As the echoes of a tumultuous 2023 linger, the legal landscape of New York, often a harbinger for the broader U.S. legal industry, stands at a crossroads. In retrospect, the year witnessed the rise and fall of venerable institutions, leaving behind pivotal questions as we step into 2024.
THE END OF AN ERA FOR LEGAL LUMINARIES
The corridors of two of New York’s oldest law firms, Stroock & Stroock & Lavan and Shearman & Sterling, resonated with the winds of change. Established within a breath of each other in the late 1800s, Stroock finds itself in dissolution, while Shearman aligns its destiny with the formidable Allen & Overy from London in a landmark merger set for the coming year.
Their narratives, though distinct, share a common thread of partner departures triggering a cascade effect, leading both firms on a quest for consolidation. However, Stroock’s pursuit of a merger ended in vain.
THE CONSOLIDATION IMPERATIVE
In the tapestry of legal shifts, Shearman’s merger is not a solitary note. 2023 witnessed a multitude of established U.S. law firms opting for mergers. Maynard Cooper & Gale joined hands with Nexsen Pruet, Holland & Knight intertwined with Waller Lansden Dortch & Davis, and Ulmer & Berne forged an alliance with Greensfelder, Hemker & Gale. The Shearman and Allen & Overy transaction, symbolic of this consolidation trend, is slated for closure by May.
As the clock ticks into 2024, the legal landscape braces for further consolidation under the influence of cost pressures and a slower growth environment, as predicted by a recent report from Citigroup’s Citi Global Wealth at Work Law Firm Group and Hildebrandt Consulting.
THE SALARY CANVAS
The concluding months of 2023 brought a sigh of relief for associates in major U.S. law firms. The domino effect initiated by New York’s Milbank, elevating first-year associate salaries by $10,000 to commence at $225,000, saw resonance across the legal sphere. Cravath, Swaine & Moore’s subsequent announcement further fueled this trend, prompting other major and niche firms nationwide to follow suit. While a boon for associates, this surge in salaries raises pertinent questions about the sustainability for less profitable firms in the competitive legal landscape.
REDEFINING PARTNERSHIPS
The traditional model of single-tier partnerships, once the bedrock of top law firms, is on the wane. Cravath’s reported addition of a salaried partner tier, and rumors surrounding Paul, Weiss, Rifkind, Wharton & Garrison contemplating a non-equity partner tier in 2024, signal a paradigm shift. While some stalwarts like Cleary Gottlieb Steen & Hamilton hold their ground, others like Davis, Polk & Wardwell and Skadden, Arps, Slate, Meagher & Flom remain elusive in response to queries.
In the evolving legal saga, the only certainty is change, as New York’s legal scene navigates the trials and transformations that lie ahead in 2024.
