Partners jump ship as legal firms target talent

More than 220 partners switched allegiances over the past financial year and the trend looks set to continue as legal firms pursue a more targeted and focused approach to hiring.

More than 220 partners jumped ship over the past financial year, according to Eaton Strategy & Search

The past financial year has been interesting from a partner move perspective.

With an uncertain economic outlook, firms have continued to perform well and defied some of the perception from a year ago. An anticipated slowdown in M&A did not occur to the extent envisaged by some. Instead, law firms have defied their budgets yet again and continue, in the most part, to grow. Indeed, growth is the name of the game at the mid-tier firms that post the largest increases in partner ­numbers.

However, at some firms there has been more of a ‘‘consolidation’’ approach, and a median further slowdown in lateral hires (down from approximately 242 for FY23 to 221 for FY24). In a similar vein to the previous financial year, firms continue to be targeted, hiring partners to fill specific gaps in practice groups, and, at what is commonly referred to as the top tier end of the market, most often created by retirements or departures. It’s consolidation and slight, rather than considerable, growth. Those firms will still be opportunistic if an elite partner with a market-leading profile becomes available, but this is not common. Firms also appear to be lending more weight (in practice) to the cultural fit of lateral hires, where previously this was not given as much consideration (in reality).

The second half of 2023 saw a slew of team moves and firms targeting partners to replace specific departures. Many of the team moves occurred where mid-tier firms poached teams from firms of equivalent standing.

This year was notable for the demise of KPMG Law, perhaps another failure of the big four to move into the provision of legal services. Other firms to suffer material departures included Clyde & Co, MinterEllison, Holding Redlich, Norton Rose Fulbright and HWL Ebsworth.

The first half of 2024 has seen a continuation of the mid-tier firms hiring, whereas the main players in what is commonly known as the ‘‘Tier 1’’ category, from a lateral hiring perspective, have included Gilbert + Tobin, Ashurst and A&O Sherman. Gilbert + Tobin rehired two alumni. Other growth included a strategic firm ‘‘acquisition’’ in Perth, thus encapsulating a subdued market. Other ‘‘leading’’ firms have been conspicuously quiet, although there are a number of moves afoot that will be announced imminently and during the second half of this year, although there are unlikely to be any seismic jumps in partner numbers at those firms.

Many of the larger team moves at the mid-tier level have been insurance-related. Areas of demand at the larger firms have centred around energy, cyber/data and restructuring. Other areas of note include workplace relations and disputes. There will always be a demand for elite corporate (especially public M&A) and private equity partners, but where many firms’ remuneration models now reward high performers, the lateral movement of these partners is not widespread.

Firms will continue to hire partners with a portable book of business.

The market therefore continues to demonstrate a more targeted and focused approach to hiring, related to specific areas where larger firms have a gap to fill. As it has been for some time, it is no longer a case of growth (save for some of the perceived mid-tier firms) – rather consolidation.

While the movement of laterals has been slower than in the previous 12 months, it appears firms will continue to hire partners with a portable book of business, with a focus on being strategic around the three C’s: clients, conflicts and culture.

Dominic Peacock is a Partner and Legal Search Consultant and Strategic Advisor to Law Firms at Eaton Strategy + Search