Big Law Partner Poaching and Payday Hostages
Tom Borman, LawFuel Contributing Writer
BigLaw is getting aggressive in its tactics to retain legal talent as the partner poaching and the big money that gets the big talent continues to disrupt the legal market.
This trend reflects the growing competition for rainmakers and high-performing partners in an increasingly dynamic legal landscape.
Recent years have seen unprecedented levels of partner mobility, with some reports indicating a 30 percent increase in lateral partner moves compared to pre-pandemic levels, creating much-vaunted big money, big partner moves.
Big law firms are adapting their partnership structures to accommodate lateral hires more flexibly, such as the ‘black box’ pay model we wrote about recently.
These arrangements includes offering lucrative compensation packages, such as those publicized recently involving Cleary Gottlieb’s publicity about lateral hires, signing bonuses, and even modifying partnership tracks to entice established partners from rival firms.
The willingness to make these “sweet deals” underscores the value placed on partners who can bring substantial business and prestige to a firm.
BigLaw Discouragement
But while firms are pulling out all the stops to attract talent, they’re also implementing measures to discourage departures.
A prime example of this is Kirkland & Ellis, which is one of the world’s most profitable law firms.
Kirkland has reportedly introduced a new policy that allows the firm to retain up to 55 percent of a departing equity partner’s compensation at its discretion. This approach effectively creates a significant financial disincentive for partners considering a move.
The new policy also involves granting the firm discretion over the accrued compensation of departing partners, reducing the notice period for departing equity partners from 120 to 60 days, and shortening the repayment period for capital contributions from 12 months to 3 months.
This policy shift at Kirkland & Ellis is indicative of broader trends in the legal market to adopt more aggressive tactics at a time of aggressive competition for talent, particularly in high-demand practice areas such as M&A, private equity, and technology transactions.
The potential loss of millions in accrued compensation creates a significant barrier to partner exits, altering the risk/reward calculations for lateral moves.
And high-profile moves can impact a firm’s reputation and internal culture.
Sabina Lippman (pictured) of Lippman Jungers, it could be perceived as reflecting insecurity and a transactional approach to partner relationships. There have already been reports of potential problems at Kirkland & Ellis in terms of their partners and profitability. Other firms are likely responding with equally aggressive retention strategies, including substantial counteroffers and long-term incentive plans to keep valuable partners.
Many firms are using lateral hiring to establish or strengthen their presence in key markets, particularly in tech hubs and financial centers.
Onboard Challenges for Firms
As firms onboard numerous lateral partners, they face the challenge of effectively integrating these new hires into their existing culture and client base. There’s an increased emphasis on diverse lateral hiring, with many firms actively seeking to improve their diversity profiles through strategic recruitment.
The shift towards remote work has expanded the potential talent pool for lateral hiring, allowing firms to recruit partners regardless of geographic location in some cases.
The situation at Kirkland & Ellis, one of the world’s most profitable and prestigious law firms, exemplifies the lengths to which top firms are willing to go to maintain their competitive edge in talent management.
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