Slack Stock – Elite N.Y. firms are in a battle for talent. Could they all be losing?
- The dynamics of associate turnover are shifting for highly profitable New York firms.
- “We started evaluating, ‘What are we really paying for in New York?'” said a Cravath associate who left for a job in Tennessee.
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(Reuters) – It’s been a year for rethinking priorities and associates at top New York law firms, who spent 2020 experiencing a pandemic and waves of social unrest from cramped apartments and childhood bedrooms, have done just that.
More than 270 have left the 10 most profitable New York firms in 2021, according to data from LinkedIn and lateral due diligence provider Decipher Investigative Intelligence. Many went to new cities, smaller firms, or firms more tied to Silicon Valley than Wall Street.
Associate turnover is nothing new. But the dynamic is changing, according to data and interviews. Facing intense demand for deal work, New York’s traditional elite firms are competing for lawyers whose expectations are transforming alongside the U.S. workplace and economy.
Throwing more money at the problem in the form of salary increases and unprecedented special bonuses may not be enough. The departures partly reflect a generational shift, favoring more affordable cities, work-life balance and tech clients, that could leave a long-term mark on law firm recruiting.
Reuters analyzed LinkedIn data to track U.S. associate job movement between Jan. 1 and late April at the 10 most profitable New York law firms.
Those firms, based on data from The American Lawyer, are Cravath, Swaine & Moore; Wachtell, Lipton, Rosen & Katz; Sullivan & Cromwell; Davis Polk & Wardwell; Simpson Thacher & Bartlett; Paul, Weiss, Rifkind, Wharton & Garrison; Debevoise & Plimpton; Cahill Gordon & Reindel; Weil, Gotshal & Manges; and Milbank.
It’s a group of firms with prestige – and cash – to spare. So why leave?
“I’d predict that the majority of reasons are highly personal in nature – moving closer to family, buying a house, a realignment of personal objectives and priorities,” said one associate, who stayed in New York but joined an out-of-state firm with offices near family.
Another associate who switched jobs cited the workload – more than 300 hours a month for several months. The associate moved to a midsize firm with fewer hours, even though it meant a pay cut and leaving bonus money behind.
Recruiters said associates have turned down signing bonuses as high as $300,000 for firms with a culture or geographic or industry footprint they prefer.
Willard Younger, a New York area native who left his associate position at Cravath earlier this year, began considering a move after he and his wife, then an associate at Proskauer Rose, visited family in Tennessee last year.
“We started evaluating, ‘What are we really paying for in New York?'” he said. “With all the amenities gone, or closed off, it was definitely tougher to justify both of us working Big Law hours in a small apartment.”
Now, the pair are associates at Nashville-based Waller Lansden Dortch & Davis, where they can still handle interesting work – but can also drive home to a house they own, with a backyard.
TECH DRAWS TALENT
The majority of associates who left New York’s elite firms stayed in Big Law, LinkedIn and Decipher data shows, often lured by firms with a strong presence in the tech sector. Silicon Valley-based Cooley; Gunderson Dettmer Stough Villeneuve Franklin & Hachigian; and Fenwick & West together swiped dozens of associates.
Los Angeles-founded Latham & Watkins and Boston-based Goodwin Procter, which both advised on Slack Technologies Inc’s listing, were also top landing pads, alongside behemoth Kirkland & Ellis.
The 10 New York firms did not provide comment. Neither did Cooley, Goodwin and Kirkland. Latham’s New York managing partner Marc Jaffe said that by May 21 his firm had hired 105 U.S. lateral associates, with more coming, compared to 107 U.S. lateral associates hired in all of 2020.
Fenwick chief talent officer Neha Shah Nissen said her firm has upped hiring in 2021, focused on New York. By the end of May, Fenwick employed 328 non-partner attorneys, including 63 who joined this year. Another 12 lawyers were scheduled to join within the month, a representative said.
Ryan Purcell, Gunderson’s New York hiring partner, also reported tremendous growth. Gunderson had hired 88 lateral associates by early April, compared to 37 associates in all of 2020 and 46 in 2019, he said. More than half of the new hires were in New York.
“When we see the kind of jump in demand that we saw in the last year … we can’t meet that demand just with law school recruiting,” Purcell said.
Decipher data shows that as of May 28, the 100 highest-grossing U.S. firms hired 724 corporate associates in 2021, compared to an average of 471 such moves in the same period from 2017 to 2020.
Associate departures from the ten most profitable NYC firms
It’s not just that tech-focused firms are more eager to hire. Associates are more eager to work for them, recruiters said. Tech companies held steady in 2020 as the overall U.S. economy floundered in the pandemic, signaling stability.
The newest generation of lawyers also grew up when tech was ascendant, finding friends on Facebook and searching for answers on Google while Wall Street banks drew ire over the 2008 financial crisis.
During the pandemic, “associates took time to look inward at the kinds of clients they’re servicing,” said Kate Reder Sheikh, a legal recruiter at Major, Lindsey & Africa.
Elite law firms are built to lose associates every year – not everyone can make partner. Not all the New York firms lost associates at the same rate.
Most did attract new associates: Davis Polk poached from San Francisco-based Orrick, Herrington & Sutcliffe and Simpson Thacher lured associates from Cahill. Paul, Weiss hired from Sullivan & Cromwell and Simpson Thacher, Milbank from Weil and Debevoise from Latham, LinkedIn data shows.
Still, the pandemic, high deal volume and a hot hiring market has pushed some associates to leave those New York firms faster than planned, associates and recruiters said, at a time when the firms are offering two-part special bonuses as high as $64,000 to retain talent and, in some cases, raising current first years’ salaries as high as $205,000.
Another wave of departures could be looming.
As U.S. COVID-19 vaccination rates rise and case numbers fall, law firms are issuing office return plans – meaning associates riding out the pandemic in say, Florida, must now figure out if they want to come back to New York or find a job that lets them stay put.
“That’s going to be decision time for a lot of people,” said Lawrence Klein, a New York legal recruiter at Robert Half.
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