From Swans to Hummingbirds
Partners at law firms used to be much more monogamous career-wise, staying at one institution for life. Now they flit from firm to firm. What changed?
Legal journals are reporting more partner-level lateral moves among law firms than ever before, not only in the U.S., but in all major commercial centers around the world.
Forty years ago, partners rarely left their law firms. Law was considered a gentleman’s profession and partners were on board until retirement. What has changed dramatically is the level of knowledge in the market, which has taken decades to filter down to the individual lawyer.
In 1979 Steven Brill founded The American Lawyer, the first glossy magazine reporting on the business of law firms. A few years later, Brill started reporting on the difference between the finances of Law Firm A and Law Firm B, opening a floodgate of information about law-firm financials. Unlike public companies, most law firms were partnerships and did not have to comply with regulatory rules regarding the disclosure of information.
But Brill directed his journalists to call every single partner in every law firm, to collect information that became The AmLaw 100 and The AmLaw 200. Several partners in every firm were friendly to journalists and surreptitiously revealed the latest financial report from the chairman. Soon other publications followed suit.
Shortly after The American Lawyer and its European counterparts starting publishing financial information, legal recruiters popped up in key markets. For example, Joe Macrae (who founded Mlegal) co-founded ZMB in London in 1990. Suddenly partners in law firms around the world were getting calls from legal recruiters encouraging them to consider opportunities at different law firms.
The recruiters were using every argument possible to encourage partners to consider a different opportunity. They focused on compensation, conflicts, billing rates, relative strengths of practice, or the chance to lead a practice or office, among many other push factors. Now that lawyers had options, they started to consider their career paths more carefully.
The relaxation of legislation and regulatory rules governing the practice of law across countries also contributed to the lateral-partner movement. Although a number of firms had opened offices in Europe and even Asia decades earlier, most countries restricted U.S. law firms from practicing local law so lawyers in those ex-U.S. offices would focus on clients needing U.S. law capability. In the early nineties, a number of countries opened their doors to foreign law firms. For example, the United Kingdom changed its law in the early nineties to permit foreign law firms to practice local law. Suddenly firms like Chadbourne & Parke were advertising in London legal magazines with slogans like “Partner Compensation to $1,000,000” to lure British lawyers from the U.K. law firms at a time when the top of lockstep at some Magic Circle firms was circa $300k. Now there are more than 100 U.S. law firms in London and a total of more than 200 foreign law firms there.
It has taken three decades for the information that distinguishes one law firm from another to disseminate so widely across the globe that significant numbers of partners now acknowledge the possibility that “the grass may be greener on the other side.” The demand for lateral partners in the U.S. has never been higher. More than 1600 partners among the AmLaw 200 law firms in the U.S. moved from one law firm to another in 2016.
The demand for lateral partners—particularly those with profitable practices—remains high. With the demise of firms like Heller and Bingham in the U.S. which were once considered market leaders, managers within each law firm believe that their firm must grow or it will die. Law firms of all shapes and sizes are trying to break in to new markets like Houston, Chicago and Silicon Valley and key financial centers like New York, London and Shanghai – because they see clients or potential new clients in growing industries like energy, technology, life sciences, and finance expanding and requiring more legal services.
Transparency in the law-firm market was a pre-diluvian gleam in Steve Brill’s eye in 1979. It took several decades, but the deluge of information year-after-year about the legal market has seismically transformed the way law firms operate and the way partners assess their careers.
Martha Angell is a shareholder at Mlegal Group, an international legal search firm with multiple U.S. offices, originally founded in the SF Bay Area. Before becoming a leading partner recruiter, Martha worked at The American Lawyer for four years and later became editor of Legal Business magazine in London. She also practiced law at major New York law firms and is a graduate of the University of Virginia School of Law.