Covid Effect Update (May 2020)

 

Past

As we noted in April, the lateral market ground to a halt in March. Openings were pulled from firm websites in record numbers.  Candidate processes at both the associate and partner levels largely froze in place, even when close to the finish line.  

Present

Firms are starting to identify and communicate associate hiring needs again, but the number of active searches is a small fraction of what was active at the beginning of March.  Firms are still interested in partners whose addition can be accretive to firm profits in 2020.  But requirements for portable business have increased as the bar for “accretive” has risen and firms have expressed skepticism as to whether a lateral candidate’s pre-Covid revenue numbers can be replicated in 2020. 

Future

Most analysts are predicting a revenue shortfall in 2020 of 15-20% among AmLaw 200 firms.  And U.S. economic activity is not expected to reach pre-Covid levels until 2022.  Many firms are withholding payments to equity partners and several have already cut salaries for attorneys and staff.  Some analysts predict significant layoffs as well, over the next few months.

 

What does this mean for you as a lateral candidate in 2020?

Associates will face significant competition for any posted positions, as candidates interested in making a move will apply to the same small universe of openings.   Associate candidates will also need to address concerns that they may be applying because they have been or will be let go.  We found great success during the last recession proactively inquiring with firms who had busy practice areas but had not yet opened an official search to the market at large. 

Partners will almost certainly need a book of business to move in 2020 and that book will be subject to heightened scrutiny.   But there should be opportunities for partners in several categories: 1) partners whose clients are seeking rate reductions, but whose firm will not budge; 2) partners whose book may no longer suffice at their current firm, but would be welcomed by other firms; 3) partners who have lost faith in firm leadership’s handling of the downturn; 4) partners who seek firms with higher profit margins and more secure financial footing.

Happy to discuss possibilities in markets we cover and to suggest recruiters in other markets.