18 Jan 2024: What to expect in the US associate market
2023 was a slow year for associate hiring.
Given the substantial drop in corporate deal flow, transactional practice areas were particularly acutely hit. Several firms made well publicized layoffs. What does 2024 have in store?
It should be a better year…
All indications are that 2024 will be a stronger year for lateral associate hiring.
- There was a rebound in M&A activity in Q4 of 2023 which early indications would suggest, seems to have continued into 2023. M&A and leveraged Finance partners are busier and roles are starting to return already.
- The Energy Transition, Renewables and Infrastructure Projects market remains strong. This sector shows no signs of slowing after a strong 2023.
- For litigators, the antitrust and regulatory space also had a strong showing in 2023 and this looks set to continue.
- Patent Litigators continue to be in demand.
- Healthcare remains a very active sector.
Fragmentation across the market
2023 saw biglaw firms raise salaries. There is one key difference this time to the last time there was a round of salary raises to the Cravath scale. There is now a pronounced fragmentation in firm performance across the market.
Firms that are underperforming or are struggling with profitability will be faced with a tough choice: Follow the pack and take a further hit to profitability, or hold salaries at current levels and risk increased attrition and difficulty in attracting talent going forward.
This fragmentation in firm performance has a number of knock-on effects including partner promotion prospects.
Partner promotion prospects
In 2023 promotions varied drastically depending on the firm. Several firms had bumper years within Corporate (e.g. Davis Polk doubling Corporate promotions, MWE an increase of 50% and Kirkland increasing debt finance promotions by 50%). However, many firms struggled given the slowdown in deal activity.
In a fragmented market like we are now in, firms are not all following the same trends. You can be at a prestigious firm with a fantastic reputation. However, your practice area may be underperforming the market. If you are a 6th year associate or more senior, it is vital you consider ahead of time whether or not your firm is the right platform to achieve partnership. If you are going to lateral, you need sufficient runway at your new firm to get there in time.
Interview standards are higher
There is a general acknowledgment that firms over-hired in 2021. There is now a more intense focus from partners on ensuring that lateral hires are going to succeed. Interviews have become more technical recently and partners are really probing on push / pull factors for a lateral move. A common piece of feedback we heard in 2023 was “the candidate just delivered a stock answer to the question.” The best answers to this question weave a personal narrative into the rationale. In this market the bar is significantly higher and all of the other candidates you are interviewing against will have strong resumes and deal sheets. A nuanced, personalized rationale for the move can be the thing that separates you from the competition.
Return to office policies
Most firms have returned to a model of four days per week in office and one per home although some firms have still retained the 3/2 hybrid model. Fully remote roles are now incredibly rare and barring a few firm exceptions, really are only possible on an ad hoc basis.