Strings Attached; Growth for Growth's Sake; Mental Health; Summer Slowdown
Strings Attached
Firms are increasingly using bonuses structured as forgivable loans to compensate laterals and current partners. These loans not only help with retention, but also give firms flexibility to compensate outside of their typical formula or structure without raising eyebrows from the partnership at large, since firms do not have to report these loans on a partner's compensation schedule (Bonuses with Strings Attached Play Role in Partner Retention, Justin Henry, 3/19/24, American Lawyer).
Growth for Growth's Sake
We often hear from firm leaders that they do not want to grow simply for growth's sake. But there may be inherent value in growth for momentum's sake and scale (Why 'Growth for Growth's Sake' May Actually Help Law Firms, "Growth", Andrew Maloney, 3/6/24, American Lawyer, quoting one firm leader who cited growth as the "best tangible proof of continued investment in the market"). The American Lawyer recently hosted a webinar focused on mid-size firm mergers, which offered takeaways on scale that can be generally applicable to firms of all sizes.
The larger the headcount, the easier it is to absorb talent loss;
A firm may never know the work that it misses out on because clients believe that the firm is too small, i.e. not deep enough of a bench in x practice, thin in y specialty, not in z location.
Size is a good defense against acquisition by other firms.
Legal departments are seeking specialists in their outside counsel, and scale allows a firm to keep a variety of specialists busy.
Scale allows for professional management, including C-Suite professionals with bandwidth to execute on firm management committee ideas, without the inevitable distractions of deal closings or trials.
Data privacy compliance and technology adoption (AI) are expensive, and costs are more easily spread over a larger group of partners.
Of course, while firm leaders pursue growth, firm partners can get ruffled by perceived lack of attention and compensation packages of lateral additions (Growth). In this era of lateral movement, partners are continually assessing whether their firm is investing in them and whether other platforms would offer a better fit (Growth).
Attorney Mental Health
Emphasis on growth keeps constant pressure on firm leaders, which trickles down to partners and associates. As recent commentary in Law.Com noted, "it is not possible for a lawyer at a Global 200 law firm to ‘take it easy’ for a while because it will show up in their billings, others might muscle in on their client relationships, and rival firms might take market share" (Mental Health: Who has the Power to Change the System?, "Mental Health", Paul Hodkinson, 3/11/24, Law.Com International). Further, responsiveness is highly valued by clients. But being continuously on-call adversely affects mental health. Psychotherapist Jonathan Coppin notes that most people "do better with short bursts of intense stress followed by breaks, rather than unremitting exposure to low-level stress" (Mental Health).
Attorney survey data on stress and mental health continue to raise alarms. According to ALM Intelligence's 2023 survey, almost half of the 2,900 respondents thought that mental health problems and substance abuse have reached a crisis level in the legal industry. 71% reported having anxiety in 2023, more than 15% admitted contemplating suicide, and nearly 15% knew someone in the legal profession who committed suicide in the past two years ('We're Literally Dying': Addressing Mental Health in the Legal Profession Needs to Start in Law School, "Dying", Christine Charnosky, 4/4/24, American Lawyer). According to the David Nee Foundation, these challenges begin in law school, with depression levels among law students rising from nearly 10% upon entry to 40% by graduation (Dying).
Commentators and mental health experts are calling on firms to take a more active role in regulating the stress levels of their attorneys, with one commentator analogizing lawyers to professional athletes, who "will stay in the game and fight until they are pulled out" (PEP Talk: The Am Law 100’s Quiet Boost, Paul Hodkinson & Lisa Shuchman, 3/19/24, Law.com International). The ABA's Well Being Pledge has 227 active signatories, including nearly 60 of the AmLaw 200 and 20% of ABA accredited law schools (Dying). The ABA offers a Tool Kit for Lawyers and Legal Employers looking for guidance.
Summer Slowdown
Summer associate offers for 2024 2L summer programs reached their lowest mark since 2012, according to a NALP Report analyzing the 2023 recruiting cycle (Facing Overcapacity, Law Firms Made Fewer Offers for 2024 Summer Associates, Amanda O'Brien, 3/12/24, American Lawyer). The Report speculates that overcapacity and low utilization rates led firms to be more conservative in their summer hiring.
