The Recorder: Lateral Partner Demand Strong in Bay Area, According to Macrae Analysis

Macrae’s research team closely tracks lateral partner activity across our markets, including the San Francisco Bay Area. As we head into the end of the year, Recorder reporter Jessie Yount took a close look at our data and spoke with Partner Suzanne Kane and Managing Directors Nick Goseland and Sarah Morris about what it reveals, and what’s ahead in 2023.

On the numbers:

“Lateral partner hiring in Northern California is expected to return to pre-pandemic levels. Even as firms exhibit more caution in hiring, demand for top talent hasn’t let up…There have been 93 partner moves in the Bay Area thus far, 40% of which have been women partners. The expectation for the full year, assuming November and December will reflect the average of the other months, is 112 partner moves, according to Macrae’s analysis of Leopard Solutions data. If that full-year figure bears out, that will reflect a 14.5% decrease compared to the 131 moves in 2021, but only a 5.1% decrease compared to the 118 moves in 2019. (And not far off from the 114 moves that took place in 2020.”

‘The biggest difference in terms of what we’re heading into now, compared to other slowdowns, is that demand is still there,’ Kane said, noting that demand is still highest for corporate partners.’”

On compensation:

“‘The biggest rub heading into 2023, whether there is a slowdown or not, is the compensation that partners received in the last year or two,’ said Kane.

Average partner pay in Northern California was well above the national average of $1.12 million in 2021, which was already the highest total ever recorded…

‘Firms made use of the money they made in 2021 and locked down their partners with huge bumps in compensation,’ Kane said. ‘As a buyer, you could take advantage of a small slowdown in hiring, but compensation is still very high. A year from now, we might be having a different conversation.’

Kane and fellow Macrae legal recruiter Sarah Morris agreed that partner pay is due for a reset, and some Bay Area partners are bound to see their compensation fall.

‘Even if firms don’t trim points or shares, compensation is going to go down because the shares will be worth less,’ Morris said. ‘That could allow for a little more movement.’ …

Nick Goseland, a Silicon Valley legal recruiter who recently joined Macrae, noted that partners may be reluctant to move given tougher economic conditions and the high compensation they’ve received in recent years. But he said partners in incredibly busy practice areas last year are at the least more available to take calls and consider opportunities.

On the uptick in moves by female partners:

While the pandemic didn’t hugely impact partner hiring activity, the emergence of remote work has spurred opportunities and movement among female partners, Kane added.

‘Many women partners express a need for some flexibility which is hard to get in Big Law and/or they had established after many years at their firm,’ Kane said. ‘All of sudden you could move firms and there isn’t an expectation that you’ll be in the office to work all day, every day, so you could finally consider a move that benefits you in other ways.’

Kane also added that firms have opportunities to win female talent by offering equitable treatment, including but not limited to the areas of partner pay and leadership positions.

We encourage you to read the article in full here: Lateral Partner Demand Strong in the Bay Area, but Elevated Compensation Threatens a Logjam