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Recruiting During the Corona Pandemic

As the world struggles to cope with the Coronavirus pandemic and societies world-wide adapt in order to minimize risk of infection while remaining as productive as possible under the circumstances, most major law firms continue to recruit. What has changed primarily during this highly infectious crisis is merely the basic mechanics; firms are increasingly opting for telephone interviews instead of in-person meetings.

Perhaps more significantly, law firms like other entities are employing a gamut of strategic approaches to this crisis as in any other crisis; some viewing it as an opportunity to take advantage of diminished competition to recruit even more aggressively and realize gains that may have been unattainable in a relatively calm and stable environment, others plodding forward as if it’s business as usual, while a few more skittish players have paused recruiting altogether promising to reconvene only once the crisis has stabilized. We remind the attorneys we are privileged to represent that while we live in interesting times and how we react during heightened uncertainty can be defining to us, the same applies to the firms they are considering joining, this time of crisis providing a rarely available window for due diligence with respect to a firm’s culture and their way of conducting business.

We urge our law firm and attorney clients alike to proceed with the mindset that this too shall pass, and to resist the temptation to put recruiting on hold. On the contrary, view this as an opportunity to make particularly attractive gains in a largely panicked market that will likely be unavailable again until long after we have come to grips with this crisis as we have all the others that have preceded it.

Since Hanover Legal’s founding is 2000, we have together survived a number of other crises and can fully expect to see a few more once this one too has faded into memory. We assure all of you that as our understanding of the Coronavirus continues to evolve, we will remain on board with you here as well and eager to assist you in any way.

Brexit and BigLaw Stability

According to a report published on law.com on October 6, 2016, “global and European M&A deal volumes fell to their lowest levels for three years during the third quarter of 2016, following Britain’s vote to leave the European Union this June. Mergermarket data shows that 3,595 global deals were announced during Q3, the lowest quarterly figure since the second quarter of 2013 (3,546), and the worst Q3 since since 2012, when 3,296 deals were announced. Global deal volume fell by more than 20 percent on Q3 last year, when 4,501 transactions were announced. Meanwhile, the European market saw 1,323 deals during Q3 – the lowest figure since Q3 2012 (1,271).  Total deal values were also affected, with $8.13 trillion worth of global deals announced – 15 percent down on the same period last year, when total deal values stood at $9.58 trillion.”  This report has naturally sent chills down the spines of some of our attorneys.  So, how worried should we be?  Is the sky now really falling?

The answer in our view is yes and no depending on the strength of your firm’s platform, which is essentially a function of its current financial and cultural health, its ability to withstand short-term turbulence, and the extent to which it is balanced and diversified in terms of practice areas and geographic scope.  To put Brexit in perspective, BigLaw has recovered from other significant turbulence over the last few years, including, since 1999, the bursting of the dot.com bubble, September 11, Enron, WorldCom, the Iraq Wars, and the CMBS frauds leading to our most recent financial crisis.  With respect to Brexit, White & Case M&A global co-head John Reiss and Freshfields corporate head Simon Marchant offer the following calming observations:   “After Brexit,” says Reiss, “commentators struck the death knell for M&A.  It has had some impact, particularly on certain industries in the U.K., but its impact is, and will be, limited.”  Marchant similarly posits:  “What we saw during the aftermath of the financial crisis was that the market and clients can absorb quite a lot of uncertainty and nevertheless get on with their business…”  Id.  See also an article published shortly after the Brexit vote in the Financial Review entitled:  London Law Firms Shake Off Brexit as Revenue Rises:  “The elite group of “magic circle” law firms with headquarters in London increased their revenues last year and signaled that the global nature of their work would help them weather any UK downturn resulting from its decision to leave the EU…  Andrew Ballheimer, A&O’s global managing partner, called Brexit “the largest demerger in history”, adding that it would be “unbelievably complex”. He stressed that A&O’s business was “well hedged”, with just 35 per cent of revenues coming from Britain.  Matthew Layton, managing partner at Clifford Chance, said his firm too was “well hedged” to withstand any future UK slowdown.”

This is not to say, however, that the decreased global deal flow attributed to Brexit will not effect any of our BigLaw players.  We advise our attorneys to be wary of potential red flags with respect to the stability of your firm’s platform, to stay current as to the relative financial and cultural health of competing firms, and to be in as good a position as possible to jump to a more stable ship if the need arises.

Off to the Races

As we move towards the heart of 2016, the Dewey & LeBoeuf saga has faded quietly into the annals of BigLaw history (having failed to garner convictions but succeeded in propelling the youngest of its defendants to a first-year associate position at Williams & Connelly), and the few early financial reports that have become public paint a rosy picture.

Among the leading thoroughbreds is Paul, Weiss, Rifkind, Wharton & Garrison, which continued its twenty year streak of increasing revenue and profits. exceeding $1.1 billion in revenue last year representing a 7.1 percent increase from 2014 and over $4 million in profits per partner for the first time in its history (see http://www.americanlawyer.com/id=1202748743109/The-Am-Law-100-the-Early-Numbers-Paul-Weiss-Partner-Profits-Top-4-Million#ixzz41VnKioek).  Revenue and profits per partner also rose at Willkie (gross revenue reportedly increasing to $658 million representing a 2.8 percent increase over 2014 with profits per partner rising 1.8 percent to  $2,605,000  (see  http://www.americanlawyer.com/id=1202751808613/The-Am-Law-100-Willkie-Grows-Revenue-Profits#ixzz44o4KpQbs), Fried Frank (revenue reportedly up almost 10 percent to $504.5 million and profits per equity partner up 21.5 percent to $2.2 million – s firm record (see http://www.americanlawyer.com/id=1202751870681/The-Am-Law-100-A-Big-Year-for-Fried-Frank-as-New-Strategy-Pays-Off#ixzz44o3NcSyJ), Milbank (reporting $771 million in gross revenue representing an increase of 1.3 percent with profits per partner up 0.7 percent to $2.765 million (see  http://www.americanlawyer.com/id=1202751817832/The-Am-Law-100-Milbank-Posts-Modest-Financial-Gains#ixzz44o5EV2jZ), Gibson Dunn (posting a 4.7% increase in revenue to $1.54 billion, profits per partner rising 4.6% to $3.19 million (see http://www.legalweek.com/legal-week/news/2449451/am-law-100-gibson-dunn-reports-20th-straight-year-of-revenue-growth), Mayer Brown (gross revenue increasing 2.8 percent to $1.257 billion and profits per equity partner up 7.6 percent, to $1.56 million (see http://www.americanlawyer.com/id=1202751330446/The-Am-Law-100-Revenues-Edge-Up-at-Mayer-Brown#ixzz44o7FK71z), Winston & Strawn (revenue per lawyer at the Chicago-based firm topping $1 million for the first time in 2015 with profits per partner up 7.1 percent over 2014 (see http://www.americanlawyer.com/id=1202752698340/The-Am-Law-100-Winston–Strawn-Grows-Profits-Revenue#ixzz44nvrCJ9W), Seyfarth Shaw (gross revenue rising 6.3 percent to $590 million and profits per equity partner reaching $1.02 million representing an increase of 8.5 percent, with average partner compensation reportedly up 4.8 percent to $660,000 (see http://www.americanlawyer.com/id=1202751889794?rss=rss_tal_amlawdaily). and Schulte, Roth & Zabel (revenue rising to $405.5 million representing an increase of 1.2 percent with profits per partner up less than 1 percent to $2.33 million on net income of $198 million (see http://www.americanlawyer.com/id=1202752080965/The-Am-Law-100-Schulte-Roth-Holds-Steady-in-Revenue-Profits#ixzz44nxwMwdO).

One firm reporting negative revenue and profits was Cahill, but no partners there are heading to poorhouse anytime soon either (gross revenue reportedly down 4.1 percent to $364.5 million, profits per partner down 7.1 percent to $3.36 million  (see http://www.americanlawyer.com/id=1202751922568/The-Am-Law-100-Revenue-Partner-Profits-Dip-at-Cahill-Gordon#ixzz44o2lSOm4),

To be clear, however, not all firms are thriving.  Dickstein & Shapiro is the latest of our major players to see its demise.  Of the 175 or so AmLaw 200 firms that have not yet reported their financials, no doubt most are doing their best just to maintain their respective positions in the BigLaw revenue and profitability race, while some are teeter-tottering as they make every effort to hide their struggles so as to avoid crises of confidence and the inevitable partner and client exoduses that follow.

To those contemplating a lateral move, we as always urge a thorough due diligence of viable market possibilities and firm finances when relevant, and are eager to assist in performing that diligence so as to minimize the risk of jumping onto the next sinking ship.