In 2023, the landscape of the legal industry was characterized by significant disparities between the most profitable firms and the tier just below them. Contributing factors included a slowdown in corporate practices resulting in layoffs, delays in start dates and a general dip in hiring. These were particularly prevalent for a second consecutive year.
Firms such as Milbank triggered a trend of raising associate salaries, a move that was replicated by multiple competitors despite the prevailing uncertainties in corporate workflows. For instance, Milbank, in early November, significantly enhanced its associate salary scale, setting a base pay of $225,000 for their first-year associates. Similarly, Cravath Swaine & Moore introduced a seniority-based scale with pay ranging between $225,000 and $420,000. Paul Weiss, McDermott Will & Emery, Dechert, and Baker McKenzie were among the major firms that matched Cravath’s salary scales.
Yet, not all law firms thrived in 2023. Orrick Herrington & Sutcliffe, for example, faced a slowdown in their technology-focused operations, leading to the layoff of 90 attorneys and staff alongside delayed start dates for newcomers. Other Silicon Valley firms took similar steps, dealing with overcapacity issues, stagnated demand in M&A and slow capital market practices.
On a brighter note, the merger of Allen & Overy and Shearman & Sterling saw the emergence of a mega-law firm of about 3,900 lawyers. This move represents the increasing trend of consolidation in the industry and showcases the competitive advantages of increasing market share through strategic mergers.
Additionally, Cravath Swaine & Moore, in response to increasing competitive forces, added a salary partner tier. Importantly, it was among other Wall Street firms that revamped their pay schemes.
David Boies, an 83-year-old star litigator, officially handed over the reins of his namesake law firm, Boies Schiller Flexner. His retirement marked the end of an era and with his departure, Matthew Schwartz took over as chair of the firm.
Lastly, it is relevant to note that the legal industry didn’t stay insulated from broader socioeconomic controversies. Several firms revoked job offers due to students’ views on domestic and geopolitical sensitive matters. Law firms were also targeted by anti-DEI activists in the aftermath of the Supreme Court ruling that eliminated affirmative action in higher education. Similarly, debates around free speech and controversial comments also impacted hiring decisions in multiple firms.