Notice And Comment: Biglaw In 2022?
What does the new year hold for the world of large law firms?
Welcome to Original Jurisdiction, the latest legal publication by me, David Lat. You can learn more about Original Jurisdiction by reading its About page, you can reach me by email at davidlat@substack.com, and you can subscribe by clicking on the button below.
As Yogi Berra famously said, “It's tough to make predictions, especially about the future.”1 And making predictions about Biglaw is particularly difficult.
As an observer of the legal profession, I’ve made numerous predictions over the years When it comes to the courts, which revolves around predictability, many of my prognostications have been correct;2 when it comes to the world of large law firms… not so much.
In August 2020 I predicted that year-end associate bonuses would go down in 2020 compared to 2019; instead, they went up. There’s a dynamism to the world of business that makes forecasting unusually challenging, with numerous factors affecting even the most mundane development.
In the latest episode of Movers, Shakers, and Rainmakers, the Biglaw-centric podcast that I co-host with Zach Sandberg of Lateral Link, we made a few predictions of our own. Zach is more optimistic than I am about the robust market for transactional work continuing into 2022. We both believe lateral movement will remain high, although for different reasons (which we explore on the podcast). I predict that new office openings will cool down, while Zach doesn’t think so. We agree that law firm merger activity will heat up.
But as mentioned, I’m not great at making predictions about Biglaw. So let me turn over the floor to you, dear readers, in this latest installment of Notice and Comment, and toss out topics for you to opine about in the comments of this post:3
The overall market for legal services. Will deal activity continue at record-setting levels? Will the pandemic subside, allowing courts to reopen and litigation to pick up—or will Omicron and future variants put the kibosh on that?
Lateral hiring of both associates and partners. Will it remain high, or will it finally start to subside?
The Great Resignation. Now that many lawyers have collected their year-end bonuses—and are feeling burned out after almost two years of working non-stop through the pandemic—will we start to see more attorney attrition?
In-office work, remote work, and hybrid work. With apologies to folks who hate this term, what will be the “new normal” on these issues?
Diversity, equity, and inclusion. Biglaw has been very focused on DEI for the past two years. Will this continue, or was it just a passing fad?
These are just a few possible issues worth discussing. I welcome your predictions about them and any other topics of interest to you, which I ask you to share in the comments to this post (rather than emailing to me; the whole point of Notice and Comment is to get readers to post comments).4 Thanks!
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As is often the case when it comes to famous quotations, whether Berra deserves the credit for originating this quip is a subject of debate.
Judicial nominations are a good area for me. For example, I predicted in March that Justice Beth Robinson of Vermont would be nominated to the Second Circuit, which happened in August. I identified then-Judge Neil Gorsuch as a possible SCOTUS nominee—in 2006, more than a decade before his nomination.
Disclosure: I have an ulterior motive for writing this post. I’ve been asked by an industry publication to make predictions about the coming year in Biglaw, and I’m at a bit of a loss. I’m hoping you can help me—and if you have particularly interesting insights, I hope you won’t object if I put them in my own words and pass them off as my own. ;-)
In the event that you do email me instead of posting in the comments, please be warned that I might repost the contents of your email in the comments on your behalf (keeping you anonymous, unless you request a shoutout).
As I guessed, a few readers preferred to email me. I'm going to post comments on their behalf, with their permission, keeping them anonymous. From one (very thorough and thoughtful) reader:
"1. Market: As always, transactional will be mostly driven by broader economic forces. However, from a Biglaw per-lawyer perspective, I think it is more likely to stay hot than recede. Market consists of both supply and demand and part of what we see is that the existing supply is being stretched to the limit; law firms count on increasing hours per lawyer to get through the busy periods but some of the post-recession classes were too small to meet this level of work. Anecdotally, I think an increasing number of Biglaw lawyers aren't going to just go from 2000 billables to 2500 (for what benefit if they aren't sticking around to make partner?). Furthermore, it's difficult for firms to 're-tool' lawyers into transactional practices (I can't speak to litigation) five years into their careers, although I'm sure many firms are trying. Long term I'm sure the market will work itself out but I see a continuation for the next few years at least. The increasing rates reflect this market reality, which will also be reflected in record high PPP...this is evidence that the market for Biglaw work is as hot as ever.
2. Laterals: Lateraling of partners is just up and to the right, and I see no break in that trend; as more and more partners lateral, it reduces the stigma of it, and partners with a portable book of business have too great of an incentive to move if their existing firm isn't paying enough. Associate lateral movement I think continues to be high as well, due to the effects mentioned above: law firms are just going to get increasingly aggressive about signing bonuses in order to shore up their ranks. Given rates, it is economically rational for big firms to continue to up signing bonuses to $100K or so for quality mid-level associates, since those associates return much more in annualized billings, and the cost of being understaffed is losing out on work.
3. Great Resignation: Increasing number of associates will feel burned out, but Biglaw bonuses will continue to be high to keep folks. So this one will stay 'on trend.'
4. In-Office: Very few firms (let's say ~V10, plus some boutiques) will actually be able to enforce an in-office requirement when a competitor firm, doing most of the same work, will offer associates a six-figure signing bonus and ability to work remotely. This may take time to work its way through the system.
5. DEI: I think this is likely to continue to be a focus, although maybe not as great as we saw in summer of 2020. Firms know that incoming associates are looking at these, and it is relatively easy enough for them to donate additional money and resources. I'm not sure I see firms fundamentally changing their business practices or culture in order to attract and retain more diverse backgrounds, however."
When the Fed takes away the punch bowl, there’s gonna be a crash. And it will be ugly.