It is no secret that investment from US firms in London’s legal market has caused a cascade of hires and restock hires (some even with hyperinflated salaries) that eventually trickled down to much smaller firms. The question is, who is left picking up the pieces and how are they going to do it?
Most will now think back to the rather historic year of Paul Weiss who continued their raiding of London’s top talent that started with Neel Sadchev and Roger Johnson joining from Kirkland & Ellis back in 2023. While others will look at the more recent activity at Sidley Austin, who have recently announced the eighth partner hire from Latham & Watkins; who themselves made several high-profile hires from Cahill Gordan & Reindel in a bid to restock their leveraged finance team.
This activity from US firms which has left gaps across London’s elite was the first domino to fall, which ultimately led to firms poaching the leading dealmakers at comparative or progressively smaller firms in a bid to ‘plug’ financial holes and maintain profit margins.
With more and more dominoes falling, firms were left with a cocktail of decreases in work generated by partners lost to other firms, overinflated costs to replace them and a general increase in costs to retain exiting junior staff through either pay rises or promotions or typically both. This lethal combination has resulted in serious dips in financial performances, as already seen at top 100 firms who have announced almost 50% decreased pay-outs to their top partners.
So how will the market recover and what steps will firms take to protect themselves?
Stay tuned for our next post!
