Recent Trends In The Lateral Legal Market
A lot of attention has been paid lately to lateral partner hiring and compensation,
recently I sat down with Tina Solis, a top litigator at Nixon Peabody. In this article
Tina shares what new trends are emerging in the legal landscape as we approach the new year.
In this active legal market, as law firms adjust and solidify their new work policies,
they are also incorporating provisions into their partnership agreements to protect
against departures.
Despite recent signs of a slowdown, the lateral attorney market continues to
boom. With the ever-changing remote work landscape and the frequency with
which attorneys are moving firms, law firms have increased their reliance on law
firm partnership provisions to protect the firm.
With the fiscal year coming to a close for many firms, recruiters and attorneys
must be cognizant of the provisions in law firm partnership agreements that can
have considerable implications when an attorney decides to make a move.
For instance, firms are including clawback provisions with regard to bonuses
and/or advances/distributions paid to the departing attorney within a certain
amount of time prior to their departure. Some provisions provide for a mandatory
clawback, while others leave it to the discretion of the firm’s management. Such
mandatory provisions are likely unenforceable under a forfeiture for competition
argument but largely go unchallenged in the public arena because many firms
have arbitration provisions in their partnership agreements.
Firms are also changing how and when they pay bonuses. Rather than paying
the bonus in a lump sum, many are choosing, instead, to pay out the bonus in
installment payments at certain times throughout the subsequent year. This
means that a departing partner either has to forego a certain amount of their
bonus or wait to depart for a new firm until such time as the prior year’s bonus
has been paid in full.
Also, more frequently firms are including non-solicitation provisions in their
partnership agreements to prevent additional departures. These provisions, for
example, prohibit the direct or indirect solicitation of colleagues for a certain
period of time after a partner leaves their current firm. Generally, however, these
types of provisions are not enforceable post-departure.
How does this impact lateral recruiting?
In short, laterals need to be more precise about timing when making a move.
Money is oftentimes forfeited or clawed back, so the new firm may need to
provide a “make-whole” signing bonus or provide additional compensation to
offset this loss. Consulting with counsel to address these issues and properly
planning the timeline of a departure is crucial.
Be sure to look out for an in-depth interview with Tina Solis of Nixon Peabody, on
‘Best Practices For Departing Attorneys’ and the upcoming CLE: Ethical Guiding
Principles to Changing Law Firms Ethically.
This is the time to start strategically to look at your future. Let’s take 10 minutes
and chat. Call me at 516.731.3400 or email me at
[email protected]. To learn more about the legal marketplace visit
our website at https://www.onbalancesearch.com .
About Tina B. Solis, Litigation Partner, Nixon Peabody, Chicago, IL
Tina advises businesses on issues involving trade secrets, unfair competition and
complex commercial litigation in state and federal courts. She also counsels
lawyers and law firms on professional responsibility issues. Tina regularly
represents regulators in federal court litigation related to the failure of banks.
Tina is also leader of the firm’s Financial Institutions & Banking Disputes team,
which represents institutions and individuals in a full range of civil litigation,
enforcement matters, Financial Industry Regulatory Authority (FINRA)
arbitrations, and compliance investigations on issues such as consumer
protection, fair lending, anti-money laundering, and violations of fiduciary duties.
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About On Balance Search Consultants
On Balance offers great insight and industry intelligence. Shari Davidson,
president of On Balance Search Consultants, advises law firms on how to take a
firm to the next level and helps rising talent make the transition to the right law
firm.
Contact us today. Call 516.731.3400 or visit our website at
https://www.onbalancesearch.com .
Please note that the content of this blog does not constitute legal advice and is
only intended for the educational purpose of the reader. Please consult your legal
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