Leopard Solutions' data shows that firms, following the post-pandemic hiring boom of 2021, are adjusting their staffing strategy when it comes to their partner and counsel promotions. While some firms have announced layoffs, other firms have been heading in alternate directions. Although we have seen many associate promotions, what are the Top 200 firms doing with the vacant associate slots, and what might those reductions spell for the legal industry in 2023?
Key Findings:
• Over 50% of Top 200 Firms currently show a decline in associate headcount compared to the same time period last year
• Within the Top 200, promotions to Partner were far higher in 2022 than in 2021 (2,892 in 2022 vs. 2,294 in 2021)
• Our Growth Decline Report shows that the Top 200 associate ranks shrank by 2% over the last year
• Top firms seem to be slow to fill empty slots created by attrition and promotion by design
Our data indicates that promotions to partner are far higher in 2022 than in the past two years. As noted, associate slots are not being filled following these promotions, but what does that mean for the future?
In January 2021, for instance, the Top 200 were up 4% in associate headcount, while presently associate headcount has declined. Leopard Solutions’ recent research on the legal hiring market, which can be viewed in our 2022 Job Market Update, shows that market corrections are happening and that law firms are adjusting their hiring strategy. The promotion data further evidences our legal job market findings, in that the legal industry is adjusting its staffing strategy coming off the over-heated hiring market in 2021. These year-over-year findings, as indicated in the chart below, suggests that promotions could continue to increase while the hiring of new associates continues to decrease. We believe it indicates how many firms are choosing to right size their firms, choosing not to fill slots created by either natural attrition or promotion.
David Lat recently appealed to law firms through his blog, “Original Jurisdiction” not to perform layoffs and learn from past downturns. Firms did not lay off attorneys during the Covid lockdown as they did in 2008/2009 but they didn’t hire either. That created the hiring boom of 2021 and how we have the firms looking to right size in a different way. While we have seen firms announce some layoffs, (Cooley, Gunderson Dettmer) other firms are going in a different direction as our data shows.
Counsel promotions across Top 200 law firms have also risen over the past twelve months. The chart below shows that counsel promotions rested at 1,146 in 2021, whereas the current 2022 number is 1,557. The numbers have been going up year over year, with counsel promotions at 1,180 in 2019.
Beyond the averages, we see firms in the Top 200 who have dropped significantly in their associate headcount. These numbers inform recruiters that it may be a tough year for getting entry-level associates in the door at these firms, so they need to craft compelling narratives about candidates to their clients and prepare for this potential "new normal” among Top 200 law firms.
We also see that firms have significantly increased or decreased the leverage from associate to partners, which indicates a possible change in law firm strategy. Leverage, in this case, shows the level of partners to associates. The ratio of associates to partners year over year shows important staffing trends that recruiters should take note of. It informs on both law firm growth, strategy, and subsequently, the current and future legal hiring market.
Legal recruiters and law firms can both utilize this data to inform their own strategy and stay ahead of their competition by knowing the market shifts that may continue into 2023.
