Marketplace Update: October 2022

Winter is coming and along with it news of soaring inflation, rising interest rates and energy price concerns. But what impact does the macro-economic news have on law firms as we enter the final quarter of the year? Does the news equate to bad news for law firms – and what is the impact on recruitment?

Here are some of our thoughts and feedback for the forthcoming quarter:

• There is still fundamentally a staff shortage across all areas from partners and associates to business services. This is a combination of increased (post Covid world) challenges of staff retention coupled with a shortage of suitable candidates on the labour market. Job vacancies remain high across all areas and levels. Whilst the numbers of job vacancies alone doesn’t tell the full picture (vacancies may remain unfilled if the bar goes up), there has not been any lull in new demand;
• Coupled with this is a lesson learnt during the pandemic – plenty of law firms reacted quickly with redundancies and recruitment freezes only to find themselves struggling to backfill once the market roared back to life and suffered real staff shortages to service increased workflows. Short term recruitment models are expensive, time consuming and damage culture;
• Flexible working is still very much here to stay and remains a challenging focus for law firms and a priority for candidates looking for a new role. Firms have clarified what this means for them. The general consensus is currently 3 days in the office and 2 from home. The challenge is often how this is enforced for different levels of staff. It has become a key motivation for candidates when considering a new firm to join and allows differentiation – as well as opening up other job routes if private practice becomes too intransigent in demanding presence in the office;
• Feedback from law firms is workflows have maintained in most areas. There is definitely a degree of caution in the air with transactional work and we will see how this translates at the quarter progresses, but the counter balance of litigation work remains high;
• Law firms fundamentally are looking to increase revenue and profit, have a move diverse partnership and grow in new sectors and new markets. The quickest way to achieve all these is through laterally hiring partners and considering team moves and mergers to gain quicker and more sizeable growth. We remain incredibly busy with daily new instructions;
• One increasing challenge law firms are starting to face is retirement age. Traditional models of retirement ages of 60-65 may not fit the bill for partners wanting to continue working beyond those years and whilst several US firms are currently benefitting from attracting these partners, will the UK firms adapt to ensure that another route to lateral hiring isn’t ruled out?