Hiring/Staffing Trends in the Legal Market

Law Practice Today, September 2013

Moderated by Nick Gaffney

Authors of the most recent World Happiness Report, issued earlier this month by the United Nations’ Sustainable Development Solutions Network, found the world to be a happier and more generous place than where the planet stood five years ago. One wonders if their research extended to the legal field, which has been more sporadic than sustainable, and whose job seekers have gone through greater pains than their predecessors to find employment.

The legal services industry has seen significant changes since 2008, some prompted by the recession, and others a result of the evolution of the market for legal services. Those hiring lawyers or other legal professionals are being more selective about whom they hire, while candidates are also more discerning about which law firm or organization they join, seeking non-contract positions at firms that have demonstrated stability.

We held a discussion with a sampling of recruiting specialists to explore whether the current trends in the legal market will be lasting ones. We would like to thank the following participants for taking the time to weigh in and share their observations:

The below summarizes how the recession has changed staffing/HR and what we can anticipate in the future.

Legal Hiring Mirrors Industry Rebound

While the recession brought legal services hiring to a standstill, the ice has begun to thaw in areas that echo the economic turnaround, according to Delia Swan, founder of Swan Legal Search, who noted a rising tide in areas such as real estate, intellectual property, healthcare, energy, and antitrust litigation. Julie Lacouture, principal of Mom Corps, mentioned a similar increase in positions that help businesses. “In addition to more attorneys and paralegals, we are seeing more demand for business development professionals and marketing experts,” she said. “Our clients are ready to grow their firms.”

However, some of this is simple market correction – with the real estate market depressed for so many years, the number of real estate lawyers decreased. Now with the rebound in the commercial real estate market, Swan observed, real estate lawyers are a hot commodity, but there aren't enough with the desired “mid-level” experience to satisfy the growing need.

The legal market rides the tail end of shifts in the economy, explained Ann Batcheller, director of business development at Providus Group. “Reports indicate that legal hiring is beginning to trend up, and yet we continue to see a focus to save and conserve resources via outsourcing, conservative hiring and asking existing attorneys and paralegals to handle more responsibilities to make up for the deficit.”

“As a nonprofit legal services organization, we are not yet seeing a recovery from the recession from a funding standpoint and therefore in our hiring,” said Alison Brunner, CEO, Law Foundation of Silicon Valley. “We are hiring at about the same rate as last year since we are generally only able to hire for attrition. Even now, we evaluate whether we can delay hiring for some positions to save expenses. In general terms, although our program work is expanding in some areas we are not adding headcount. We have been working to leverage greater pro bono assistance to meet the increased demand for legal services by low income clients.”

Job opportunities at law firms have returned on a case-by-case basis, according to Tiffany Hedgpeth, an attorney at Edgcomb Law Group, who pointed out that while large law firms have been slow to recover, boutique firms have found new avenues for business.

“At least in the field of litigation, the legal services market does not appear to be recovering at any appreciable rate,” Hedgpeth said. “Clients have become very conscious about how their money is spent and many have rejected the old model of paying high hourly rates and having a team that is comprised primarily of junior lawyers with little experience.”

Hedgpeth’s firm Edgcomb Law Group is one of the aforementioned boutiques benefitting from clients’ changing valuations for legal services. “In the past few years, clients have increasingly shown their unwillingness to pay large firm rates and have opted to use boutique firms that provide more flexibility,” she said. To meet the increased demand, Edgcomb Law Group expanded its practice earlier this year and opened a Southern California office, adding two new partners, and they anticipate bringing more on in the near future.

Lessons From The Recession

While each participant said they’ve noticed the legal industry heighten its collective conservative nature as a result of the recession, some noted the positives of the situation, such as a more studious approach to hiring.

The nonprofit legal world has seen benefits from the recession when it comes to hiring. Brunner’s Law Foundation of Silicon Valley remarked, “We have definitely enjoyed the competitive pool of applicants for open positions. We have also enjoyed a higher retention rate for our current staff.”

“Every open position is scrutinized more closely as firms seek to raise their game with better candidates operating more efficiently,” Swan said. “Excellent candidates remain in high demand, while more average candidates who might have done well in better times tend now to get passed over.”

Batcheller noted that many of her clients hesitate to hire on a full-time basis when they have an influx of work, instead on a contract-to-potential-hire basis, so that the client can be certain they will retain the business or peak in workload, and to be sure the person hired is the right fit. Relying on a pool of project-based and/or part-time employees has resulted in a significant competitive advantage for the industry in Candidates v. Firms. The shift has also created a second life for the formerly passed over, such as working moms, who Lacouture said make for a lot of win-win solutions.

Whether this new model will be successful and how it will impact client service is still up in the air, Hedgpeth said, but what is abundantly clear is that planning large summer and first-year classes one or two years in advance is inefficient. “Clients just don’t want to be paying a lot of money to have inexperienced attorneys working on their projects.”

The quest for efficiency will also lead to more specialization within law firms, a smart business practice whether in good or bad times, Batcheller said. “There is a trend in law firms and corporations to focus on their core business, rather than trying to do everything themselves.”

“I believe this is a true inflection point for the industry,” said Brunner, “As a whole, the private legal market has truly changed due to increased competition and outsourcing of some traditional legal functions. This has made the field even more competitive, and my understanding is that it has started to put pressure on the entire field from the law school enrollment perspective.”

The Ideal Candidate, 2013

Those that manage to break through the crowded field are from top-flight law schools and upper-crust firms, and boast solid client development skills. “There's just not as much room for the average, journeyman hire,” Swan said. “Every firm wants partners who can sustain themselves, and better yet keep an associate or two busy.

While firms are still hiring associates as positions open, firms tend to retain recruiters only when seeking top talent, due to the abundance of young lawyers available. Firm prioritize partners and sort out associates and staff at a later date, a food chain created by the economics of the different roles. “Partners with books of business are revenue generators. Once business increases, there is still the need to leverage associates. Staff hiring is at the end since they typically cannot charge out their time,” Batcheller said. On the partner front, firms are placing the portable client bar at around $1-2 million, and sticking to it, according to Swan. “In a buyers' market the firms can afford to be fussy, and they are.”

But just as the employers are jilted from the recession, their candidates maintain a level of hesitancy too, wanting to be sure the firm they commit to will exist in the future. Candidates also want assurances that they won’t solely be brought in to churn the bill and will possess a degree of flexibility. Lacouture’s firm, Mom Corps, found in its recent Labor Day survey that 73 percent of job seekers say that flexibility is one of the most important factors when looking for a new job, with another 45 percent of working adults in the U.S. willing to give up some portion of their salary in exchange for more flexibility at work.

While it is understandable to prefer to move forward with firms that demonstrate a willingness to invest in their candidates, Hedgpeth emphasized that applicants cannot be too picky, given the state of the market, especially at the junior level.

“Attorneys and staff cannot expect that they will be able to find employment with a large firm that pays giant salaries and will offer a long career,” she said. “There are many different opportunities in the legal field, and attorneys and staff need to keep their eyes and minds open to such opportunities.”

The ideal candidate then, when education and previous experience are indistinguishable among the pool of applicants, is one who can make a case for him or herself fitting into the culture of the firm. Lacouture said firms need to be convinced that the candidate can be successful within their existing firm structure.

“Lawyers and staff that have an entrepreneurial spirit will do quite well,” she said. “The firms that are doing the best are the ones that invest in their staff and empower them to make connections, bring in new business, and work in partnership with other firms. This diversification of referral networks takes hustle.”

Being selected for a coveted role is about quality, presentation, and assimilation; and the cream always rises, Swan said.

Nonprofits have a little different take, explained Brunner. She strongly prefers candidates with a demonstrated commitment to public interest law and social justice. “For our direct services positions, we look for prior experience working with low income and/or special needs populations,” she said. “Additionally, we place a premium on a candidate’s abilities to identify, investigate and resolve client problems; to analyze, write and present ideas and legal concepts clearly; and to research, negotiate and litigate legal issues.”