The pandemic continues to dampen demand for laterals. Many law firms have slowed down lateral partner and associate hiring, all the while instituting pay cuts for employees, a new survey shows.

According to the newly released National Association of Law Placement survey, nearly 70% of firms have reduced lateral associate hiring in the period from March through May, while 40% have reduced their lateral partner hiring. The survey, which also shows that many are delaying new associate start dates, was conducted on June 18-30 and based on the responses of 356 law offices and 167 law schools.

"All of the firms are looking at everything through the lens of the Great Recession, and when the coronavirus pandemic began, everything [in terms of lateral hiring] froze up initially just so firms could get their bearings," said Amdie Mengistu, senior consultant of partner practice at Whistler Partners.

While there's still an appetite among big firms for group hires, demand for single-partner hires has declined, said Lauren Drake, a Washington, D.C., partner at recruiting boutique Macrae.

"We're seeing a slowdown and hesitation with one-off partner moves, and firms are a lot more cautious about hiring from the government; that's also been a real dip," she said.

And associates — similar to new hires from the government — require more investment from firms, especially in their first few years, she said. Firms are feeling uncertain about their future, potentially explaining why the demand for associate hiring has dropped off more than partners.

Still, Mengistu and Drake both said they were keeping up a busy recruiting schedule. As prospective laterals are more open to switching firms and onboarding virtually, lateral activity is once again on the uptick, they both observed.

"It feels like things have stabilized a bit, or at least plateaued," Mengistu said. "During the last few months of the pandemic, compared to 2008, we've had less layoffs and more lateral hiring. It hasn't been as catastrophic as we expected."

Meanwhile, many firms are continuing with pay cuts throughout the year. NALP found that about 62% of responding law firms have implemented salary cuts and/or delays in partner draws since March 1.

The uncertainty in the legal industry goes hand-in-hand with the wave of coronavirus infections, which are causing states such as Texas and California to reshutter, while law firm offices in former virus epicenters such as New York are staying cautious. Many firms have planned a gradual return to in-person work by opening their doors to a small number of employees and defaulting to remote work for the foreseeable future.

According to the NALP study, 35% of law firm offices were partially reopened or planned to be by the end of June, but an additional 39% of offices said they were unsure of when they would reopen.

Law firm caution—health, financial or otherwise—is also beginning to affect recent graduates. According to the NALP study, 50% of firms have not established a start date for incoming first-year associates, while 62% of firms with established start dates are not bringing in new associates until January 2021. The study also found that 85.2% of law schools had Class of 2020 graduates reported rescinded offers from private practice.

As for summer associates, according to the latest survey, 87% of firms hosted a partially or fully remote summer program in 2020, according to the study, while 95% shortened the length of their programs.

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