H1 2026 was a selective market, not a slow one. The firms and practice areas tied to private credit, complex financing structures, and distressed work stayed busy. Those relying on broad-based strategic M&A found conditions more uneven. The defining characteristic of H1 was not volume but specificity. Firms wanted associates who could step into active, specialist practices and contribute immediately, and they competed hard to get them.
Hiring Demand
Finance-related practices drove the strongest lateral hiring activity in H1, rather than traditional broad-based corporate work.
Leveraged finance, private credit, structured finance, liability management, and restructuring-linked capital solutions were consistently active. Firms with strong private equity and private credit platforms stayed busy advising on refinancings, rescue financings, continuation vehicles, and hybrid capital structures. Several expanded their restructuring and capital solutions teams in direct response to sustained client demand.
Traditional M&A was more uneven. Upper-middle-market sponsor work held up, but broad-based strategic M&A hiring became more selective.
"Firms were willing to hire laterals with niche financing experience, but not generalist corporate associates with a broad skill set. The market rewarded specificity at every level."
- Andrea Zdralea, Business Director, Henderson Scott Legal
Financial services disputes, investigations, bankruptcy litigation, and regulatory-facing litigation teams maintained steady demand.
Firms increasingly sought associates who could operate across disputes, investigations, and financial regulatory matters rather than siloed litigators. Employment remained active around executive mobility, restrictive covenants, and workforce restructuring. The preference for mid-level and senior associates who could contribute immediately was one of the defining trends of the period.
Talent Availability and Compensation
Associates in high-demand practice areas entered H1 with real leverage, and they used it.
Milbank's June 2026 salary increase reignited compensation discussions across the market, raising associate salaries by between $10,000 and $20,000 depending on seniority. But base salary was not the only variable. Guaranteed bonuses, sign-on packages, accelerated reviews, and hybrid flexibility all became active parts of negotiation. Firms that could not compete on base leaned into these levers with varying degrees of success.
What associates were actually evaluating was more complex than compensation alone. Mid-level associates at below-market firms compared workloads against peers at Cravath-scale firms and questioned whether the pay differential justified the difference in experience and advancement opportunities.
Counteroffers became increasingly aggressive in H1, prolonging hiring cycles without resolving the underlying reasons people were considering a move.
"What firms need to realize is the interview is a two-way process. With in-demand candidates it's really important to sell the company and the opportunity, be transparent about what you can offer, and be open to negotiation. The firms that understood that secured the talent. The ones that didn't lost candidates late in the process."
- Andrea Zdralea, Henderson Scott Legal
What Candidates Were Looking For
The most consistent theme across H1 candidate conversations was concern about long-term platform strength and career trajectory rather than immediate compensation.
Associates wanted more meaningful work, more predictable workflow, a clearer path toward partnership, and genuine client exposure.
"I hear a lot of associates complain about being either severely overworked in understaffed specialist groups or underutilized in slower practices with little transparency around future workflow. Both situations drive movement, just for different reasons."
- Andrea Zdralea, Henderson Scott Legal
Firms that attracted the strongest candidates in H1 were those that could speak specifically about partnership economics, advancement timelines, and what a realistic career trajectory looked like. Vague answers to those questions became disqualifying rather than simply unsatisfying. Process speed was the other defining challenge. Elongated interview rounds, delayed partner alignment, and conflicts checks created friction that cost firms candidates who had multiple options and no reason to wait.
H2 Outlook
The market is expected to remain strongest in leveraged finance, private credit, restructuring, funds, capital solutions, and financial regulatory work. These are not temporary conditions. They reflect a sustained shift in where law firm revenue is being generated and where firms are investing as a result.
The biggest risks in H2 are losing candidates due to slow internal processes, retention fatigue in overworked specialist teams, and associates losing confidence in partnership economics and long-term visibility.
"The firms likely to outperform in H2 will be the ones treating hiring as a strategic growth function rather than a reactive replacement exercise. Have a faster interview process, be clearer with advancement narratives, and provide transparent compensation structures."
- Andrea Zdralea, Henderson Scott Legal
Starting lateral conversations now, rather than waiting until a role becomes urgent, is the difference between a strong shortlist and a difficult search.
Firms hiring into leveraged finance, private credit, restructuring, and related practices are already competing for a relatively small pool of proven talent. Understanding where competition is building before a search begins will be a significant advantage in H2.
The Henderson Scott Legal team can share what the market looks like for your specific practice area and seniority level before you enter the process. Reach out directly to start the conversation.