Big Law Newsmakers on the Five Most Important Stories of 2024

Big Law’s better than expected year pushed top firms to make major strategic moves as they jostled for position.

A welcome upturn in deals activity helped spur demand at many leading firms, prompting them to hit the recruiting trail for partner talent. Increasing competition, particularly to land lucrative private equity work, boosted the asking price for rainmaking partners and prodded some firms to free up more money to pay those lawyers.

Here are the top legal industry stories of 2024 as told by some of its leading players and observers.

‘You have to have the financial strength to pay people what they’re worth in the market.’ — Frank Lopez, Paul Hastings

The richest Big Law firms got richer this year. Several used their advantage to shop for partner talent.

The 50 largest US firms saw net income rise 24.5% through the first nine months of the year, according to a survey by Wells Fargo’s Legal Specialty Group. That’s compared to a 22.2% rise for the entire Am Law 200.

Surging competition for rainmakers saw top partners at firms such as Kirkland & Ellis, Paul Weiss, and Simpson Thacher & Bartlett fetch as much as $20 million or more. Some firms made changes to longstanding compensation systems to keep up. Paul Weiss now pays partners under a “black box” system, while Weil Gotshal & Manges pledged to factor in business generation in setting partners’ pay.

Lopez and his firm were among the most aggressive players in the lateral recruiting market this year. Paul Hastings says the moves have already paid off.

Some firm leaders strive for a virtuous cycle between strong financials and aggressive lateral hiring. The more client-bearing lateral partners a firm recruits, the more compensation they can offer partners with lucrative client relationships.

But bringing large numbers of new partners also comes with risks. A larger partner pool could water down profits. And it’s hard to know for sure which clients will move with a new hire until the partner lands at the firm.

‘It’s hard to build enough scale with one-offs, laterals, and an occasional group hire.’ — Kent Zimmermann, Zeughauser Group

While elite firms plucked partners from rivals, others looked to join forces to achieve scale. Consolidation swept the lower ranks of the Am Law 200, driven by pressure to provide a wider range of services in more places.

Three mergers involving six large firms were announced within a span of six days in September. Troutman Pepper is combining with Locke Lord, a deal on which Zimmermann advised. Ballard Spahr is tying up with Lane Powell and Womble Bond Dickinson is pairing with Lewis Roca.

A total of 41 law firm mergers were executed in the first nine months of 2024, according to consultancy Fairfax Associates. That includes the May launch of transatlantic firm A&O Shearman.

‘Creating an income tier in the partnership gives us more flexibility to attract, promote, and retain the most sought-after talent.’ — Anjan Sahni, WilmerHale

There soon may be more partners paid largely by salary across the country’s 200 largest firms than those getting equity shares in their firms.

Paul Weiss’s new partner class tripled in the first year after installing a “nonequity” or “income” tier. WilmerHale and Cleary Gottlieb were among leading firms who also joined the trend this year.

Firms are leaning into nonequity partner ranks as a tool to recruit talent and protect profits. Still, some have faced backlash from their own lawyers over how they manage “partners in name only.”

Duane Morris and Thompson Hine were hit with lawsuits accusing the firms of misclassifying nonequity partners for tax and other purposes. They’re not the only firms who have saddled nonequity partners with Medicare, Social Security, and other costs by treating them as self-employed.

‘Firms were balking at doing a mid-year bonus because they didn’t want to set a precedent .’ — Jolie Steppe, Greene-Levin-Snyder Legal Search Group

Milbank turned heads in August when it announced “special” associate bonuses ranging up to $25,000.

Cue three months of crickets, as peer firms mulled over yet another increase in associate compensation. The waiting game was another sign that firms had shifted their recruiting attention to the partner ranks.

Milbank then announced it would pay out year-end bonuses on the same scale as last year, in addition to the earlier extra payments. By the end of November, Cravath and several others pledged to match Milbank on both special and year-end bonuses. The combined moves will see associates at the highest-paying firms collect an extra $21,000 to $140,000 this year.

Firms that paid the two bonuses kept them separate to tamp down associates’ expectations for next year. Steppe said it’s the same reason why they took their time matching the special bonuses.

‘At other firms, it was like a hate crime to donate to Trump. They’re having to reorient.’ — former US Rep. Tom Davis, Holland & Knight

Big Law’s most vocal political partisans had a clear favorite in the 2024 election, especially after President Joe Biden bowed out.

Lawyers gave more money to Vice President Kamala Harris in the first 10 days after she replaced Biden at the top of the Democratic ticket than they ponied up for President-elect Donald Trump in nearly two years. Trump’s supporters in law expressed concerns about repercussions if they went public.

The tables quickly turned after Trump’s victory. Law firms with Trump ties, like Holland & Knight and Squire Patton Boggs, were quick to tout them to the press and clients. Those with more left-leaning roots are now touting their “bipartisan” practitioner benches.