Big Law Layoffs = Buyer’s Market

As demand for legal talent exploded over the last two years amid a surge in capital markets, mergers and acquisitions, and other highly-profitable work, desperate Big Law firms often poached from smaller and regional competitors, wooing associates away with offers of higher pay and the option to work from anywhere.

Some major firms in larger markets like New York and Washington, D.C. used the opportunity of remote work to entice associates in secondary markets like Atlanta and Seattle. They also offered pay rates that many associates couldn’t ignore and that smaller firms couldn’t match.

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Now, as demand decreases for the most lucrative business transactions, some larger firms are finding there’s not enough work to go around for all of the extra associates they hired, and smaller firms whose rosters were thinned during the recruiting war are seeing a possibility to claw associates back.

“There is opportunity for smaller firms, non-Am Law 50 firms, [and] firms that don’t pay market to grab some really, really talented lawyers right now, both from law firm layoffs but also from tech company layoffs,” said Kate Reder Sheikh, a Partner in the Associate Practice Group covering the San Francisco Bay Area and Colorado for legal executive search firm Major, Lindsey & Africa.

“This is the moment for us to be opportunistic and go grab some talent that either got poached from us or we couldn’t afford in the last few years,” said Catherine Hanaway, chair of the 726-lawyer firm Husch Blackwell.

Hanaway said it was gut wrenching to lose some of their associates, but now the firm has no plans to make layoffs. “I’m hoping that a few of those people who got poached we see come back,” Hanaway added.

Husch Blackwell nearly doubled the size of its first-year associate class over the last five years, with 48 newly minted attorneys joining the firm this September.

The changing economic conditions offer a chance for smaller firms to compete not only for top associate talent, but also for partners, according to Irwin Kishner, Executive Chairman of the 150-lawyer, New York-based Herrick Feinstein. Last year, Kishner’s firm was simply fighting to preserve its talent base.

“It’s just going to be a greater talent pool now to be able to decide who you’re going to bring in and who you’re not,” Kishner said.

While smaller firms stand to benefit from the increased availability of talent, it could also be a great opportunity for lawyers to land at a firm which offers better work-life balance and the chance to work somewhere with a lower cost of living. For some lawyers, it may be the first time these smaller firms have even been on their radars.

“In some cases, they wouldn’t have even talked to those firms two years ago, but once they do, they realize that there could be a really strong fit in other regards, besides pay,” Reder Sheikh said.