BigLaw firms find themselves in 'lateral playpen'
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A few large, diversified law firms with growing profits are taking advantage of a market lull to lure partners away from rivals they have outperformed.
That’s the take of a Big Law Business column from Bloomberg Law, which reports that firms are even more vulnerable to lawyer poaching when they “fail for years to pile up returns for partners.”
The column pointed to Shearman & Sterling and Stroock & Stroock & Lavan, which have seen partner departures in moves that “destabilized both firms.”
Shearman has announced a planned merger with Allen & Overy after seeing flat revenues from 2016 to 2022 and a decline in average partner compensation of about 7% during that time. It has lost partners to firms that include King & Spalding; Gibson, Dunn & Crutcher; and Paul Hastings.
Paul Hastings also picked up more than 40 restructuring lawyers from Stroock in April 2022 after Stroock’s revenue “had largely stalled,” the Big Law Business column said.
Paul Hastings, on the other hand, had a 46% increase in revenue from 2016 to 2021 and a 74% spike in average partner compensation.
Stroock has talked to multiple firms about the possibility of a merger, according to the Big Law Business column.
A managing partner at a top firm lamented the current hiring market in an interview with Bloomberg Law.
“It feels like all firms, no matter how strong or profitable, are at risk of other elite firms willing to offer lavish, extravagant, irrational amounts of money to lift partners in strategic practice groups,” the anonymous partner said. “No one is immune. The world has just become this lateral playpen.”