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This has certainly been a crazy year all around. With social, economic and health issues all occurring at the same time - and all this in a presidential election year.
Despite this uncertainty, many large law firms have reported to me that financial health is actually quite strong. I’ve been told by some associates that they continue to hammer away working long hours. These associates are quite concerned about not getting their bonuses despite the hours being billed. Meanwhile, so many law firms have stopped all associate lateral recruiting and are focused exclusively on trying to add partners with large books of business. It makes sense. However, some firms have used this opportunity to cut fat and lay off associates or cut salaries. Others obviously have lost business, and that has impacted top line revenue (especially in certain boutiques with fewer clients).
Instead of taking advantage of good talent and hiring associates as needed for specific groups, many firms have taken a “complete hiring freeze across the board” approach. The result: Good candidates are still getting offers from law firms that are smart enough to secure good talent (that might not normally become available if not for the current crisis) and corporations are smart – they continue to hire and take strong candidates out of law firms. It's known as opportunistic hiring.
One must wonder if the partnership model of law firms results in a “shotgun” approach of across the board hiring freezes - instead of a more targeted approach. It would seem to make sense that firms with a lack of business in one practice area (that likely will not pick back up soon), should be making cuts. While others that remain busy deserve the support of additional associates. Adding more pressure onto associates by not providing them with necessary support makes a work from home job just as grueling as having to come into the office. Plus, associates have more freedom to accept calls from recruiters regarding other options when working from home.
Law firms need to be very careful come December, 2020. If business is still strong and firms attempt to short associate bonuses (for those working a lot of hours), it’s inevitable that 2021 will see significant turnover. I’m always impressed as a legal recruiter by associates and partners that really have no desire to move because “I’m treated really well here”. Whether it’s flexibility due to child care needs, fair compensation, or support for building their book of business, some firms seem to be doing a very good job at retaining talent at both the partner and associate level. 2020 has been the year of the “work from home trial”. It’s shown that most perform well, and having a reduction in travel and more time to spend with family is resulting in happier employees.
If firms continue to work in a hybrid model of work in the office and work from home (even post Covid-19), the talent drain from law firms to in-house opportunities will slow significantly for years to come.