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Like virtually every other industry, the legal sector felt the initial shockwaves of the pandemic. Earlier last year, law firms pulled the trigger on layoffs, furloughs, and pay cuts, while certain practice areas saw a slow-down in work as clients sought to reduce spending.
And, while legal recruiting didn’t escape unscathed, especially in the earlier months — total hiring in 2020 was down by almost 28% compared to the previous year, per data from Firm Prospects — the situation quickly stabilized.
“The legal industry as a whole has realized that it hasn’t been hit as hard as everyone thought they would’ve been,” said Meredith Frank, a partner at the recruiting firm, Major, Lindsey & Africa. “They got through it stronger than they would’ve expected.”
While hiring in the last three months of 2020 was 28% lower than the same quarter in 2019, total law firm hires saw an uptick of 44% from the third quarter to the fourth quarter last year, according to Firm Prospects — signaling a positive outlook from firms.
Law firms were able to do this by taking immediate measures to manage and preempt the anticipated impact of the pandemic by doubling down on billing and connections, Frank explained. Actions like implementing pay cuts, furloughs, and hiring freezes helped, too.
The overall stability of the legal industry led most law firms to resume hiring by the middle of 2020 — and to prove they’d still pay good money for prominent lawyers who can bring in big business.
Insider spoke with seven prominent industry recruiters about five important trends in legal recruiting in a year that was heavily defined by a global health and economic pandemic — and what this means for the year ahead.
‘Cautious optimism’ in the legal sector going into 2021
Law firms have fared well in weathering the onset of the pandemic’s storm, recruiters agree.
Certain sectors, like technology, healthcare, and life sciences have especially seen robust demand, as has bankruptcy and data privacy, said Karen Andersen, a managing director at Major, Lindsey & Africa’s partner practice group. Capital markets and corporate work have been “plugging along,” too.
Law firms were able to come out okay in terms of overall revenue by the demand generated in these practice areas, as well as by reducing overhead costs with remote work, said Jesse Hyde, director at Lateral Link. He added that corporate activity “really picked up” in the fourth quarter, as evidenced by a boom in IPOs and “blank check” companies, for example.
These practice areas will continue to see a surge in demand in 2021, said Andersen and Hyde.
“The whole industry was able to turn on a dime and adapt to the situation,” said Andersen. “I would say there’s cautious optimism in the legal sector going into 2021, especially with the vaccines that are coming out. There’s a very vibrant demand for legal services.”
A shift toward highly strategic lateral recruiting
This past year has seen a “major shift” in focus by most law firms to what Major, Lindsey & Africa’s Frank calls a “highly strategic approach to recruitment,” as opposed to more of an opportunistic one.
Given the industry-wide squeeze in cash flow, firms only looked for candidates that would immediately add value: Frank said she saw a huge uptick in requests for restructuring and bankruptcy, healthcare and regulations, and labor and employment lawyers.
“We also generally continue to see requests for various litigation-type practices, primarily in the white-collar space,” said Frank. The past four years under former president Donald Trump Jr. has seen a substantial cutting of red tape on regulations, and government enforcement and investigations are expected to heat up again with the new Biden administration.
That said, the uptick in demand for talent came primarily from those firms that were on a more stable footing. “We saw a complete pause from some firms, while others that were financially secure took advantage of market disruption caused by the pandemic and continue to be bullish in their lateral hiring strategies.”
Another caveat is that recruiting efforts were primarily centered around “the real core” of a firm: partner recruiting, rather than associates.
“Certain firms have taken advantage of other firms shutting down completely to really work on their partner recruiting efforts,” said Lauren Smith, principal at Parker + Lynch.
However, hot practice areas such as white-collar, M&A, and bankruptcy still see demand, even among associates, said Nicole Spira, founder of Cardinal Search Partners.
“It’s going to be an extraordinarily busy year,” said Spira.
The virtual environment has made recruiting easier
The convenience and confidentiality afforded by the virtual work setting have reduced a lot of the friction when it comes to recruiting.
Because of less travel and covert visits to a competing law firm’s office, candidates had the ability to meet many more people throughout the course of the recruiting process, said Frank of Major, Lindsey & Africa.
“They’re able to get a much better sense of the firm and its culture,” said Frank.
Joshua Dull, a partner at Major, Lindsey & Africa’s Miami office, said that he was “surprised” that firms made a lot of hires without meeting them in the flesh.
The pandemic has also created the opportunity for lawyers to take a step back and reevaluate their long-term career goals, Dull added.
Diversity and inclusion will play an increasingly important role in driving hiring demand
Law firms have been taking greater steps toward boosting their diversity, an industry-wide move that was catalyzed by the renewed calls for social justice after the murder of George Floyd.
These efforts have been bolstered by pressure and incentives from large corporate clients like Microsoft and Intel, who are setting stricter diversity standards for the outside counsel they choose to hire, from the number of diverse lawyers working on matters to billable hour distribution requirements.
Law firms are also recognizing the advantages of having a more diverse workforce, said Frank.
More gender-diverse companies are 25% more likely to outperform their least diverse counterparts, while the chances of outperforming in terms of profitability are boosted to 36% for more ethnically representative companies, per a McKinsey study conducted in May.
Some recruiters, like Gloria Sandrino, a principal at Lateral Link, saw big lateral moves like those of Reginald Brown from WilmerHale to Kirkland & Ellis as indicative of firms’ heightened desire to double down on their D&I initiatives.
“Firms are factoring in diversity in their hiring decisions,” said Sandrino. “I’m hearing more and more about that from firms, and these moves show that they’re doing more than just talking the talk.”
Some in-house lawyers are considering moving back to law firms
Another interesting trend of the past year was an increasing demand from in-house lawyers who are looking to either move back to a law firm or find a similar position at another company.
“Inside counsel are typically considered cost centers to companies, so the first place they’re going to go to are law firms” if that company shutters, said Parker + Lynch’s Smith.
Legal departments have also been evolving in the last several years, creating a “new breed” of in-house counsel who are asked to wear many more hats, explained Dull of Major, Lindsey & Africa. This can lead to less job satisfaction, despite the fact that in-house gigs have historically been seen as having a better work-life balance than a job at a firm.
A move from in-house back to a law firm, however, can be “very difficult” because these lawyers don’t have a book of business they can bring with them. Plus, in-house lawyers tend to be pretty senior, and may ask for higher compensation than firms are willing to shell out, Smith said. Instead, she predicts that these lawyers will likely end up landing an in-house job at another company.