In a startling revelation, lateral hiring within law firms witnessed a staggering decline of 35% last year, with associates bearing the brunt of the slowdown in corporate client demand, according to a recent report by the National Association for Law Placement (NALP).

Associate Hires Plunge by 43%, Partner Moves Down by 10%

The NALP report highlights a significant downturn in law firm recruitment for the second consecutive year, following a surge in demand during the pandemic era. Associate hires experienced a drastic plunge of 43%, while partner moves saw a notable decline of 10%, elucidating the profound impact across all lawyer ranks.

Law Firm Hiring Plummets 35% Amid Layoffs : Corporate Practices Suffer Most

Legal recruiters attribute much of the decline to corporate practices, traditionally the most active areas for hiring among law firms. As demand slows, several major law firms find themselves compelled to lay off lawyers and staff, adjusting their recruitment targets accordingly.

According to Ru Bhatt, a recruiter for Major, Lindsey & Africa in New York, there was a slight uptick in litigation; however, it failed to compensate for the substantial corporate needs that typically keep recruiters occupied.

Partner Hiring Resilient Amidst Turmoil

Unlike associates, partner hiring weathered the storm relatively well, with only a modest decline noted. Stephanie Biderman, another recruiter from Major, Lindsey & Africa, attributes this resilience to the fact that the majority of partners moving possess portable books of business, while associates serve as leverage for that business.

Law Firm Hiring Plummets 35% Amid Layoffs : Uncertain with Hints of Recovery

Despite the gloomy outlook, there are signs of a potential recovery on the horizon. Recent months have witnessed heightened activity, particularly in finance-related roles, signaling a tentative resurgence in demand for corporate attorneys.

According to Bhatt, while the pace may not match that of 2021, firms appear to be gearing up for increased lateral hiring. However, caution remains the watchword as firms cautiously navigate the uncertain terrain of post-pandemic legal landscapes.

Looming Layoffs and Trimmed Summer Classes

In addition to scaling back lateral hiring, firms have also downsized their summer classes, according to a separate NALP report released earlier this month. This data paints a bleak picture, suggesting that firms anticipate the demand slump to persist for the next year or two.

Nikia Gray, NALP’s executive director, warns of potential layoffs in the coming months, emphasizing that firms may not tolerate excess capacity for much longer. As the legal industry braces for continued uncertainty, swift termination decisions for any performance issues may become commonplace, reflecting the harsh realities of a shrinking market.