As waves of layoffs continue to take over Biglaw firms this summer, the legal community is being driven to question the reasons behind such prevalent attrition. Only a handful of months ago, Kate Reder Sheikh of Major, Lindsey & Africa mentioned that some firms were grappling with overcapacity among their personnel which essentially alluded to bloated payrolls.
Recent hard data on Biglaw’s overcapacity has shed light on why the legal landscape looks the way it does. With lateral moves for partners reaching almost record highs, the complete standstill of lateral moves for associates has raised alarms in the industry. The inevitable outcome of capacity redundant coupled with a decrease in demand is, apparently, associate layoffs.
The American Lawyer brings forward additional insights on this phenomenon, based on some fresh data originating from Decipher Investigative Intelligence:
The second quarter of this year turned out to be the second busiest in terms of partner moves since 2017, registering 1,265 moves. This percentile was just 4% short of the 1,322 moves witnessed during the same quarter in 2022, as reported by Decipher.
The figures for the second quarter also showcased a 43% dip in associate moves, reaching 2,797 against 4,904 in 2022 during the same time span. This was also 5% less than the average six-year span from 2017 to 2023.
Total lateral shifts in the U.S. were reduced by 41% year-to-date, owing mainly to the decrease in associate moves. However, the discrepancy saw a bit of a tapering off in the second quarter. The moves were now 50% off after the first quarter, as stated by Greg Hamman, Decipher’s chief data officer.
In summary, firms are currently in the process of adjusting their headcounts at the associate level. This polite term of “rebalancing” does not disguise the fact that numerous Biglaw firms are subtly indicating to associates that their term has been overstretched.
It is indeed hoped that the scenario will look up soon, and associates will not only regain the confidence to make a lateral move, but will also be able to stay with their firms without the constant fear of layoffs.