Demand, Mergers, & BigLaw Invasion?
As vaccinations rise, trials resume, and capital is deployed, demand for legal talent is back near pre-Covid levels. There were 4,107 lateral moves in Q1 nationally, short of 2020’s highwater mark of 4,366 but north of the 5 yr avg of 3,759. Litigation (36%) and corporate (18%) led the way. Similarly, lateral moves in North Carolina (74) eclipsed the 5 yr av. (68), but fell short of last year’s mark (83). Litigation also led the way (28%), with finance laterals coming in 2nd (16%), reflecting Charlotte’s status as a financial center.
Both nationally and locally, corporate associates hold the upper hand at present, as law firms seek to staff up to service pent-up deal demand. Firms are utilizing signing bonuses, same-day offers (following interview), and in some cases not requiring relocation, in order to get talent in the door (Same Day Hiring and Signing Bonuses: Corporate Associate Market is on Fire, Dan Packel, 4/1/2021, American Lawyer). Remote-work flexibility and remote associate hiring may ultimately adversely affect North Carolina firms in two important ways: the former allowing associates to relocate to North Carolina without lateraling, while continuing to work at NY market compensation for their current employer; the latter opening the door to the remote hiring of North Carolina associates by firms paying NY market compensation.
Law Firm Merger Activity
26 law firm mergers were announced nationally in Q1, with 7 of the acquired firms ranging in size from 21-100 lawyers. The Pandemic slowed merger activity last year to 65 combinations, after 3 consecutive years of 100 or more. Commentators believe 2021 will approach pre-pandemic levels, as the desire for scale is a longer-term trend; and navigating the pandemic has perhaps made law firm leadership more open to change (Law Firm Merger Talks Heat Up as Pandemic Increases Pressure to Scale, Andrew Maloney, 4/6/2021, American Lawyer).
BigLaw market penetration in North Carolina
Speaking of change, in a recent article on law firm expansion, AmLaw Reporter Dan Packel opined “the newfound acceptance of remote work and the heightened cross-office collaboration that have emerged after a year of pandemic conditions have changed the calculus [on office openings]. It’s no longer a question of scale alone, but of client expectations, available talent and how it fits into the firm’s wider practice mix” (For New California Entrants, Talent and Fit Outweigh Critical Mass, Dan Packel, 3/30/2021, American Lawyer). Indeed, Quinn Emanuel (PEP $4.67M) recently “opened” with remote hires in Austin (two attorneys) and Atlanta (one attorney).
Historically, BigLaw has shown relatively more interest in Charlotte, due to banking; there are 33 AmLaw 200 firms with a presence in Charlotte (1,313 attorneys in all) vs. 21 firms in Raleigh/RTP (482 attorneys). AmLaw firms have had challenges achieving critical mass in both markets; nearly half have not grown past 15 lawyers in Charlotte and nearly two-thirds have not in Raleigh/RTP. Time will tell whether a wider acceptance of remote-working will encourage additional AmLaw firms to enter the Charlotte or Raleigh/RTP markets by cherry-picking local partners, without needing to achieve critical mass to justify a new physical location.
