when lateral hiring was down by 52%. Lateral hiring volume decreased considerably during the Great Recession in 2008 and 2009, and then experienced a substantial rebound as the legal economy recovered in 2010 and 2011. From 2012-2019, percent changes in lateral hiring year-over-year ranged from losses of approximately 11% to gains of about 14%.

The results shown in Table 1 and Table 2 are based on data from 388 law offices/firms that reported at least one lateral hire in either 2019 or 2020. Table 1 reports aggregate information for partners, associates, and all other lateral lawyers. Table 2 reports on lateral partner and associate hiring, which accounted for approximately 83% of the lateral hiring reported for 2020. It includes cities and states with at least five offices that reported office-specific information, and which collectively reported at least 20 lateral hires in 2020.

Key Findings:

• Based on aggregate hiring information on more than 4,500 lateral lawyers in 2020, the overall volume of hiring was down 30.2% compared with 2019 in these same offices/firms, with a median of five and an average of 11.7 lateral hires per office/firm. Partner lateral hiring fell by 23.5% in 2020, while associate lateral hiring experienced a sharper decline of 33.3%. The average number of lateral associates hired per office/firm in 2020 was approximately seven and the median was three compared to an average of about two and a median of one for lateral partner hires. Lateral associate hiring accounted for 62.0% of lateral hiring in 2020 and lateral partner hiring accounted for 20.7%. Other lateral hiring comprised 17.3% of lateral hiring in 2020, and, as the median figure of one suggests, many offices did not do any hiring of this type in 2020. Aggregate hiring in this category was down by 25.5%. (See Table 1.)

• However, as Table 2 shows, changes in aggregate hiring and the level of hiring, measured by either the median or average number of hires, varied considerably by both firm size and geography. For example, for firms reporting their lateral hiring on a firm-wide basis (in the section of Table 2 labeled "Firm-wide Reports"), lateral hiring as measured by medians ranged from 9 to 62.5 depending on firm size and declines in aggregate volume ranged from approximately 27% to 38%. Lateral hiring decreases by region ranged from about 23% to 35%. (Regional figures in this section of Table 2 reflect firms reporting firm-wide information, but whose offices are wholly or predominantly in one region.)

• Among offices reporting activity for a single office, offices averaged from 0.9 to 1.5 lateral partner hires depending on firm size, whereas associate lateral hiring averages ranged from 3.1 to 4.4 per office. While lateral hiring was down across the board, offices in firms of more than 700 lawyers experienced the largest drop in lateral hiring (-32.8%) while offices in firms of 501-700 lawyers had the smallest declines (-10.8%).

• On a regional basis, the level of lateral hiring per office was highest in the Northeast, with a median of 6.5 and an average of 11.5 lateral hires in 2020, compared with medians of 3.0 to 4.5 in all other regions and averages that ranged from approximately four to seven. However, in terms of aggregate volume change, volume was down the most in the West/Rocky Mountain region (-34.7%) and down the least in the Northeast (-20.8%). The median number of lateral hires was highest in New York City and the Washington, DC/Northern VA area, where the median was eight in both locations.

• Among cities reporting at least 50 lateral hires in 2020 (Boston, Chicago, Dallas, Houston, Los Angeles/Orange County, New York City, San Francisco, and Washington, DC/Northern VA), lateral hiring declines ranged from 40% in San Francisco to about 20% in Boston. However, changes in lateral hiring volumes by city can fluctuate widely from year to year. For example, Los Angeles/Orange County, San Francisco, and Washington, DC/Northern VA reported increased volumes ranging from 2% to 28% in 2019 when compared to 2018. (See Chart 1.)

• Despite the overall 30% decline in lateral hiring in 2020, not every office or firm experienced such a large decrease, while others saw an even more dramatic drop in lateral hiring. For example, about 52% of offices/firms reported decreases of 30% or more in lateral hiring, while 48% experienced declines of less than 30%. The last column in Table 2 reports the percentage of offices that experienced these larger declines of 30% or more in 2020. Among cities with at least 10 offices reporting, Houston (68.8%) and San Francisco (73.7%) had the highest proportion of offices reporting decreases of 30% or more in lateral hiring. In contrast, just one-third of offices in Chicago reported declines of 30% or more.

• While overall lateral hiring and associate lateral hiring were down across all firm sizes, regions, and cities/states included in NALP's analysis, this was not the case for partner lateral hiring. For firms reporting firm-wide data, partner lateral hiring was up by nearly 5% in firms of 251-500 lawyers and by nearly 14% in firms located in the Southeast. For office-specific reporting, partner lateral hiring was up by about 9% in firms of 250 or fewer lawyers and by 28% in firms of 501-700 lawyers. Partner lateral hiring was down across all regions, but some individual cities/states experienced growth such as Charlotte, Missouri, Philadelphia, and the Seattle area.

• This year's survey results document a sharp decline in the lateral hiring market which was predominantly driven by the impact of the COVID-19 pandemic on the economy and the recruiting process, following a year of relative stability in 2019. Survey results, of course, reflect the respondent pool for each year. Nonetheless, to the extent that the survey pool is relatively consistent with respect to firm size and location, it appears that the average number of lateral hires per office/firm remains above the levels measured during the height of the Great Recession from 2008 to 2010. Prior to the 2020 fall-off, the average number of lateral hires reached record levels in 2018 and 2019. It remains to be seen whether 2021 will see a return to these historic levels as the pandemic wanes. (See Chart 2 and Table 3.)

For full results of prior year surveys, see NALP Bulletin columns posted under Entry-level and Lateral Hiring.

Table 1. Summary of Lateral Hiring — 2020

Source: NALP Survey of Legal Employers on 2020-21 Recruiting

Table 2. Lateral Hiring in 2020 and Comparison with 2019

Source: NALP Survey of Legal Employers on 2020-21 Recruiting

Note: This table includes offices/firms that reported at least one lateral hire in 2019 or 2020 and which also reported complete information for both years. Collectively these 388 employers reported 4,534 lateral hires in 2020. Other lateral hires are included in the overall totals, but are not reported out separately. Cities and states shown had at least five offices collectively reporting at least 20 lateral hires in 2020. Following the overall total shown in the first line, the table separates out surveys which reported information firm-wide, or for multiple offices, from those which reported office-specific information. Firm-wide information by region includes firms whose offices are predominantly or wholly in that region. However, office-specific information includes some instances of firms with most attorneys located in that city or whose additional offices are located primarily in adjacent areas, and of multi-office nationwide firms consolidating two geographically adjacent offices onto one survey.

Table 3. Summary of NALP Findings on Lateral Hiring — An 18-Year Retrospective, 2003-2020

Source: NALP Survey of Legal Employers on Recruiting, 2003 - 2020-21

Chart 1: Percent Change in Aggregate Lateral Hiring from 2019 for Cities with 50 or More Lateral Hires in 2020

Chart 2: Percent Change in Aggregate Lateral Hiring from Previous Year, 2003 - 2020