2020 Current State of the Legal Job Market
The Legal Sector had a net loss of 1,700 jobs in March. Job losses accelerated in April and May to 68,000. Mid-May to June saw a slight rebound with slightly over 1,000 new Legal Industry jobs. Most law firms are opting to cut or furlough non-attorney staff versus attorneys, including legal secretaries, file clerks, receptionists, office managers and operations professionals. That trend is very different than the recession of 2008/2009 wherein both staff and attorneys were laid off, but the associate level attorneys in certain practice areas bared the brunt of the headcount reduction at private law firms. Larger legal industry employers (AmLaw 200) this current recession are avoiding attorney layoffs and opting for pay reductions for all attorneys with a tiered cut starting as high as 30% at the Partner level on a declining scale based on status and compensation level, down to a range of reductions for associates that is anywhere from 10-20% depending on the firm.
Some firms are deferring compensation rather than cutting salaries (or draws) and bonuses/distributions, furloughing non-billable staff and redeploying attorneys in slow practice areas to higher demand teams. There have been a few firms that have furloughed entire groups in slow practice areas, but the preferred method is redeployment.
From the perspective of a legal recruiting business, Lucas Group’s Legal Division saw a large decline in revenue YOY in April. Similar results are expected in May & June with the majority of the pre-COVID clients engaged in searches from February and March put “on hold” due to uncertainty. Layoffs, whether staff or attorney, creates an opportunity for recruiters to backfill openings with temporary or permanent legal talent when the demand for legal services resumes and firms need to service clients. Firms with stronger cash positions are seeking acquisition targets, practice groups or Lateral Partners with books while firms in a weaker financial state are seeking a life raft through merger or acquisition.
What area(s) are first to Rebound
Litigation is slowly rebounding. The first week in May saw federal filings uptick to rates of 2019 after plummeting since mid-March. Ney York, New Jersey and Seattle have seen the most pronounced rebound. Specifically, patent, securities and insurance litigation filings are up with business loss claims expected to surge in the months to come.
Hot Industries and Practice Areas for Legal Professionals
Labor & Employment – Counseling & Litigation
- Reduction in Force Counseling; wrongful termination – WARN ACT
- Risk Evaluation and counseling associated with Work from Home workforces
- COVID specific issues for employees’ returning to work and related Workers Comp
- Monitoring changes to state and federal regulations Counseling on OSHA, FLSA, Immigration (Unions on Alert)
- Privacy concerns related to temperature taking and health disclosures (HIPPA)
Insurance, Real Estate & Construction – Commercial Litigation
- Force Majeure
- Coverage/Reinsurance – Business Interruption/Supply Chain
- Fraud & White-Collar Litigation due to stimulus money misappropriation
- Commercial Foreclosures
- Commercial and Residential Evictions
- Healthcare (insurance coverage – medmal, personal injury – nursing home liability)
Life Sciences & Intellectual Property
- Patent Prosecution in pharma sectors
- Clinical Trials & Drug development
- FDA Regulations
- IP Litigation
Banking/Financial Areas
- Insolvency/Workouts/Restructuring/Bankruptcy
- Advising on stimulus packages, CARES ACT, SBA/PPP loans
- New SEC Guidelines for banks
- Tax/Trusts & Estates
- Private Equity/VC
- Collections/Abatement