U.S. lawyers swapped firms at record pace in 2021, report finds

REUTERS/Mike Segar
  • Last year's increase in associate and partner moves the highest in the 23 years NALP has kept track
  • Houston, New York and Boston the hottest lateral markets
  • Nearly a quarter of law firm offices hired associates to work remotely

(Reuters) - Providing further evidence that the U.S. legal hiring market was on fire in 2021, a new report has found that lawyer moves between law firms were up 111% nationally last year.

Lateral moves among law firm partners increased nearly 43% over 2020, while the number of associates switching firms was up 149% year-over-year, the National Association for Law Placement (NALP) said Wednesday. The combined 111% annual increase in lateral moves is higher than any time in the two decades NALP has been gathering that data, it said.

“Lateral lawyer hiring at this level is likely unsustainable over time, and I expect the lateral market to cool a bit in 2022, or at least level off, but for now it remains a volatile and fast-moving market,” said NALP executive director James Leipold.

Leipold noted that securing mid-level associate talent is “a bit of a battlefield,” thanks to high demand and rising associate compensation. In the past year, the standard starting associate salary at top firms has risen to $215,000 from $190,000, not counting multiple rounds of bonuses intended to sway associates to stick around.

Kate Reder Sheikh, a partner at legal recruiting firm Major, Lindsey & Africa, on Wednesday called 2021’s lateral landscape “unprecedented,” but added that lateral hiring has already pulled back to more traditional levels in 2022.

“It is, at least in part, owing to a normalized amount of M&A and capital markets activity,” she said. “2021 is the outlier; 2022 is a return to form.”

According to NALP, nearly 7,700 attorneys switched law firms in 2021 compared to 4,500 in 2020 — a year in which lateral hiring declined 30%, largely due to the pandemic.

For the first time, NALP asked law firms about hiring lawyers to work remotely, without relocating to an office. Among all law firm offices, 15% reported hiring a remote lateral partner, while nearly 23% hired remote associates.

Lateral hiring was up across all U.S. markets and regions, NALP found, but it was especially robust in Houston, New York and Boston, which saw total lateral moves increase 191%, 178%, and 171% respectively over 2020.

Read more:

N.Y. law firms raise starting salaries to $215,000 as lawyer pay race continues

The legal talent war that broke out in 2021 shows no sign of slowing down

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Karen Sloan reports on law firms, law schools, and the business of law. Reach her at karen.sloan@thomsonreuters.com