The legal industry has been experiencing significant shifts in 2024, with strategic hiring playing a pivotal role in shaping the landscape for BigLaw firms. Here are key insights:

Moderated Headcount Growth and Improved Productivity

Regarding headcount, total lawyer headcount grew by 1.2%, aligning with pre-pandemic growth levels. Leverage (1.1%) drove most of the increase, while equity partner headcount grew modestly (0.3%). Notably, firms strategically invested in income partner talent (4%) to retain senior associates and build their equity partner pipeline.

According to a Law360 report, the top 10 biggest law firms by the total amount of attorneys at each firm is:

1. Kirkland Ellis 3,043 

2. Latham 2,614

3. Greenberg Traurig 2,155 

4. Holland & Knight 2,035 

5. Sidley 1,798 

6. DLA Piper 1,696 

7. Morgan Lewis 1,688 

8. Jones Day 1,647 

9. Gibson Dunn 1,629 

10. Goodwin 1,598

The report further states that while the average rate of growth is 2.2%, the 50 biggest law firms grew at a rate of 2.9% and that the 200 largest firms grew at a rate of 2.6%. The remaining 200 firms grew at 1.4%.

Revenue Growth Outpaces Expense Pressure

In the first quarter of 2024, the industry witnessed robust double-digit revenue growth (10.8%), surpassing ongoing expense pressures. Key drivers included:

• Demand Rebound: After nearly two years of declining demand, the legal sector saw a 2% increase in demand. Litigation, bankruptcy, regulatory work, and large-cap M&A transactions contributed to this growth.

• Year-End Inventory Collection: Firms successfully collected year-end 2023 inventory, particularly in the first two months of the year.

• Productivity Boost: Average lawyer productivity improved by 1.2%, signaling a positive start to the second quarter.

Expense Pressures Persist

Operating expenses increased by 6.8%, outpacing lawyer compensation growth. Factors such as technology, travel, business development, taxes, and talent contributed to rising costs. The impact of associate salary increases announced in the previous quarter was evident in compensation expenses. Additionally, income partners, with higher salaries than associates, influenced overall lawyer leverage costs.

Strong Performance by Larger Firms

Among law firms, the Am Law 1-50 segment delivered the strongest performance, with revenue growth (12.9%) and demand growth (2.3%). These firms managed to maintain solid inventory levels, positioning them well for the second quarter. Am Law 51-100 and Second Hundred firms also experienced demand growth due to headcount increases, achieving revenue growth of 6.9% and 7.8%, respectively.

M&A Momentum and Demand Growth

Amidst the resurgence of transactional activity, law firms are actively hiring. Notable Am Law 100 firms, including Paul, Weiss, Rifkind, Wharton & Garrison; Sullivan & Cromwell; Akin Gump Strauss Hauer & Feld; K&L Gates; and Seyfarth Shaw, have all recently announced lateral M&A partners. 

This hiring spree aligns with industry research indicating a return to demand growth after nearly two years of declines. Litigation, bankruptcy, regulatory work, and large-cap M&A transactions are driving this positive trend.

Globally, M&A activity has surged, with a 38% increase compared to the previous year. Although the number of worldwide deals declined, the overall value of transactions remains robust. The technology sector continues to be a key driver of the global economy, prompting law firms to position themselves as leaders in M&A and technology-related transactions and litigations.

In summary, strategic hiring decisions, productivity gains, and revenue growth are reshaping the BigLaw landscape in 2024. As firms adapt to changing dynamics, their hiring strategies will continue to play a crucial role in navigating the legal market.