A strong state economy and robust legal market in Texas have created an explosion in Big Law lateral career opportunities, with some of the nation’s largest and most successful AmLaw firms opening new Texas offices and merging with Texas firms. In the past 12 months alone, there were about half a dozen of these new office openings and several firm mergers throughout the state, providing competitive options for lawyers in Texas who are opportunistically seeking their next career move.
According to Parker + Lynch Legal’s research and market intelligence, the number of lateral moves in Texas has progressively grown over the past two years, with lateral hires increasing by more than 30 percent in 2017 and by more than 20 percent in 2018. The rate of lateral moves in Texas seems to be competitive on a national level. Data from ALM Intelligence evaluating partner hires at AmLaw 200 firms placed Houston, Dallas, and Austin within the top 20 most active markets in the country, competing with cities like Boston and San Francisco.
This may leave some law firms in Texas wondering what they can do to avoid losing their top talent to competitors. While some factors may be outside of a firm’s control, understanding the various reasons why partners and associates consider lateral moves can provide law firms with competitive and tailored incentives to help them retain top talent.
Not surprisingly, compensation is often a key motivation when contemplating a lateral move. However, since compensation models for Big Law associates and partners often differ, monetary considerations for these two roles can also vary significantly. For example, some Big Law partners may weigh going from a firm with a “black box” compensation system versus a firm with an open, transparent one. Others may want a firm that offers more business development support, origination credits, better cross-selling opportunities, a more reasonable rate structure, or in general, a larger, more profitable firm—these all affect a partner’s bottom line and ability to build business and income.
As for Big Law associates, their salary increases have splashed the news headlines over the past few years. It began when New York-based Cravath, Swaine & Moore announced raises for associates in June 2016, after nearly a decade long dry spell. In June 2018, New York-based Milbank raised salaries once more, quickly followed by Cravath, who met and even further increased salaries for some associate classes. This news spread like wildfire and most peer firms throughout the country matched associate salaries to stay competitive and retain talent. A firm’s failure to match compensation (and match quickly) speaks volumes to associates, regardless of any rational business reason behind it. The resounding message for associates? Lack of appreciation. This causes many associates to act on lateral opportunities where they feel they may be valued (and paid) more.
However, aligning compensation expectations alone may not be enough to keep top talent in Big Law. When salaries spike, the focus on billable hours and productivity often intensifies. This can create an even more stressful work environment, driving high performers to explore new options that may better meet their personal and professional needs. In order to balance the demand for increased productivity with attorneys’ desire for work-life balance and fulfillment outside of the office, law firms may consider implementing policies such as flexible hours and facetime arrangements, or no weekend office hours. Some firms may also offer part-time or reduced hour roles commensurate with reduced salaries. Implementing non-traditional incentives and policies like these can make an enormous difference in building a positive law firm culture for attorneys at all levels of the organization.
Other fundamental needs that may impact an attorney’s decision to remain with their firm include consistent communication and feedback, opportunities for continued career development, clear and attainable paths for promotion, and mentorship. Communication fosters trust and security, while career development and opportunities for promotion help avoid boredom or feeling stagnant in one’s career. And a formal mentorship program may provide associates with helpful support and development that allows them to thrive early in their careers. This all goes a long way in creating satisfaction, productivity and loyalty. Many attorneys find it much harder to leave a place where they experience this connectedness, even when a salary increase is on the table.
While some degree of lateral movement is common and unavoidable, many of these steps that firms can take go a long way to minimize attrition and help retain Texas’ top Big Law talent.
Sharon McLaughlin is division director at Special Counsel’s Parker + Lynch Legal. McLaughlin is a former practicing attorney admitted in Texas and California. She practiced employment-based and business immigration law in San Diego and Houston for many years. Sharon transitioned into the permanent placement and recruiting of attorneys at the end of 2004. As Division Director, Sharon hires, trains and manages a team of top notch recruiters who place attorneys in permanent positions in law firms and corporations throughout the state. She also actively recruits and places attorneys in permanent positions in law firms and corporations in Texas.