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ANALYSIS: BLS Jobs Predictions Optimistic; Legal Unemployment Up

Sept. 4, 2020, 5:17 PM

This week, the U.S. Bureau of Labor Statistics released unemployment data for August as well as its 2019-2029 Employment Projections. So we have a bit more data than usual to discuss this month.

The BLS believes that legal occupations are going to grow about as fast as all U.S. occupations between 2019 and 2029, with big gains seen in non-lawyer positions—especially paralegals and legal secretaries. However, these paraprofessionals have not yet begun to realize significant gains. And unless lawyers learn to more effectively utilize individuals in those roles, the projected growth may never materialize.

And that August jobs report is showing that, as an industry, hiring continues to favor White male workers. On a positive note, overall jobs increased in legal occupations, indicating we may be seeing hiring in corporate legal departments. On the negative side, unemployment levels are rising.

BLS Is Betting on Paralegals, Perhaps Optimistically

Between 2019 and 2029, BLS expects that pricing pressures will result in law firms staffing projects with more paralegals and legal secretaries. The predicted result? A 10% increase in paraprofessional employment. However, for this to occur, a significant change in the legal industry would be required.

As reported on July 31, legal occupations employment has been shifting away from lawyers this year. Non-lawyers in legal occupations experienced a 3% increase in employment over the first half of 2020, while lawyers saw employment decrease by 15%. However, paralegals and legal secretaries did not share in the employment gains, as might have been expected. Instead, like lawyers, they experienced a decrease in employment over the first half of the year. Second-quarter employment was 6.7% lower than fourth-quarter 2019 levels.

The BLS expects employment in legal occupations to increase between 2019 and 2029 by 5%. It projects lawyer employment will grow by 4%, similar to the 3.7% growth projected for all occupations. But non-lawyers in legal occupations are expected to see a greater-than-average employment increase, with paralegals and legal secretaries projected to see the biggest gains.

The Employment Projections report notes that these are “long-term projections intended to capture structural changes in the economy.” They do not, however, include Covid-19 impacts. As such, they likely fail to capture the permanent effects expected to result from new and extended remote work situations, such as the increased acceptance of technology.

Paralegals may suffer in a remote-work environment, since individuals now need to make a more concerted effort to identify and include them in projects. Paralegals often struggled to be fully integrated into legal teams pre-pandemic, and this additional hurdle may result in them receiving less work. So while predictions that price competition for legal services will increase over the next decade are unsurprising, and downward pressure on the cost of legal services is only intensified by the current recession, this downward pressure does not necessarily translate into additional work for paralegals. This is supported by Bloomberg Law’s recent reports that pandemic-related layoffs continue to hit professional staff in even the largest firms.

There are, of course, numerous ways to meet demands for lower-cost legal services. Increased use of alternative fee arrangements and legal technologies could help meet the demand. Bloomberg Law has also repeatedly reported on increasing competition from law companies, including the Big 4 accounting firms. Less frequently discussed is how paralegals and legal secretaries can be more effectively utilized to reduce costs and improve efficiencies.

If the legal industry shifts attention to more effective staffing and project management tools, integrating paraprofessionals and other support staff more fully into legal matters, the BLS predictions for significantly increased employment of paralegals and legal secretaries by 2029 may be possible.

July Gains Reversed in August

While overall U.S. unemployment rates dropped (on a seasonally-unadjusted basis) by 2 percentage points, legal occupations did not share in the joy. In fact, the legal occupations unemployment rate for August reverted back to the June rate of 4.1%.

With respect to actual employment figures, legal occupations data showed a slight increase in jobs, while Bloomberg Law reported that August’s establishment data showed no job increases in the legal services industry. For a summary of the two types of data reported by BLS in its monthly report, take a look at Robert Combs’s analysis published yesterday.

So what can we conclude? First, it appears that legal services organizations (primarily firms) did not increase hiring in August. No shock there. Second, individuals working in legal occupations continued to find opportunities—perhaps starting new businesses or working in organizations not categorized within the Legal Services NAICS code (541100). So corporate hiring of legal professionals may be increasing! And third, more people are looking for jobs in legal occupations. This could be a result of new law school graduates entering the job market. Or it could mean that individuals are returning to the job market after taking some time away. Likely some combination of the two are reflected in the data.

If you want to know which categories of individuals saw the most increase in legal occupations employment in August, the answer is White male workers. Both African American and Asian workers lost jobs (both as a percent of total legal occupations and on a real basis). Women lost of bit of ground, while men gained more than 60,000 jobs.

I guess old habits are hard to break.

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