Three corporate partners are sitting in a meeting room at a US law firm in London. It is 9pm and they are in the 'goldfish bowl'. They have been grilled by 100 partners throughout the day, some more than once, who have each fired questions at them: "Why are you leaving?" "Are you being pushed or are you jumping?" There is a live video conference set up so New York partners can also drop in. The trio must impress. They need 75% of the partnership vote to win jobs at the firm.

This experience recounted by a recently-hired team is a snapshot of the lateral partner hiring process in the City in 2015. For many who have moved firms this may sound familiar: with the scars of the recession not forgotten, the recruitment process is an intense experience. Recruitment consultants report the London market is seeing a return to the heydays of 2006 but while US firms are throwing big money around again, and some UK outfits are prepared to break their lockstep to find the right partner, the moves this time round are more calculated and strategic.

"We have seen a return to some firms offering lots of money outside their normal remuneration structure. It's come back as a result of a shortage of good quality people who can build business and have expertise," says Adrian Fox (pictured), managing director of legal recruitment boutique Fox Rodney.

All the magic circle bar Slaughter and May have discussed tinkering with their remuneration systems in recent months. Freshfields Bruckhaus Deringer is thought to have broken lockstep for recent hires in the US and Asia as well as its new London recruit Ward McKimm, who joined from Kirkland & Ellis in June. Clifford Chance (CC) partners, meanwhile, voted to overhaul its lockstep in April to make space to pay for super points.

Linklaters used its April partner conference as an early sounding board for a forthcoming review of its lockstep model with a view to being able to reward high-performing junior equity partners.

Meanwhile, at the end of last year, Allen & Overy introduced a new discretionary bonus points pool to award star partners.

So, as the magic circle tries to compete with US big money, what are the implications for the lateral partner recruitment market?

"The markets are busy. It has that 2006-07 feel to it. We have come full circle as lots of firms are now looking for the same talent," says James Whitworth, managing partner of legal consultancy Piper Pritchard.

Legal recruiters believe the magic circle's quest to retain and recruit star partners is having some impact on the market.

"This will make it harder to dislodge some star partners from the magic circle if they can now earn over and above what their lockstep position would entitle them to," says Vassos Georgiadis (pictured), managing director and founder of Melton Legal Search.

At the same time, many are sceptical about UK firms' attempts to reverse the flow of lateral exits to US firms.

"The UK firms are doing what they have to do to offer a credible alternative," says a partner who recently joined a US firm in London. "Do I think the changes to their lockstep structures are a long term solution? No I don't because the US firms still have more flexibility in terms of compensation."

"Before the financial crash, a lot of partners, particularly those in the magic circle, were quite loyal partners in a lockstep firm," adds a UK recruiter. "Afterwards, they realised that loyalty could be a one way street. That's when they began taking recruiter calls and coming in for a conversation."

Client loyalty

Although some rainmakers attract clients through their personal brands, recruiters point out that magic circle partners can often suffer from a lack of client following, with clients more wedded to the firm's expertise than to an individual.

"Now it is a bit harder to place magic circle partners. There's a presumption that, albeit they are excellent lawyers, many come with limited business and they haven't had to be entrepreneurial and 'hustle' for work," says Georgiadis.

Another UK recruiter, who declined to be named, highlights the additional difficulty of placing magic circle partners who have been pushed out.

"If you turned back pre-crash, if a magic circle partner got a tap on the shoulder you could get them into the tier below reasonably easily. They would take a bit of a haircut but it would not be too bad.

"Now you are looking at at least a 50% pay cut, particularly for those partners that are service partners and don't have any business – and very few of the magic circle candidates do."

As their appetite for hiring and the relative size of their UK offices continues to grow, US firms are increasingly poaching from each other. In June, Kirkland & Ellis (K&E) finance partner Philip Crump left for Gibson Dunn. In May, City funds partners Mark Mifsud, Kate Downey and Alexandra Conroy all departed from K&E to join Fried Frank Harris Shriver & Jacobson in the City.

Recruiters also paint a picture of new practice areas and sectors coming into vogue.

"There's more demand for high yield partners alongside private equity in tune with increased globalisation," says Fox.

Others highlight litigation, financial services regulation, construction, corporate M&A as well as support practice areas as transactional activity rises.

Differing approaches

However, there is a clear divergence in the way firms approach recruitment.
"Some firms demand cold hard numbers while others are more strategic," says Whitworth. "You can still see examples of firms doing chequebook recruitment and trying to buy a name and a book of business."

Others take a more nuanced approach. Speaking about hiring earlier this year for a US firm's private equity practice, one partner explains:

"We weren't looking for a book of business. We wanted partner bandwidth, so somebody with some crossover with our existing clients and who could help mine the platform."

Regardless of approach, the common theme is that the interview process is more intense than ever.

City law firms are now conducting what recruiters describe as "forensic analyses" on their prospective lateral hires. Since 2010, due diligence has increased with some firms paying up to £15,000 for a headhunter to report back on a candidate. Others carry out their own research by talking to the candidate's clients and former partners of their firm.

"The whole process tests your will to live, let alone your will to move. The lateral has to be horizontally and vertically sound, ambitious yet collegial, a team player yet competitive," says Dominique Graham (pictured), director and founding partner of legal consultancy Graham Gill.

For most, in an increasingly competitive and volatile market, the business case is vital, she says. "Most firms will tell you they aren't in the business of buying revenue: they're after the skillset and ability to practise based on track record. Some mean it, but they are a tiny minority."

In this climate, it is the US firms that are making the most traction in the City's lateral partner market, while UK firms remain more on the defensive, concludes one partner who recently switched firm.

"The big thing over the last year has been US firms recruiting very aggressively. Post-recession there's still a much tighter grip that's held on UK partnership and on equity even it if has been stretched. Much more care is taken on bringing in lateral partners."