Despite an industry-wide slowdown in M&A and a broader macroeconomic malaise, the biggest and most profitable law firms are still “full-speed ahead” on hiring transactional talent.
That includes Latham & Watkins, which, through the first two quarters of the year, has announced several hires in the corporate and M&A space, with a particular focus on investment funds, insurance transactions and private equity. The hires have often been in the biggest markets, including New York, Washington, D.C., and Silicon Valley, and from rivals such as Kirkland & Ellis, Clifford Chance and Willkie Farr & Gallagher.
Analysts said Latham, like Kirkland & Ellis and a few other Big Law juggernauts, is in the enviable position of almost always being a recruiter of top talent. Firms such as Latham are so profitable they can mostly carry forward with their strategies in the lateral market, even if economic conditions and legal demand take a dip, they said.
“What you’re actually seeing is a phenomenon that applies maybe to only Latham and Kirkland. They’ve reached such a level of profitability and growth that they’re looking to get great pieces of the puzzle irrespective of what the economy might be doing,” said Jeffrey Lowe, of recruiting firm Major, Lindsey & Africa.
The firm last month added Jamie Walter, who was a founding partner of Kirkland’s Washington, D.C., investment funds group. Latham has added several partners to its M&A practice in New York this year, including Gary Boss and Analisa Dillingham from Clifford Chance, where Boss was co-chair of the global insurance sector group. Both partners focus on insurance transactions. The firm last month also announced Daniel Mun, from Willkie Farr & Gallagher and Kirsten Gaeta from Clifford Chance.
Earlier this year the firm also announced M&A additions in New York, including Jason Webber from White & Case and Caroline Blitzer Phillips from Vinson & Elkins, plus private equity and finance additions like Stephanie Teicher from Skadden, Arpls, Slate, Meagher & Flom and Barrie VanBrackle from Orrick.
Latham, the second-highest grossing law firm in the Am Law 100, has lost some talent too, of course.
The day the firm announced the addition of Kirkland’s former investment group leader Walter in D.C., Kirkland announced it had taken back investment funds partner Nabil Sabki in Chicago. Goodwin also plucked technology and emerging company partners Chris Shoff, David Ajalat and David Pendergast in Los Angeles, while Cooley took life sciences partner Frances Stocks Allen in London and Paul Hastings added real estate finance and transactions partner Pablo Clarke in LA.
The firm did not offer comment on its hiring strategy this year.
Those moves come despite an industrywide slowdown in some of the most profitable parts of Big Law this year. Initial public offerings are at a near-standstill, and M&A and its adjacent practices, which lifted firm financials to record highs last year, have also slowed.
A recent report in the U.K. also projected a drastic slowdown in lateral partner hiring in the second half of the year, despite the fact it was 14% higher in the last two months than during the same period in 2021. And some firm leaders and analysts in the U.S. have observed some cooling on corporate hires this year.
But law firm recruiter Scott Yaccarino of Empire Search Partners has observed that Latham looks to continue building out M&A and private funds and continue dominating capital markets—something the firm has done for years.
“Those have been core strategies of theirs that they’ve been really successful with,” he said.
A more granular change, he said, is that some of Latham’s recent capital markets hires have had ESG backgrounds, calling that a “rapidly growing” area for firms to invest in. He also said it’s more common now for firms to look for finance hires with some expertise in direct lending, which has continued to expand and move upmarket.
‘Never Going to Stop’
While Latham has had a high-profile hiring streak this year, Yaccarino noted a willingness to continue investing and adding in M&A, private funds and capital markets isn’t necessarily unique to Latham. A firm like Latham can make more competitive offers, but most big firms would jump at the chance to hire a very good private equity attorney, for instance, Yaccarino said.
Contrary to the U.K. report, neither Yaccarino nor Lowe, of MLA, said they really expect lateral partner hiring to slow significantly in the U.S. the rest of the year, notwithstanding some kind of more dramatic economic problem.
Lateral recruiting, even in a slower demand market, is imperative to law firm growth. After all, firms can generally grow key practices in three ways: merging, adding capacity with current partners, or hiring additional partners. Those first two options are more difficult, Lowe said.
“Whether it’s a booming or slow market, the only way to grow is to add people who’ve already figured out the secret sauce to developing a practice. That’s why even if there’s a big economic downturn, it will slow down partner hiring, but it’s never going to stop,” he said.
Indeed, Kristin Stark, a law firm consultant at Fairfax Associates, said she’s still seeing high interest in lateral recruiting across firms, despite record inflation and wide economic uncertainty. She added that as litigation has picked up, it’s also masked some of the softness on the transactional side of firms’ practices.
“I do think there is a lot of management-level discussion of risk and uncertainty, of market volatility. So, will that slow down lateral partner hiring? Undoubtedly. Because law firms tend to be fairly risk averse,” she said.
“That said, firms right now are still full-speed ahead,” she added. “Are M&A partners going to get the same premiums while jumping firms that they did the last 18 to 24 months? Probably not. But they’re still moving.”