It's a Buyer's Market for Laterals, Study Says
Just like in the housing market, where deals can be made right now, law firms in good financial condition are in prime position to bring in talent they would otherwise not be able to attract.
“Shopping for lateral partners can be a thorny venture, but for law firms with the resources, it is the perfect time to buy,” says KermaPartners, which compared lateral moves in Am Law 200 firms in the first quarter of 2008 with moves in the first quarter of 2009.
The company found (PDF) that laterals were shifting to firms with lower profits per partner. Indeed, 70 percent of those who moved in ‘09 moved to a firm where their profits per partner were 1.8 percent lower than at their former firm. The median decrease was $155,000 per equity partner.
The National Law Journal observes that BigLaw partners may be more attracted to middle-market firms, which tend to be better performers in a down economy because their practices aren’t so closely tied to Wall Street.
Still, KermaPartners observed that lateral movement so far this year has been lower than expected. That’s despite a growing number of defunct firms, including Thelen and Heller Ehrman.
“This likely indicates that prospective laterals were not only waiting for their draws, but were waiting to see year-end reporting of other firms before they began negotiations,” KermaPartners notes.
KermaPartners, however, predicts lateral movement will pick up.
