Emergence Of Lateral Market In Dallas-Fort Worth

Dallas/Fort Worth is one of the hottest lateral markets to emerge in recent years. Chris Miller of the Dallas/Fort Worth office of Kinney Recruiting shares his insider’s view on market trends and what to expect if you’re a lateral looking to move to the area.

How do the salaries and bonuses at Dallas/Fort Worth firms compare with other markets?

Salaries in Dallas are pretty much in line with the salaries in the Houston market, which are mostly in line with New York. Fewer of the Cravath-scale firms are resident in Dallas than they are in Houston, but every incoming firm that’s paying Cravath-level salaries changes the mix a little bit. We’ve historically had as many of the inbound AmLaw 30 firms as Houston has over the last five or 10 years, so salaries are subject to the same range you see in every major market. That means the national firms with the higher rates pay the Cravath scale, and everybody else sort of steps down depending on where they fall within the hierarchy.

As for bonuses, we do tend to see a little bit of differentiation from the New York scale. That’s where the firms make up their difference between the value proposition of a New York associate versus the value of a Dallas associate. So, even where the firms do pay the Cravath salaries, the bonuses tend to be lower than New York bonuses. This is not in every case, mind you. We have some clients who are paying full New York bonuses to some associates, but it depends on the practice group you join as much as the firm.

What about the cost of living in Dallas? What sort of housing can associates expect to afford?

Cost of living is a great advantage for Dallas. The growth in Dallas is only a sliver of the big growth the entire Dallas/Fort Worth area has seen. The cost of living depends on where you live, whether you’re in Dallas proper or in the suburbs, but the inventory of homes is large, as is the size of the homes, and houses and apartments are widely available for those with law firm means. Even working at regional firms, you can live quite well in Dallas, especially compared to other big cities. There’s a great opportunity for very comfortable housing—places with yards and pools.

There’s such a wide range of people, so if you’re looking at mid-level associates who are single or newly married, they may choose to live in a more urban place. Uptown Dallas, with high-end apartments and condos, has seen the most explosive growth from the law firm and young attorney standpoint. That’s where most of the law firms doing the moving and shaking are located. So, there’s a big variety of places to live depending on what you want.

What kind of hours should associates in Dallas expect to bill?

It obviously varies from firm to firm. The bigger the firm, the higher the hours expectations. As more big firms move in, the needle goes up. That said, your worst day in Dallas will still be a whole lot better than your worst day in New York. The hours expectations are just lower here. We very rarely hear the horror stories that you routinely hear out of places like New York. It’s a bit difficult to peg because there’s such a wide range of firms, but generally speaking, you’re looking at 2,000 hours, with it being 10 percent higher for Cravath-scale firms and 5-10 percent lower for regional firms. Our lateral placements uniformly tell us how much better it is here if they’ve ever spent time in a bigger market.

How would you describe the current state of the lateral market? Is it hot? Stagnant? Something in between?

I’d say the market is hot. That’s partly because of the law firms and partly because of the businesses supporting the firms. There’s been lots of press in the last several years about companies moving to the Dallas area. Massive companies are building new headquarters, revamping their current operations, or drastically expanding. Toyota, State Farm, Liberty Mutual and Pioneer Resources are just a few examples. We hear a lot from people whose spouses are being moved to Dallas with one of these companies, so that expansion partly drives the pick-up in the lateral market.

As for the economics of the market, we’re seeing steady climb and growth. Dallas doesn’t have the big swings you see in Houston because the market is more diversified, with a wide variety of businesses and law practices that drive the increasing and steady demand in the lateral market. We’ve seen a lot of inbound traffic into the law firm market in the last three to five years. A number of firms have opened offices here in the last few years, and you can tell that the market continues to be in demand because we’re seeing some of these new firms already turning over as other firms want to acquire them. The recent Winston & Strawn opening was a huge deal. It was very eye-opening that a firm could open here at that scale, and the massive investment shows that the market is desirable.

What are the most relevant industries and practice areas driving law firm business in Dallas?

Within the diverse market, the busiest groups right now are the private equity M&A groups, the private equity fund groups, the bank finance groups. Dallas is a banking center, so we have a high number of banking finance practices or practices that do all the business of the big banks. Litigation isn’t as busy these days but is steady and picking up.

If you were to look at the inbound companies coming to the market or drastically expanding in the market, that defines where a lot of the business is. We have a lot of mortgage companies, mortgage-backed securities work, and mortgage servicing work, as well as foreclosure and consumer finance work that’s related to those kinds of practices.

Even though Dallas is diversified, energy is still a vastly important component of the local industry. ExxonMobil is based here, and a large part of what lawyers do here is related in some form to either the energy industry or money that was grown through work in the energy industry and is now in more of a private equity posture. Nearly all firms do something related to energy in one way or another. The Dallas market is subject to the ebbs and flows of the energy industry, and it’s a major factor for the law firm practices here. That said, Dallas is a growth market across a wide variety of industries outside of energy.

What’s your current takeaway on the overall state of the Dallas/Fort Worth lateral market?

Growth, growth, growth. If you’re a lawyer looking to lateral, assuming your credentials are good, it’s hard to think of market that would be more desirable than Dallas/Fort Worth. The combination of net growth business-wise, lateral demand, housing affordability, overall cost of living, climate and location makes it a great place to practice and live.