Sponsored briefing: The lateral partner hiring landscape for 2024

I have been working with law firms advising on strategic lateral partner hires for more than 20 years, and trying to predict what the market is going to do is not only challenging but futile, as the market often does exactly the opposite of what everyone thinks it is going to do.

Law firm growth and profitability is directly linked to hiring and developing the right people, be that as trainees, or as lateral partner hires. Even firms that have historically grown organically, such as the Magic Circle or single-office big hitters like Macfarlanes and Travers Smith, are increasingly making forays into the lateral recruitment market. This desire/need/pressure to grow and to get ahead of the curve has exploded in recent years and resulted in record numbers of partner and team moves, not to mention some eye-catching mergers.

To gauge where the next 12 months might take us, it is worth looking back at 2023, when London partner moves rose to c500, an increase on the average over the past five years of c450.

Although 2023 was not a great year for law firms, as the market was relatively muted and we certainly didn’t see the record-breaking revenue and profit growth of the previous two to three years, we actually saw the highest number of partner moves ever in a single year.

This was driven by a number of factors, including collapses such as Ince & Co, restructurings such as KWM, and a significant number of firms betting on private equity and hiring partners to strengthen the bench or to play catch up with the market, as well as partner moves resulting from mergers such as A&O Shearman.

‘To gauge where the next 12 months might take us, it is worth looking back at 2023, when London partner moves rose to c500, an increase on the average over the past five years of c450.’
Frank Varela, V&P Global

The standout hirers who made the headlines in 2023, were mostly US firms and consisted of a combination of effectively new entries such as Paul Weiss with 14 partner hires in London, and the usual suspects growing the existing offering such as Kirkland & Ellis, Paul Hastings, Latham & Watkins and Milbank, who hired the core of Dickson Minto’s London office. However, a number of UK firms also made some eye-catching hires, notably Addleshaw Goddard hired over ten partners in London including hires from Greenberg Traurig, Goodwin Procter and DLA Piper.

Eversheds also hired a five-partner team as a result of KWM (China)’s disposal of its entire EMEA business.

So what’s in store for 2024?

2023 saw law firms continue to invest and gear themselves up to take advantage of any uptake/improvement in transactional markets, but the market outlook for 2024 is relatively unsettled, and it is, of course, an election year on both sides of the pond, which will have an impact on the economy. Although inflation has fallen, and it is hoped that interest rates will follow, it will nevertheless take some time for that to feed through a return to a more buoyant transactional/private equity market.

The UK, as opposed to the US legal market, is predominantly transactionally focused. Therefore, despite efforts by many firms to redress the balance and some serious efforts made to hedge with disputes and restructuring hires, London law firms will continue to face strong challenges from an uncertain economy.

We think 2024 will see significant investment in disputes and arbitration lateral hires in London, together with some backfilling where firms add skillsets to the practices that they bolstered in 2023 but where they are still light.

We will also see a lot of restructuring in some transactional practice areas and in real estate, where there is an ongoing lack of visibility on deals.

The lateral partner recruitment market has been both consistent and robust for the past 20 years, with a steady increase in partners on the market. While this trend looks set to continue in 2024, whether it will be as easy to find a new home for partners who find themselves on the market as opposed to those being specifically targeted by headhunters, as it has been in recent years, will remain to be seen.

The lateral partner recruitment market has always been categorised in three segments:

1. those ‘on the market’, those looking for a job at any given time, which amounts to approximately 20%;
2. those open to a move but not actively looking, which amounts to another 20% and;
3. the remaining 60% are the hard-to-get strategic hires that are the bread and butter of the headhunters and where law firms are spending the big bucks.

What we are starting to see is some flexing here with the ‘on the market’ pool of candidates getting larger and providing more opportunistic opportunities for law firms to add partners which most of the time are not strategic.

‘Although inflation has fallen, and it is hoped that interest rates will follow, it will nevertheless take some time for that to feed through a return to a more buoyant transactional/private equity market.’
Frank Varela, V&P Global

We expect to see a market split, with some firms to remain focused on hunting strategically and targeting specific and sought-after partners, while other firms will take an opportunistic approach and will look to capitalise on the increased number of partners searching for a new home.

The market since Covid has been one of optimism and record-breaking financial results, which has led to far more confidence and willingness to invest in partners on a less strategic basis, perhaps finding a space for someone rather than filling a gap. Whether this continues in 2024 is the big question. The opportunistic approach has contributed to a record-breaking number of moves happening in record time.

For the firms with strategic rather than opportunistic needs, competition for their ideal laterals has been, and will continue to get, more and more intense, this is where the real war for talent shows no sign of easing as we move into 2024.

As headhunters, our role is to support firms with strategic search projects and recruiters are usually more involved with the opportunistic hires. Our role is to successfully attract and hire hard-to-reach partners, and as the lateral partner hiring landscape for 2024 looks set to be the most challenging one for the past few years with competition for top talent more intense than ever, a focused, structured, and well thought through approach will be more important than ever. It is not about the hiring; it is about the right hiring.

In summary

Overall, I think that the lateral partner hiring landscape for 2024 will continue to grow. Despite all the uncertainty, the economic outlook and elections, I cannot help but think that we have crossed the Rubicon with lateral partner movement. When I first started out, partner moves were rare; what we have seen since is that it has become the norm. In the past five years, the willingness amongst partners to consider moving has generally increased, and I think that this in itself will continue to drive lateral movement up, it’s not about the market conditions, it’s just how the profession has evolved, partners moving is no longer an outlier. Gone are the days of a one firm mentality, the profession is now much more akin to banking and other recruitment markets where movement, either for positive or negative reasons, is common and if partners are unhappy, or not part of the strategy, there is no stigma in moving and having a multi-firm career.

Frank Varela founded V&P Global in 2006, an executive search consultancy specialising in partner and team moves as well as office launches in new jurisdictions. He has been involved in more than 500 partner and team moves and worked on the strategic recruitment projects for law firms resulting in significant growth, including new office openings.