Much has been said and written about the robust lateral hiring of 2021, and it was, in fact, a very busy year. For example, Firm Prospects tracked 27,245 attorneys moves in 2021, as compared to 17,383 in 2020 and 22,362 in 2019, a 56% and 22% increase, respectively. What really stands out about 2021, however, is not necessarily the total number of hires but rather the unprecedented demand for transactional attorneys.
Unprecedented Spike in Demand
Generally speaking, hiring by AmLaw 200 law firms tracks with the broader practice-area demographics of the attorneys within its ranks, save for small upticks/drops in hiring of attorneys with certain specializations driven by demand in various sectors or by market conditions. For example, in the middle of the pandemic, there was a slight uptick in hiring of bankruptcy attorneys as well as a slight bump in demand for employment attorneys due to conditions created by COVID. This trend can be seen in the first three years of Figure 1., below.
The highlighted portion of Figure 1., however, shows the sharp deviation from the proportional hiring that Firm Prospects tracked in the three years leading up to 2021. By way of example, looking at the two largest practice areas within which AmLaw 200 attorneys practice, litigation and corporate, which make up 34% and 19% of AmLaw 200 attorneys, respectively, the true demand for transactional attorneys in 2021 becomes apparent: there are 76% more litigation attorneys in the AmLaw 200 than there are corporate attorneys, yet in the second and third quarters of 2021 firms hired nearly 10% more corporate attorneys.
Corporate Attorneys Hired at a Rate of 2X Litigators and IP Attorneys
Figure 2., below, displays the same hires covered in Figure 1., above, for the four largest practice areas in the AmLaw 200: litigation, corporate, intellectual property and employment. Rather than presenting the data as aggregate hires, however, Figure 2. displays the data as a percentage of total attorneys in those practice. For example, at the peak of hiring in the second quarter of 2021, Firm Prospects tracked 1040 corporate hires out of ~22,600 corporate attorneys in our database, for a total of ~4.6% of all corporate attorneys. In that same quarter, only 2.3% of litigators and IP attorneys moved and 3.57% of employment attorneys moved. Thus, the data show that corporate attorneys were hired twice as frequently as litigators or intellectual property attorneys and just under 30% more frequently than employment attorneys.
SPAC IPOs and Tech M&A Driving Demand
Much of the demand for corporate attorneys in 2021 can be tied back to record levels of tech M&A deals and the boom in SPAC IPOs. As the below chart from PitchBook shows, SPAC IPOs more than doubled from Q4 of 2020 to Q1 of 2021, coinciding with the ramp up in corporate attorney hiring that started in Q1 of 2021 and peaked in Q1 of the same year. It will be interesting to see what happens in light of the slowdown in SPAC activity, particularly if there is a drop-off in tech M&A deals in 2022 as well.
In summary, 2021 saw an unprecedented spike in demand for transactional attorneys, driven largely by a surge in SPAC IPOs and tech M&A activity. While lateral hiring in the legal industry surged overall, the disproportionate demand for corporate attorneys was a standout trend. As the market evolves, law firms will need to stay ahead of these shifts to remain competitive.
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