Last year saw the return of special and signing bonuses in the US legal market, signaling sustained competition for elite legal talent. Rather than indicating a broad-based hiring surge, this trend is in fact indicative of a laser-guided recruitment strategy in which firms are willing to pay significant premiums for attorneys with very specific expertise.

While there are many corporate lawyers working in major cities, the proportion with this very defined skillset is small, so they can effectively name their price. Based on what we have observed in recent months and the hiring activity of the top firms, I certainly believe this trend is one which will continue for the foreseeable future. What seems to have happened is that those firms were all looking for the best people at the same time, so inevitably that creates considerable competition. This means that those associates were in a very good position to obtain big signing bonuses.

The years following the pandemic were two of the best ever in the legal recruitment industry. This could be very obviously explained by so much activity being shut down during Covid and then rebounding with such an unprecedented surge. For reasons that are harder to pin down, there is almost a similar level of confidence in the marketplace now, which started toward the end of last year and still prevails. The offers we are seeing are almost reaching the level of the post-Covid flurry, when it was almost impossible to fulfill the demand.

While M&A was not as busy last year because of geopolitical issues like the tariffs implemented by President Trump and the ongoing conflict in Ukraine, that seems to have smoothed over. Interest rates appear to be coming down, and we are in a period of high investment. There are multiple explanations. But regardless of the exact reasoning, as a result of that improvement in confidence, deals are happening again, so there is going to be real demand in both leveraged finance, M&A and funds.

Looking ahead, the market for the best attorneys at the top 20 firms in New York is likely to remain incredibly competitive in these high-demand practice areas. Recent market activity has seen multiple offers exceeding $100,000, highlighting how competition for experienced attorneys is approaching the levels last seen in 2021 and 2022.

Firms are hiring more senior people than before, and the shrinking pool of suitably experienced senior associates and counsel is intensifying pressure on firms to secure talent earlier and at higher cost. I think it is perfectly possible that this sign-on bonus figure could rise still higher for certain people. Although $100,000 is a high number and not that common, we have seen a few rare instances in which bonus offers have exceeded $125,000. It is hard to envisage signing bonuses increasing beyond that, but we generally see more offers having sign on bonuses then not.

Despite the apparent reluctance among firms to create an escalating bidding war, clearly the level of experience of the candidate might give them even more sway when negotiating a signing bonus with a firm desperate for a very tailored acquisition.

Senior associates, counsel, and non-equity partners (NEP) are also in higher demand right now. The effect of this is that lateral moves and step-ups have been made more accessible for the right candidates, particularly where firms are prepared to be flexible on role and title.

Beforehand, firms were less inclined to take people on at senior level, or even senior associate level. They would typically be looking for a two to six-year associate. Traditionally, the reason for this is that anyone above that six-year threshold would be getting closer to partnership level, which evidently brings its own risks. They wanted people at the mid-level because they are not too expensive; they are also at a stage in their career in which they can be molded and trained according to a firm’s particular demands and structure.

Today, however, given the intensity of the competition between these top firms, there is more willingness to take on people already in senior positions. It comes down to the simple necessity of having to deal with the workload and having the ability to further grow their practices.

Firms are much more flexible about paying massive incentives simply to get these prized assets through the door. Candidates have considerably more leverage than they would have done if they were just desperate to move. When it is a case of an attorney being willing to jump at anything, the firm holds all of the cards.

But in a marketplace as busy and tight as this one, the candidate or the associate tends—in many cases—to be able to assert much more bargaining power. So, they’re able to be a bit more aggressive with their negotiations and more straightforward. Plainly this can give them the platform for obtaining much better offers. 

At the same time as changes in the hiring environment, we have also been observing structural changes to partnership tracks at different firms. This too is playing a significant part. Different firms are putting different structures in place to create alternative progression pathways.

Based on this evolving template, candidates can increasingly weigh the relative value of early partnership titles versus more substantive routes toward equity elsewhere. For example, Kirkland and Ellis promotes attorneys to partner at the seventh-year level, but for some candidates this milestone carries less weight, as it is widely viewed as an expected progression within the firm. 

As a result, some attorneys choose instead to move to another firm as a non-equity partner, where the role may represent a more substantive and credible step towards equity. Historically, prior to this uptick in activity of the last two to three years, there was only a limited selection of promotional pathways for associates. For example, at a firm like Kirkland, from associate to non-equity partner to equity partner.

Alternatively, you could stay as an associate for eight years and then try to make partner or become a counsel and then a partner. These were the only real routes. Now, however, so many different firms have so many different pathways. Some firms are now promoting attorneys to counsel at seven years, to non-equity at nine years, and then equity at 11 years. Others are just going for straight equity partner after seven years. 

The natural implication of this is that if an associate doesn’t like the structure that they’re on at their current firm, there is a much broader variety out there to pick and choose from. If they are unhappy in their role, this wealth of options provides them with infinitely more choice. It is no longer a case of complaining but sucking it up because you are entrapped by an inflexible promotion structure.

This broad hiring phenomenon looks set to proceed at the same rate in the first half of this year. Firms are still being very aggressive, and there are no immediate signs of that stopping. When you have surges in the core markets of finance and M&A in particular, other areas such as tax also start to become busy because they are effectively a side-product of the substantive corporate work. There is, therefore, a high chance that these secondary areas might increase their level of activity, further bolstering the need for firms to make the right hires at associate level. I cannot envisage any immediate slowdown.