Initially, firms look at the credentials that are both the most tangible (or easily measured) and the most accessible, as they are normally contained in an associate's application. These include the prestige of the an associate's law school, their grades and class rank, the prestige of their current law firm (or company if in house), their billable hours, their practice area and their class year. The associate's undergraduate record is also considered, but this is usually less important.
Top law firms look for associates who attended law schools that are typically ranked in the top 25, and more preferably in the top 10. While the exact ranking order of top law schools varies, there are three law schools that stand apart from the rest. These are Harvard (most often #1), Yale and Stanford. These three schools are usually followed in varying order by other top law schools such as Chicago, Michigan, Columbia and Virginia. Generally speaking, the higher rated the law school, the less importance is given to grades and class rank. The reverse is also true. These means that associates who did not attended a top law school will usually need high grades and/or class rank (including law review) before a top firm will seriously consider them.
Similarly, law firms look at the prestige of the associate's present law firm. As with the top law schools, some law firms are more top than others, and their ranking vary. Nevertheless, and again as with top law schools, there are a certain firms that are consistently cited among the best or very best (Kirkland and Skadden come to mind as obvious examples). For example, the AmLaw 200, which includes the 200 largest firms in the nation as determined by the American Lawyer magazine, is considered to be a general indicator of top law firms. There are also some exceptional smaller firms that are widely thought to be among the top. Firms are also interested in the associate's number of billable hours because it demonstrates work ethic.
With respect to practice area, a law firm's level of interest in an associate will be affected both by the general level of demand in that area as well as the particular firm's needs in that area. Associates that happen to be in a more hot area are thus more likely to obtain attention from law firms. Finally, firms also take into account the associate's class year. This is because law firms tend to favor associates who have been out of law school no fewer than 2 years and no more than 5 years. As a result, associates that are only 1 year or less out of law school or are 6 years or more out of law school will usually generate relatively less interest from law firms.
Once a firm does decide that it has interest in an associate based on these preliminary tangible credentials, the firm will then evaluate several more intangible credentials through interviews, references and the like. These more intangible credentials include intellect, general writing and lawyering ability, personality, charisma, teamwork, ethics, motivation, drive and fit.