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Happy to hear from others without naming people. Not looking for specific instances, but all law firms as a whole.
At the end of the day they need to make money, so they are not going to willingly hire dead weight unless you are the progeny of a big fish.
Considering majority of the law firms are family owned and operated, including Tier-1 law firms, not a surprise that nepotism does exists.
Overall at the junior level and freshers, majority of the cases are on merit but you will find 1-2 cases where someone related to a client or other big-wig is hired. That is understandable but Tier-1 law firms have balanced out and majorly hire on merit.
1. Nature of work and Scope of Career Growth: Litigation, depending on any practice area, allows you to explore the nuances of the law in detail, argue the case for someone, or defend someone in say a losing case, and help contribute to the law and its growth. It is the reason why law is called a noble profession. Law firms, instead focus on work which are restricted to a set domain where you don't have any such serious application of mind and creativity, and mostly is monotonous in nature. On career, anyone successful in litigation has various doors which gets opened to him/her - empanelment, Judgeship, and the constitutional posts of AG/Adv General/etc. Of course, you also have senior designation coming their way. In law firms, you do nothing other than becoming a Partner.
2. Money - Yes, law firms usually pay much more, but that's true only for the first few years. Take any two similarly successful lawyers in a law firm and litigation - you will see the former outearning the latter by a huge margin in the initial years. However, 10-15 years down the line, that reverses. The counsels start outearning the partners. By a huge margin.
3. Nepotism - Law itself is a profession known for nepotism. Is nepotism now not there in other fields? Yes they are. Do they complain? Maybe, may be not. Irrelevant. However, you see the law firms are equally into nepotism since they are family run firms mainly and secondly, they would have someone coming from their family or have to please a client and hence bring in someone there. Litigation is a leveler - yes, nepotism gives a headstart - but they only help inthe initial years - you may get a chamber, may have money, may get clients/briefs - but, after a few years, if you, despite having all of these - still cannot work hard, you'll not succeed. So, despite the notion that nepo babies are lucky - which they are - they make their own careers. And it is not that every nepo baby has succeeded. There are multiple failures too. Obviously, names cannot be taken here, but you go to any court and ask around - you'll get answers.