The Dallas legal market resembles other major finance and real estate centers such as Chicago and New York where the credit crunch continues to grind deal flow to near halt. As a result, numerous major and mid-size firms have either been forced to make cuts in their Dallas offices to both legal and administrative personnel and/or freeze salaries at their current scale. A beacon of hope has been the reemergence of bankruptcy work which has resulted in high demand at both the associate and partner level. We are told that filings have only nominally increased, but firms (both major and regional) are anticipating a wave of activity and are staffing accordingly. In addition, intellectual property litigation continues to be a practice area seemingly impervious to current market conditions, and candidates who have a technical or hard sciences background and several years of substantive experience are highly marketable.
The Metroplex has long been an attractive forum for litigators and the litigation boutique continues to represent a prominent segment within this market. We expect to see the first signs of increased hiring activity originate from these boutiques. They are well-positioned to pick up market share from their major firm competitors because of their lower billing rates, they have simpler hiring processes, and they can attract talent in a slow market at salaries well-below the $160,000 scale, therefore having less investment risk in new hires.
Partners with substantial portable business (over $1 million) are also in great demand in Dallas. Admittedly, this reads as an obvious statement, but it is one that becomes increasingly true in a tight market. In fact, the overwhelming bulk of our lateral candidate activity right now is attributable to this particular segment of the candidate pool: experienced attorneys with portable client relationships. While many feel a natural inclination to sit tight until the economic picture becomes more stable, we are seeing a large number of partners realize that there is no better time to entertain moving their practices. This is true for several reasons. First, partners have been able to secure year-long to multi-year compensation guarantees which should hopefully bridge them across the recession. Secondly, many partners are taking a closer look at their current firm’s finances and have realized that they are not actually safer where they currently practice. If the collapses of Heller Ehrman, Thelen Reid, and Thacher Proffitt have taught us anything it is that major law firm profitability had become a foregone conclusion, which is a dangerous attitude for anyone to hold in a highly competitive industry. Lastly, partners are lateraling in order to improve their relative position within the market. Law firms have become increasingly adept at institutionalizing clients and those relationships that are truly portable are a desirable new source of potential revenue for a competing firm. The entry of several new national players in the Dallas market who are populating their offices with local talent only increases the pool of eligibles who will invest in an attorney with an established book of business.
Though Dallas has proven to be more resilient than most other major markets, this resilience has merely translated into proportionately fewer layoffs – a small consolation for those currently out of work or looking to lateral into the Dallas market. I hope to have a happier story to tell in my next Dallas market report.
–Daniel J. Roark, Managing Director