Latham & Watkins: Bigger Bonuses, Longer Equity Vesting for Lateral Partners

• BigLaw firms are offering bigger bonuses and longer equity vesting periods to attract top talent.
• Latham & Watkins and Cleary Gottlieb Steen & Hamilton are among the firms that have become more competitive in recruiting lateral candidates.
• Compensation guarantees now extend to four years at some firms, up from two years previously.
• Firms are giving out more equity shares to entice profitable partners to bring their business.

Firms understand that pay packages are very reflective right now of what it's taking to attract other peer-level talent.

The competitive landscape for top talent in BigLaw has led law firms to get creative with pay packages. As compensation alone may not be enough to attract lateral partners, firms are offering bigger bonuses and longer equity vesting periods. This shift is particularly evident at Latham & Watkins, where recent hires include five partners from Wachtell, Lipton, Rosen & Katz. The firm's incentives now frequently include higher bonuses and compensation guarantees.

According to legal recruiters, BigLaw firms have had to adapt their pay arrangements to remain competitive in the market. As Scott Yaccarino of Empire Search Partners noted, 'If you're a partner making $15 million a year, another firm paying you $17 million a year doesn't necessarily move the dial for you.'

Firms are responding by offering more generous equity shares and longer vesting periods to entice profitable partners to bring their business. This approach is also reflected in the extension of compensation guarantees from two years to four years at some firms.

The increasing use of creative pay packages by BigLaw firms raises questions about the role of equity and bonuses in lateral hiring. As law firms compete for top talent, they are offering more generous incentives to attract profitable partners. This trend is not limited to Latham & Watkins or Cleary Gottlieb Steen & Hamilton, as other firms are also adopting similar strategies.

The shift towards longer vesting periods and greater equity shares highlights the changing landscape of law firm compensation. As Margie Grossberg of Benchmark Legal Search Partners noted, 'Firms understand that pay packages are very reflective right now of what it's taking to attract other peer-level talent.'

This development has significant implications for lateral candidates, who must carefully consider the terms of their new employment when evaluating potential moves.

The increasing use of creative pay packages by BigLaw firms has significant implications for lawyers considering lateral moves or negotiating their own compensation. As law firms compete for top talent, they are offering more generous incentives to attract profitable partners.

This trend highlights the importance of understanding the terms of one's new employment when evaluating potential moves. Lawyers should be aware of the pay packages being offered by different firms and carefully consider the implications of each offer.

Ultimately, the shift towards longer vesting periods and greater equity shares reflects the changing landscape of law firm compensation. As Jon Lindsey of Major, Lindsey & Africa noted, 'More firms are allowing partners to become vested in their retirement plans more quickly.'

Law firms are increasingly offering creative pay packages, including bigger bonuses and longer equity vesting periods, to attract top talent in a competitive hiring market. Lawyers should be aware of these new incentives when considering lateral moves or negotiating their own compensation.

Source: Original reporting via Law.com