Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. Today, we compare hiring and attrition trends at the “most prestigious” firms and the “best firms to work for.” Sign up to receive this column in your inbox on Thursday mornings.
The tight labor market for Big Law associates is getting a lot of attention. In general terms, it seems like what’s happened is: Firms are busier than they expected to be. There aren’t enough associates to handle the work. So the busy firms are hiring more lawyers.
But we’ve heard other explanations, too. Like: Associates are quitting because the workload is too much, and they’re burned out. So those firms are looking to hire lawyers who haven’t hit a breaking point.
It’s impossible to know which of those stories is more true. Some firms probably have too much work. Some associates probably are burned out.
But if I was managing a law firm, it would seem like an important distinction to understand. Is my labor shortage mostly due to unusually high demand? Then I just need to hire more people (or take less work). Or is my labor shortage due to too many people being unhappy and leaving my industry? Then I might have a more existential problem: People don’t want the job I’m offering.
They are different problems. But so far, Big Law has offered a single response: pay associates more money.
If the problem is just that some busy law firms are suffering a labor shortage, higher wages could help those firms pluck lawyers from less-busy competitors. But if the problem is the job is so bad that people are walking away en masse, then the next marginal raise might be throwing good money after bad. The job might need to change.
Big Law firms generally pay their associates the same. The traditional understanding of the talent market has been that, all else being equal, associates will choose to work at the most prestigious firms. Even so, there are firms that associates recognize as offering a better quality of life.
Maybe these firms are experiencing less attrition if associates are leaving because they are burned out. Or maybe these “best firms to work for” are having more success hiring associates leaving the bad firms. Who knows, one firm’s burned-out associate could be another firm’s part-time treasure.
To try and find some answers, I compared four years of hiring and attrition trends at the 10 firms ranked the most prestigious by Vault to the 10 firms Vault ranks as offering the best “quality of life.”
By and large, the prestigious firms are faring much better.
The 10 firms voted as the most prestigious hired, on average, 28 lawyers from January through mid-July from 2017 to 2020, according to an analysis by Decipher, which provides lateral hiring due diligence services for law firms.
This year, those firms have hired 64 associates on average. It’s a 131% increase over the historical average. Meanwhile, the top 10 “Best Firms to Work For” have hired 37% more associates so far this year than they have on average over the previous four years (35 compared to 26).
It’s probably wrong to draw sweeping conclusions from this data. But to me, it suggests the most prestigious firms are not having that hard of a time finding people who are willing to do the jobs they offer.
It is also true the most prestigious firms include some who experienced the biggest increases in revenue last year, such as Davis Polk & Wardwell, Latham & Watkins, and Kirkland & Ellis. Those firms could be busier than the firms voted best to work at.
Interestingly, both groups are experiencing a similar spike in associate attrition. The best firms to work for have seen a 19% increase in the number of associates who’ve left this year compared to the previous four years’ average. The prestige firms have seen a 20% increase.
Michelle Fivel, a partner at Major Lindsey & Africa who focuses on associate recruiting for Big Law firms, said she is not surprised to see a widespread spike in attrition.
“Covid had a really big impact on people,” she said. “As a recruiter in my day-to-day work life, I field calls from people who are changing locations. Their priorities changed. And that happened on top of the normal lateral moves that happen.”
The firms with the biggest increases over their historical hiring averages are Latham & Watkins, Davis Polk, and Simpson Thacher & Bartlett. The firms with the biggest increases over their historical attrition averages are: Kirkland & Ellis, Cravath Swaine & Moore, and Clifford Chance.
McDermott Will & Emery was ranked No. 1 this year on Vault’s Best Firms to Work For list. Among the 20 firms in my analysis, it is the only firm that added more associates than it lost from 2017 to 2020. (In general, dwindling the associate pool is a feature, not a bug, of the prevailing Big Law business model.)
Firm chair Ira Coleman said the firm sought to communicate more with associates during the pandemic, telling them it was “OK to raise their hand and say this was unbearable.” The firm gives 25 hours of “wellness” billable hour credit, which can be used on anything from reading a book to a counseling session.
Coleman said the Vault award was an affirmation of how the firm’s associates feel about the firm today. But he is interested a broader transformation. He said his goal is for the firm to be seen as a “career accelerator” that helps former associates find fulfilling careers after they leave Big Law.
“I don’t think anybody measures that right now,” he said.
Worth Your Time
On Covid: The rise in Covid-19 cases attributed to the Delta variant is rattling plans for returns to corporate legal departments and Big Law offices, Ruiqi Chen and Erin Mulvaney report. Many leaders seem to be taking a “wait and see” stance, watching for the next move from the Centers for Disease Control and state and local authorities before answering tough questions about RTO, as well as vaccine and mask wearing mandates.
On Coca-Cola’s Legal Department: The Coca-Cola Co.’s new general counsel Monica Howard Douglas will earn $555,000 in base salary and likely millions in total compensation, Chen writes. But it’s little compared to former GC Bradley Gayton’s consulting deal with the soda giant. That will pay him nearly $12 million in exchange for a maximum of 40 hours per month working for Coca-Cola providing 20% of the services he provided when general counsel.
On the Bar Exam: The much-maligned bar exam has received a relative reprieve from the cacophony of criticism leveled at it during the pandemic, Sam Skolnik reports. This week’s exam could be the last mostly virtual exam.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.