Employment activity in the legal sector coming out of Covid

October 15, 2021

Chris Lipscomb (BA, MSc, FCIPD) COO Blue Pencil

As has been the case with other recessions most notably 2008/9, the legal sector has managed to cope comparatively well with the business impact of Covid 19. Whilst many small businesses particularly in the hospitality, retail and travel sectors have suffered major financial setbacks with some estimating that as many as 15% of related SMEs have ceased operation, fewer than 10% of law firms have even had to make redundancies. The ONS business survey actually showed that the annual turnover of legal services in the UK in 2020 remained broadly similar to that of 2019. Whilst profits for Partners were not as high as 2019 when the sector was doing exceptionally well, the hit has been marginal.

Our own experience and discussions with Partners across a range of client firms show that if anything, business is bouncing back sharply which in turn is now creating resourcing issues. Law firms have been quick to adapt to new ways of flexible working with almost all main players offering mixed patterns of home and office working. However, as has been the case with other sectors, it seems that some lawyers have used Covid as a prompt to leave the profession by taking early retirement or have used it as an opportunity to reduce their hours. An article in Bloomberg Law (10 May 2021) points to an exodus, in particular, of female lawyers who have found it doubly challenging trying to juggle family and work. The general sense of instability created by Covid has also paradoxically led to a shortage of candidates for roles, as many lawyers have opted to put off any moves for the time being until there is more stability in their lives. This is understandable given that we are still working our way through to the other side of the pandemic with the inevitable odd health scare hitting us along the way.

However, along with a business bounce back, we are now seeing the early signs of movement coming back into the legal employment market. Some of this has been fuelled by rising living costs which is focussing minds on salaries. However, there has also been a recognition that careers cannot be put on hold indefinitely. There is now a rekindled thirst for new opportunities at home or abroad. To paraphrase an old adage, at the point you are about to leave this world, you rarely look back and wish you had spent longer in the same place. This sentiment is not lost on the legal profession either.

For recruitment firms such as ours, the signs of movement are very welcome as clients urgently need high calibre candidates to try and contain workloads at tolerable levels. In some parts of the world, restrictions on movement are still creating difficulties for selection processes but we now see these beginning to recede. However, if there is one message I would give Partners in law firms, it is that they need to be mindful that selection is a two-way process. The days of some law firms feeling that candidates should be honoured to work for them are gone.  The pandemic has made people realise that it is how you are treated during the challenging times that really marks out the best employers. Like marriage, employment is a relationship and if lawyers feel that they are only going to be treated like machines to turn out billable hours, they will vote with their feet. If law firms want to attract and retain employees, they need to “walk the talk” more than they have ever done before.

We are predicting record levels of hiring activity in the final quarter of this year. This level of activity will continue to gain more momentum in 2022 as businesses reconfigure their resources to meet the new demands of a post covid world. “Playing catch” up will create tremendous pressures as well as opportunities for those who are prepared for the ride.

According to the UK Legal services Market Report 2021, over half of all law firms are expecting volume growth in the next 12 months. The report envisages the legal service market growing by 4.4% this year and then at a higher rate in 2022 which is ample evidence that the legal employment market will remain buoyant for a long time to come.