Laterals v. Summers

Post Reply
User avatar
Toni
Posts: 1166
Joined: Sat Jan 27, 2018 11:13 pm

Laterals v. Summers

Post by Toni » Wed May 09, 2018 11:29 am

I do not have any hard data per se, but from what I’ve recently noticed, firms are more focused on hiring laterals rather than taking on the number of summers as they once did. Yes/No?

User avatar
SmokeytheBear
Posts: 1060
Joined: Mon Jan 29, 2018 2:26 am

Re: Laterals v. Summers

Post by SmokeytheBear » Wed May 09, 2018 11:31 am

What year are you?

I think you're just seeing that summer classes have gotten slightly smaller in size and you are probably more conscious of lateral hiring because you are in the mix.

It's an interesting hypothesis, though.

User avatar
Toni
Posts: 1166
Joined: Sat Jan 27, 2018 11:13 pm

Re: Laterals v. Summers

Post by Toni » Wed May 09, 2018 11:39 am

SmokeytheBear wrote:
Wed May 09, 2018 11:31 am
What year are you?
4. What I noted above, just seems that way to me. Possibly because hiring experienced people makes better sense.

User avatar
SmokeytheBear
Posts: 1060
Joined: Mon Jan 29, 2018 2:26 am

Re: Laterals v. Summers

Post by SmokeytheBear » Wed May 09, 2018 11:55 am

Toni wrote:
Wed May 09, 2018 11:39 am
SmokeytheBear wrote:
Wed May 09, 2018 11:31 am
What year are you?
4. What I noted above, just seems that way to me. Possibly because hiring experienced people makes better sense.
It totally does.

lolwat
Posts: 714
Joined: Mon Jan 29, 2018 2:06 am

Re: Laterals v. Summers

Post by lolwat » Thu May 10, 2018 12:05 am

it makes like zero sense to hire summers when you can just wait a year or two out and hire laterals

User avatar
freshy dog
Posts: 76
Joined: Sun Jan 28, 2018 10:54 pm

Re: Laterals v. Summers

Post by freshy dog » Thu May 10, 2018 12:15 am

At a practice group meeting, the office chair explicitly told us this was the case and at least as far as that particular partner was concerned, is the growing trend in biglaw.

User avatar
Johannes
Posts: 12628
Joined: Thu Jan 25, 2018 6:43 pm

Re: Laterals v. Summers

Post by Johannes » Thu May 10, 2018 2:33 am

yep ive noticed the same trend.

User avatar
UVA2B
Moderator
Posts: 4133
Joined: Thu Jan 25, 2018 3:26 pm

Re: Laterals v. Summers

Post by UVA2B » Thu May 10, 2018 10:36 am

I could be off on this, but there has to be a limit on that trend, right? Like obviously it makes way more economic sense to get an attorney that has a few years of experience instead of farming fresh law students, but in order to feed the need for laterals, there will always have to be fresh hires at firms that a firm will consider hiring a lateral from. I've always been of the understanding that lateral hiring cares somewhat which law firm they are taking a lateral from, so if Firm X will only realistically consider hiring laterals from ~40-50 other firms, those firms will all need to keep getting new graduates in some capacity. Otherwise, eventually the pool of available lateral candidates will dry up.

That said, maybe this is more indication of the trend in law firms that they are realizing how inefficient the heavily leveraged model really is and this is all an attempt to decrease personnel leverage and become leaner and more efficient.

User avatar
Toni
Posts: 1166
Joined: Sat Jan 27, 2018 11:13 pm

Re: Laterals v. Summers

Post by Toni » Thu May 10, 2018 3:30 pm

Back in the day [‘14] there were reports indicating that the entire T14 graduating class could not fill all the BL openings. A move toward favoring laterals could change that dynamic a bit.

lolwat
Posts: 714
Joined: Mon Jan 29, 2018 2:06 am

Re: Laterals v. Summers

Post by lolwat » Thu May 10, 2018 9:32 pm

UVA2B wrote:
Thu May 10, 2018 10:36 am
I could be off on this, but there has to be a limit on that trend, right? Like obviously it makes way more economic sense to get an attorney that has a few years of experience instead of farming fresh law students, but in order to feed the need for laterals, there will always have to be fresh hires at firms that a firm will consider hiring a lateral from. I've always been of the understanding that lateral hiring cares somewhat which law firm they are taking a lateral from, so if Firm X will only realistically consider hiring laterals from ~40-50 other firms, those firms will all need to keep getting new graduates in some capacity. Otherwise, eventually the pool of available lateral candidates will dry up.

That said, maybe this is more indication of the trend in law firms that they are realizing how inefficient the heavily leveraged model really is and this is all an attempt to decrease personnel leverage and become leaner and more efficient.
For corporate maybe.

For litigation if we expand “laterals” to also include people coming from clerkships, there should still be plenty of candidates.

ballinoutacontro
Posts: 149
Joined: Wed Feb 28, 2018 4:32 am

Re: Laterals v. Summers

Post by ballinoutacontro » Fri May 11, 2018 2:21 am

UVA2B wrote:
Thu May 10, 2018 10:36 am
I could be off on this, but there has to be a limit on that trend, right? Like obviously it makes way more economic sense to get an attorney that has a few years of experience instead of farming fresh law students, but in order to feed the need for laterals, there will always have to be fresh hires at firms that a firm will consider hiring a lateral from. I've always been of the understanding that lateral hiring cares somewhat which law firm they are taking a lateral from, so if Firm X will only realistically consider hiring laterals from ~40-50 other firms, those firms will all need to keep getting new graduates in some capacity. Otherwise, eventually the pool of available lateral candidates will dry up.

That said, maybe this is more indication of the trend in law firms that they are realizing how inefficient the heavily leveraged model really is and this is all an attempt to decrease personnel leverage and become leaner and more efficient.
lateralling "up" is totally a thing tho.. i.e., lateralling to firms that are more selective than your own. If hypothetically the amlaw rankings correlated to the "best" firms.. the amlaw 10 could hire from the amlaw 1-25, the amlaw 1-25 could hire from the amlaw 1-50, the amlaw 1-50 from the amlaw 1-80, etc... and then there will always be firms down the foodchain that will always be desparate enough that they bite the bullet and train the fresh lawyers.

You already see this effect in "secondary" markets. For example, the one I'm in... of the AmLaw firms and comparable firms.. combined probably hire like maybe 30 summer associates (this is a wild guess...I didn't summer here either). Instead, the entire city fills their ranks almost exclusively from laterals, mostly CA/NY refugees and/or people from here returning home.

And obviously the "prestigious" firms will always hire at least some fresh lawyers even if less..to maintaining their "prestige" if nothing else

Just a thought



added: also, this is just my feeling, but I feel like firms in general are shrinking class sizes in general a little bit. Clients are tightening their belts on legal bills, an so aren't supporting quite as many jr. lawyers as they used to, industry wide. I don't have any data to back that up tho

User avatar
Johannes
Posts: 12628
Joined: Thu Jan 25, 2018 6:43 pm

Re: Laterals v. Summers

Post by Johannes » Fri May 11, 2018 11:24 pm

UVA2B wrote:
Thu May 10, 2018 10:36 am
I could be off on this, but there has to be a limit on that trend, right? Like obviously it makes way more economic sense to get an attorney that has a few years of experience instead of farming fresh law students, but in order to feed the need for laterals, there will always have to be fresh hires at firms that a firm will consider hiring a lateral from. I've always been of the understanding that lateral hiring cares somewhat which law firm they are taking a lateral from, so if Firm X will only realistically consider hiring laterals from ~40-50 other firms, those firms will all need to keep getting new graduates in some capacity. Otherwise, eventually the pool of available lateral candidates will dry up.

That said, maybe this is more indication of the trend in law firms that they are realizing how inefficient the heavily leveraged model really is and this is all an attempt to decrease personnel leverage and become leaner and more efficient.
oh yeah. i think theres def a very defined limit to the trend. i think the trend is en vogue right now for a few reasons:
1) a ton of intro biglawyers from 2014-2018 that never really got culled, so we are in kind of new territory since 2005 ... except now entry level salaries are so much higher so its not worth really investing in talent that you may not need until you def need it, so completely new territory

i think thats a huge pice of it, but these are also a thing:
2) there are so many new biglaw markets that have allowed a ton of hiring experienced lawyers from midlaw, boutiques and govt. e.g, employment law is super hot, this was not a biglaw practice in 2010; wealth planning is now a very popular biglaw field again due to the high tax rates for the first time since the bush tax cuts, IT and data privacy is really new and has a ton of overlap with IT people backgrounds, which is kind of a unique experiencel evel needed and not traditional
3) partners rather than firms being the client securer. if a firm secures clients, then a firm understands its hiring needs and its way more preductable. now that partners are the primary factor in securing a client, firms have less long term predictability hiring. it also means if you bring on a partner, they are bringing their entire posse with them so you dont even have to provide the environment anymore, the partner brings that all iwth them.
this is kind of important with your last point, firms cant really set these rules anymore if they want the right partners. this is in my opinion kirklands biggest edge in the current legal landscape. they are the only elite firm that understands this and it makes them super marketable to bring in partners/groups that other firms dismiss. how the fuck is skadden/simpson/cravath/whoeever supposed to open competitive boston/texas offices if they wont pay top dollar for the regional firms their and those SMU/BC partners and their associates.

however, all this is to say, the circumstances are right now in the market for this. im not sure that will be the case in 3 years. a move on midlevel/senior salaries or bidding wars for laterals with new lateral bonuses would basically shift the market back to where training and developing your farm system now has a higher ROI.

User avatar
UVA2B
Moderator
Posts: 4133
Joined: Thu Jan 25, 2018 3:26 pm

Re: Laterals v. Summers

Post by UVA2B » Fri May 11, 2018 11:37 pm

Johannes wrote:
Fri May 11, 2018 11:24 pm
UVA2B wrote:
Thu May 10, 2018 10:36 am
I could be off on this, but there has to be a limit on that trend, right? Like obviously it makes way more economic sense to get an attorney that has a few years of experience instead of farming fresh law students, but in order to feed the need for laterals, there will always have to be fresh hires at firms that a firm will consider hiring a lateral from. I've always been of the understanding that lateral hiring cares somewhat which law firm they are taking a lateral from, so if Firm X will only realistically consider hiring laterals from ~40-50 other firms, those firms will all need to keep getting new graduates in some capacity. Otherwise, eventually the pool of available lateral candidates will dry up.

That said, maybe this is more indication of the trend in law firms that they are realizing how inefficient the heavily leveraged model really is and this is all an attempt to decrease personnel leverage and become leaner and more efficient.
oh yeah. i think theres def a very defined limit to the trend. i think the trend is en vogue right now for a few reasons:
1) a ton of intro biglawyers from 2014-2018 that never really got culled, so we are in kind of new territory since 2005 ... except now entry level salaries are so much higher so its not worth really investing in talent that you may not need until you def need it, so completely new territory

i think thats a huge pice of it, but these are also a thing:
2) there are so many new biglaw markets that have allowed a ton of hiring experienced lawyers from midlaw, boutiques and govt. e.g, employment law is super hot, this was not a biglaw practice in 2010; wealth planning is now a very popular biglaw field again due to the high tax rates for the first time since the bush tax cuts, IT and data privacy is really new and has a ton of overlap with IT people backgrounds, which is kind of a unique experiencel evel needed and not traditional
3) partners rather than firms being the client securer. if a firm secures clients, then a firm understands its hiring needs and its way more preductable. now that partners are the primary factor in securing a client, firms have less long term predictability hiring. it also means if you bring on a partner, they are bringing their entire posse with them so you dont even have to provide the environment anymore, the partner brings that all iwth them.
this is kind of important with your last point, firms cant really set these rules anymore if they want the right partners. this is in my opinion kirklands biggest edge in the current legal landscape. they are the only elite firm that understands this and it makes them super marketable to bring in partners/groups that other firms dismiss. how the fuck is skadden/simpson/cravath/whoeever supposed to open competitive boston/texas offices if they wont pay top dollar for the regional firms their and those SMU/BC partners and their associates.

however, all this is to say, the circumstances are right now in the market for this. im not sure that will be the case in 3 years. a move on midlevel/senior salaries or bidding wars for laterals with new lateral bonuses would basically shift the market back to where training and developing your farm system now has a higher ROI.
This seems to make sense to me, and generally fits with the tension between the contraction in Biglaw that has been happening (vis a vis bigger firms buying into smaller markets to expand their presence) and the difficulty with maintaining a leveraged business model.

In your opinion, do you think the idea of a partner as a profit/client securer center will accelerate, maintain, or decrease in the future? I guess I'm imagining whether the idea of the "institutional client" is becoming outdated, or at a minimum, under attack.

User avatar
Johannes
Posts: 12628
Joined: Thu Jan 25, 2018 6:43 pm

Re: Laterals v. Summers

Post by Johannes » Sat May 12, 2018 12:12 am

tough prediction. if partners dont have an incentive to leave, then it doesnt matter what model there is because there will be a de facto institutional model with partners being firm lifers. so the big thing here is kirkland's pay model/culture/ideology being so very different from someone like cravath's. the partners leaving now didnt really have a choice between firm culture/ideology when they joined biglaw as law students (in the 1990s). outside of Wachtell, everyone in the creme of the crop had the same sort of model.

but now that kirkland (and others) has emerged with its entreperneurial/risky model, in contrast to the conservative firm first model of the establishment, law students have a choice to self identify where they belong. i think this has been kind of obvious for definitely at least 5 years now. so to that extent, i expect the rainmakers in 2035 will be better self selected to the extent both of these firm ideologies maintain. im just not familiar enough with the legal hiring in 2000 to know what the model was like, but i think kirkland was pretty established by that point and this brand of thought. i mean dewey for sure employed this model at that point. if that's the case, and the choice was kind of wide spread by 2000, i think we're just going to see a 10-year window for this realignment/reshuffling.

generally speaking, law changes very slowly. so its always safer to bet on the incumbent (which is institutional clients still).

Post Reply

Who is online

Users browsing this forum: No registered users and 5 guests