An economic downturn doesn’t necessarily mean that partners stay put or firms are discouraged to bring on lateral partners. According to the American Lawyer, a record number of Am Law 100 and 200 partners made a lateral move last year. In their annual survey of lateral activity, they found that 2,509 partners had moved in or out of the big firms in the year ending September 30, a 4 percent increase over the prior year. While this figure does include group acquisitions, it does not reflect the hundreds of partners from Heller Ehrman, Thelen and Thacher Profitt who had to find new jobs opportunities in late 2008. The U.S. growth appears to stem from the increasing number of partners seeking more secure platforms as well as partners asked to leave their current firm.

This holds true in the Asia and Middle East markets as well. This year, we saw partners go to Nixon Peabody and Winston Strawn as well as a large finance group leave Allen & Overy to join Latham & Watkins’ Hong Kong office. Unlike the US market, however, the unprecedented number of lateral partner hires and internal transfers in 2008 also stems from the continued interest of western law firms in these emerging markets to hedge their risk in this global recession. While more well-established firms looked to expand their platform (in such areas as international arbitration, intellectual and fund formation) and to build out their core strengths internationally by making opportunistic hires, newer offices were taking advantage of the turn in the market and increase in lateral partner movement to avoid the risk and expense of growing organically. In late February, Bloomberg reported that while firms in the US and UK are contracting, their China offices are expanding as “the country’s growing importance to clients makes it an essential location for global law firms, along with New York and London.” In Q4 2008, we saw over 20 offices open in Asia and the Middle East, and approximately 35 have opened thus far in 2009.

In just the last 6 months, Cypress has been approached by 10 law firms with new partner level searches in China, Japan and the Middle East. We’ve also received 2 opportunities for US based China practice partners, bringing our total number of active partner openings to well over 20. Both new and established offices are looking for high-profile partners and service partners who may be considering their options in such a tight market. For partners with a significant book of sustainable business, we have seen outstanding incentives. At the same time, for service partners with potential business, strong legal technical skills and local experience and language capabilities, we have seen alternative risk-sharing compensation structures. We have also seen more willingness to absorb associates coming along with a partner or group acquisition, so long as the partner(s) have brought over a strong, viable book of business.

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