Is Lateral Hiring Frenzy by BigLaw Creating a Bubble?
Lateral hiring at large law firms is expected to continue at a frenetic pace this year, a phenomenon that has created ever larger income gaps between equity partners at the top and bottom.
At some firms, the pay spread is as large as 10 to one and even 12 to one, according to an Am Law Daily story by former Kirkland & Ellis partner Steven Harper. One law firm, DLA Piper, reportedly paid $5 million a year to Jamie Wareham after luring him from Paul, Hastings, Janofsky & Walker.
Harper questions whether paying big bucks to lure top partners is paying off for the firms that hire them. He poses this question: “What if the lateral hiring frenzy is creating a bubble?” And then he raises another issue.
“Where a lateral bubble develops, what happens when it bursts or, perhaps more perniciously, develops a slow profitability leak?” Harper writes. “Nothing good. For the answer, ask those who once worked at Howrey, Heller Ehrman, or one of the many other now-defunct firms whose leaders thought that acquiring high-profile laterals offered only upside.”
