BigLaw Access | October Issue 2024

Well folks, October has come and gone and Thanksgiving is on our doorstep!

Firstly, thanks so much to everyone who reached out after Mack's debut in the Summer edition -- he's a trooper!

We're getting down to the pointy end of the year and without adding any more anxiety to you folks, here's a reminder that it's only 3 weeks until Thanksgiving...

Let's get to it!

Job growth rate slowest since 2020

It's been another interesting month for the jobs market, with the U.S. economy adding just 12,000 jobs in October (Bureau of Labor Statistics ), sighting the horrific Hurricanes across the Southeast as well as various labor impasses and layoffs.

The October numbers fell significantly short of the 100,000 estimated by Dow Jones , and the 223,000 jobs (revised from 254,000) added in September, making this month the slowest job rate growth rate since 2020.

It's not all bad news though; most major banks and economists aren't overly concerned as the unemployment rate has remained steady and wage growth has actually edged higher. Matthew Bush of Guggenheim Investments noted "the labor market is not falling off a cliff like the payroll numbers would imply." J.P. 摩根 strategists also maintain their forecasts of further 25 bps rate cuts in both November and December. Time will tell...

Across in the Biglaw jobs market, you would think the opposite is the case. Throughout October, we saw some of the highest levels of job openings and lateraling at both the Associate and Partner level (together with deep pockets for signing bonuses and guaranteed year-ends), but more on this further on.

What are your chances of making Partner in BigLaw?

Following the Summer edition, where I set out some of the changes we're seeing to BigLaw partnership models, I posted the results of a recent Chambers Associate analysis showing the chances an Associate has of making equity Partner at their current firm -- see full post here.

It obviously struck a chord with many of you, with over 70,000 impressions in the space of a week. While the results were somewhat questionable (particularly when the chances of becoming a Partner at Linklaters is apparently 320% according to the report), the amount of you that viewed this post gives real insight into what Associates and Partners are thinking about when making a lateral move or preparing for internal reviews.

What I've learnt from my time in law and now in recruitment is, that people like the controllables -- things they know they can do each day to get ahead [i.e. output and billables] -- but we all struggle with the uncontrollable aspects of our jobs, where there isn't transparency or the waters have been muddied [i.e. what does it actually take to get to Partner and what are the tiers, and how will I be supported with BD].

To me, it's a sign that firms to ensure that between all of the 'black-boxing' and uncertainty, Associates (at least within the firm) have a clear understanding of what it takes to achieve equity Partner, and what controllables they can put in place now to help them get there.

Funds and Secondaries market update?

For those working in the secondaries space, many of you have probably been so busy you haven’t noticed that the Oak trees have lost their leaves. Turns out, it’s probably going to continue to get busier. As the Financial Times recently reported : “records are about to get smashed”.

Investors have been turning out in droves selling second-hand stakes in aging funds, mostly fueled by endowments and pension funds trying to access cash amid slumps in general deal activity (another reason why I bang on about Secondaries being such a recession-proof practice .)

Predictions have been made that the close of 2024 will see between $145B to $150B in Secondaries sales, which would be an increase of ~25% from 2023 and ~15% increase on the 2021 record for the industry.

The end of the golden age of PE?

It’s getting harder and harder to say that Secondaries is niche market, given its rise against the challenges facing the $4T private equity buyout industry (which has taken a dip due to interest rate challenges and a general slowdown in deal making). Last year, Marc Rowan of Apollo even went as far to say that the golden age of PE buyouts has come to an end and we’re certainly seeing the evidence of this now cross over into Secondaries.?

With the cost of borrowing (to take companies private) getting more and more expensive, investors are turning to Secondaries more and more to access cash. The global head of Private Capital at Jeffries went as far as to say that secondary stakes had accounted for 14% of overall PE exits over the past 12 months, a significant increase from 5% total in 2019 and 2020 .

However, with more demand, generally brings less discounts for buyers. Two years ago, the market saw secondary stakes selling for <80 cents on the dollar while stakes are now priced between 93-98% of a fund’s value (and includes deferrals). ??

The surprising result of this is it hasn’t entirely affected PE hiring across Associates and Partners, but there remains a level of caution by firms following the unprecedented level of hiring we saw in 2021.

Secondaries lateral hiring

Over in the Secondaries space, and I think it’s fair to say we’re seeing record numbers of jobs and hiring take place (both here in the US and in the UK). Associates and Partners have more options in the market now, outside of the 8 firms ‘ranked’ in Chambers as Partners move to build out teams in the hope of being the next golden egg.

I’m continuing to work with leading Associates and Partners in the space on strategy and interview preparations as they get into final rounds with some of the most interesting groups in the market right now.

The year ahead

With 2025 now on our doorstep, a lateral move before then is very possible, but time is no longer on our side. Interview processes can absolutely be put through in a matter of weeks in some cases (the controllable) however conflicts and background checks (often performed by third parties) can slow down the processes. If you’re looking for a move this year, a guaranteed year-end is absolutely on the table, and a signing bonus depends on the strategy used (I've had an almost 6-figure signing bonus offered in the last month).

A lateral move this side of the year brings less competition that the post year-end-bonus-payout-crew who often don’t start looking until January, at which point roles can be already filled. ?

What’s your main focus for the year end and into 2025? Now is the time to set clear goals and be specific about what you want for your career next year, because it’s going to be big -- something we haven’t been able to say confidently for a number of years now.

Whether it's a lateral side step move, a step up or step down, I'm always here to chat. In fact, staying put can also have its benefits -- and I'm happy to chat through those, too.

Let's do this!

~Stef

Stefano grew up in Australia where he practiced as a top-tier corporate and funds attorney since 2015 before moving to the US to work in BigLaw. He is now a legal recruiter leading the New York office at Sonder Consultants where he works across all major US and global markets. Connect with him on LinkedIn.