Please check out our daily blog, www.theasiachronicles.com, where we also have a new post today by Alexis Lamb, regarding the rising need for US litigation associates in Asia, among our numerous daily news posts on international biglaw in Asia.
Here we are in the traditional vacation time of July and August, when interview processes can drag out quite a bit. This is especially true in this current still very hot biglaw market in Asia, where busy hiring partners are also juggling 2-week family vacations (sometimes piggy backed around a week or two working from NYC office, making the vacation time seem extended even further).
We feel fortunate at Kinney Asia that we have been able to add two US associate placements this week already – a junior associate placement in Singapore at a top UK firm and a junior associate placement in Hong Kong at a top UK firm’s Korea practice. This continues what has been a spectacular year for Kinney in Asia, with almost 50 US associate placements already this year.
While we expect the US biglaw associate lateral hiring market in HK / China and Singapore to remain very strong during the 2nd half of ’11, we don’t expect the sizzling hiring pace of the 1st half of ’11 to continue. The first half of ’11 was an anomaly, a situation caused by combination of extreme boom market for more than a year in HK / China and most of Asia, and the odd circumstance of busy Asia offices becoming very understaffed and not being allowed to hire as needed, and for many months not at all, for a 18 months of a bona-fide boom time. The boom has continued since then, another 7 months so far, although deal flow has been slowing a bit in some biglaw firms’ US practices in HK / China (some IPOs in HK, most notably Prada, has fallen flat and investigations and shareholder class actions filed against some Chinese companies have slowed down IPOs of Chinese companies in the US). It is still a very hot market, but going through a speed bump now and there has been a lot of hiring in the past few months.
We predicted late last year that this hiring boom would happen in the first quarter and last until perhaps midway through the 3rd quarter. For example, see past articles: http://abovethelaw.com/2011/01/the-asia-chronicles-hong-kong-china-openings-hiring-boom-in-first-quarter-’11/
http://abovethelaw.com/2011/01/the-asia-chronicles-as-predicted-the-asia-mini-hiring-boom-has-begun/
We continue to believe that the current sizzling level of US associate hiring cannot continue in Asia and that the pace of hiring will indeed slow down soon. By all means, the lateral hiring market will remain very strong, but simply not at the level of the first half of ’11 (where most top US and UK firms in HK / China had 3+, and in some cases 6+, US associate openings, to make up for a serious understaffing problem). The first half of ’11 was all about successful and understaffed US transactional practices in Asia playing catch up on hires that should have been made in a more spread out fashion, going back to mid ’09. The global economic crisis caused the strange situation of hiring freeze and them very limited hiring during a bona-fide boom, when more deal flow was coming in to top firms than they had staff to handle (without associates working well over 2500 hours) and when i-banks were starting to recruit again from the best firm’s ranks in HK / China.
Now, turning to the title of this post… While the biglaw US associate hiring market will continue to be very strong in Asia, even if slower than first half ’11, expect the very flattering and urgent counter offers to continue, especially for US associates moving from NYC to Asia.
The fact is that in this climate US firms really do not like to lose their US based US associates who have Asian background and who are seeking a move to Asia. While many of the same associates may be unable to quickly get a transfer to their firms’ Asia office if they asked and while in many cases those offices may not seem like the best fit anyways (keep in mind that the majority of US to Asia biglaw associate moves the past seven years are lateral moves, not transfers), there will inevitably be a lot of pushback in ‘11 when the associate gives notice they are making a lateral move to another firm’s Asia office.
Be forewarned: the inevitable counter offer in ’11, to instead transfer with your firm to Asia, comes with all the bells and whistles – including visits to your office and / or phone calls and / or lunch invites by management committee members, the practice head and in some cases even the chairperson of the firm. It can be very flattering and overwhelming.
The flattery in general is sincere. Your firm does value your work and the partners you work with most likely do have very high opinions of you (even if they don’t pat you on the back as much as you would like in the heat of pressure packed workflow).
However, you should understand that this type of pushback would not be happening in most years, it is mostly market related (for example, if you were giving notice in ’08, ’09 or the first 3 quarters of ’10, there would have been most likely no counter offer at all, much less such strong and urgent pushback). Most firms are actively recruiting in Asia now, especially in HK / China, and there is pressure internally to not lose more of the existing pipeline solid Asia background US associates the firm has in its US offices. There is also a lot recruiting competition among peer firms in China and the senior partners of China practices, who are increasingly powerful in their firms globally, do not like losing any of their own, especially those in the pipeline back in the US (which makes perfect sense of course). There is a sense that why should we lose this associate to a competitor when we are the ones who recruited him out of law school and trained the associate for some years? Situations like this get the competitive juices going…
Keep in mind, for example, that 100% of the Asian background US associates we have placed from US to Asia (who hailed from firms with Asia offices) in late ’10 and thus far in ’11 have, after giving notice, received the very flattering and impressive pushback and counter offer described above. In the previous 6 years, it was less than 10%. No matter how many times we explain that statistic, some associates will continue to feel they are being treated special and that their firm would not be similarly going all out for any or most of their Asian background associate colleagues. Again, it is highly flattering and some associates, especially junior ones, are more impressionable than others.
You can avoid the awkward counter offer after giving notice situation by simply doing one of the following: a) approach your current firm about the other firm’s offer you are considering before you actually accept it; or b) simply be prepared to politely turn down the counter offer when you give notice, without allowing a situation to develop where you are reconsidering things for weeks.
In many cases transfers are of course the best way to move to Asia. Although it is not a good business move for us in the short term, we at Kinney have helped many of our US associate candidate clients come to the conclusion that their best move to Asia is indeed within their own firm. You should obviously complete the process of making that decision before you accept an offer at another firm. Now, this seems like common sense, but many associates do not do this, for a variety of reasons. It can be awkward to ask for a transfer, especially if that transfer request is denied (and the associate thus can feel like a lame duck in the firm, with his partners knowing he is looking to lateral to Asia soon). In many cases associates who consider a counter offer upon giving notice genuinely had no idea their firm had a place for them in Asia (in many of those cases, the firm did not, but it is going to make room because the alternative is to lose the associate altogether).
The biggest problem is that most associates do not want to give notice so quickly after accepting another firm’s offer or planning to accept another firm’s offer. Of course, if an associate informs their new firm that they are considering another offer, then they are in effect giving notice at that point that very soon they will be making a decision on whether to leave the firm. If they do in fact make the lateral move it will now not be possible to remain at the firm for another month or two or three (2 to 3 months off before start dates are common in US to Asia moves) while they wait to start at their new firm in Asia (or towards end year while they wait for bonus from their current firm).
Whether intended or not, the perception created is a very bad one when an associate waits one to three months (after accepting another offer) to give notice to current firm and then actually considers a counter offer at that time. It can damage one’s reputation in what are relatively small communities of US biglaw attorneys in a particular Asia market, such as Hong Kong, Beijing, Shanghai, Singapore and Tokyo.
Keep in mind that your hiring firm would have by then given you a lot of flexibility on your start date and would have been relying on you to join them for months (common in US to Asia moves). Especially at end year, firms are sometimes very generous and flexible regarding the push back of start dates for four months, so an associate can get a full year-end bonus. Most importantly, the hiring firm has, in a very competitive recruiting market, chosen you over several other very well qualified candidates. Accepting an offer only to turn it down one to four months later creates a situation where the hiring firm no longer has alternate candidates available and has to thus start a search all over again – what can be up to a six-month process. The hiring partner can be embarrassed, frustrated and / or not all that happy with the recruiter involved. There were other candidates who wanted the spot but were turned down because you accepted the offer. Least important, but still something to consider, is that your recruiter’s reputation can be negatively affected, she may have been representing the alternate candidates as well, and obviously a placement fee is lost. Basically, a lot of people are affected by your reversal months later.
Whether intended to be or not, the perception is that the associate is acting in a very selfish manner, especially if they wait days or even weeks to notify the hiring firm that they are considering a counter offer by their firm (it has happened) and while considering the counter offer, simply refusing to answer the hiring firm’s admin emails re work visa, etc. (it has happened). Sometimes the situation can even rise to the point where an associate is considered to be acting no only selfishly, but in a very immature manner (and this perception is of course not lost on even the current firm partners who are trying to recruit the associate to stay).
How should the hiring firm handle the inevitable counter offer? Although the situation described above has been commonplace in ’11, it is still a very new and temporary phenomenon in the market, so there are plenty of US partners in Asia who have not deal with it yet, at least from a hiring firm’s point of view.
A hiring partner should keep in mind that nearly 100% of the solid US associates moving from US to Asia receive this counter offer in ’11. Thus, if there is no counter offer, that should represent a bigger problem, for obvious reasons. Also, about 80% of the associates receiving such counter offers, after giving notice, do in fact consider the counter offers. Less than 10% of these actually reverse and revoke the acceptance of their offer to hiring firm and remain at their firm.
So the odds still greatly are in the hiring firm’s favor. But commonly and understandably, the hiring partners are dismayed by having to re-recruit the new hire and not at all happy with how things have been handled by the new hire. It is important at this point, though, for the hiring partners to understand that this re-recruitment is simply a part of the process now, at least in ’11, and it is going to happen in most cases of US associate US to Asia moves this year. As hard as it may be to do so, the hiring partners will need to enthusiastically re-recruit the new hire, at least for a few days. Of course if the hiring partners feel the situation has been handled so poorly by the new hire, in a way that brings into question their character and maturity, then it is best to revoke the offer.
It is recommended though, if you are a hiring partner in such a situation and do not feel that your new hire has crossed the line where you will question their character, then you should consider the consequences of revoking the offer or not being interested in vigorously re-recruiting your new hire to continue to come on board. It is usually a mistake to assume that the new hire is per se no longer excited about coming on board just because they have allowed their current firm to present a counter offer and promised to at least consider it (it can be hard for an associate, especially junior to mid-level, to refuse to even listen to a counter offer, especially when it is presented in such a flattering way, as has been common in ’11).
Keep in mind that the new hire’s current firm partners, when giving a post notice counter offer, are counting on the hiring firm’s relevant partners in Asia to quickly grow weary of the situation and the new hire process to simply blow up, by default. This is just part of recruiting US to Asia in biglaw in ’11. The current firm will have the entire notice period (and inevitably the partners ask the associate to extend a week or more) to recruit the associate to stay on a daily basis. It can be awkward and difficult turn down such attention and counter offer, one that continues for weeks (alternatively, if the associate had approached their current firm when they received the offer from the hiring firm, then the current firm would have only had until the offer deadline to present its case).
The hiring firm will have to counter this and the hiring partners have a choice to either revoke the offer or enthusiastically re-recruit the new hire to continue to follow through in joining the new firm (if they choose the latter, do it 100%, not half-way, as hard as it may be to not be weary of and frustrated with the situation). It’s simply a matter of accepting the way the market is and that re-recruitment is going to be necessary this year in many cases of US to Asia moves (and likely in at least some in ’12 and ’13). Whether we like it or not, the vast majority of associates in these situations will consider their current firm’s flattering counter offer to remain and transfer to Asia with the current firm. Most of these associates genuinely believed there was not a solid spot for them at their current firm in Asia or they would have asked for a transfer (in some cases they already had and were turned down or told it would be a while off in the future, whereas when they give notice they are joining a competitor, magically a very strategic need exists at current firm for the associate in Asia). In most cases, there is a reasonable explanation for the situation and the associate is still very excited to join their new hiring firm and will join their new firm. Their decision in fact had already been made when they accepted their offer.
However, if the current firm has a few weeks to recruit the associate to remain and the hiring firm does very little during that time to re-recruit, then there is, in our estimation (based on what we have seen in the market this year) about a 40% chance the associate, who seriously considers a counter offer upon giving notice, will remain at their current firm and revoke their offer acceptance. While we estimate that the post notice counter offer acceptance rate is less than 10%, it is lower in cases where the hiring firm did take pro-active steps to re-recruit the new hire.
At Kinney, we have dealt with this situation 22 times this year in US to Asia associate moves (with associates considering their post notice counter offers, at least for a day, in varying degrees of seriousness). Two associates did in fact revoke their offer acceptance and one hiring firm revoked the offer of an associate who decided to consider a counter offer. The fact is most associates in these situations are going to continue to join their new firm.
This post notice counter offer issue of ’11 does not come into play nearly as much with lateral moves within Asia. This is due to notice being given much sooner after offer acceptances and also due to the fact that a current firm cannot sell a dreamy ideal situation for the associate way off in Asia because the associate already has experienced that firm’s office in his preferred Asia market. It is simply a much harder counter offer to sell, not that the counter offer is an easy sell for US to Asia moves (as is evidenced by, in our estimation, the less than 10% acceptance rate).
