Many recall the challenges associated with lawyer careers around the Great Recession. Now we are once again facing a significant economic downturn that is impacting the legal industry, and it is already triggering some deja vu. But, while attorneys will face many of the same challenges, things will be a little different this time around.
Lack of Stability
Organizations are controlling expenses by eliminating job postings, revoking offers, canceling or shortening summer programs, and delaying start dates for new hires. Existing jobs are unstable, with layoffs, furloughs, and compensation cuts hitting attorneys. For those fortunate enough to have jobs, their workdays are being extended.
Within firms, job stability issues aren’t limited to associates. Partners are also experiencing compensation cuts, and partners with insufficient books of business are at risk of losing their jobs. When partners go, often the associates who rely on them for a substantial amount of their work go with them. Attorneys with a client base may successfully switch firms, but those without books may be left with few options.
While this may read just like the experience around that Great Recession, it is notably different in the speed at which organizations implemented changes. The legal industry’s staffing response to the current economic downturn is happening promptly, with legal occupations experiencing a spike in unemployment rates at the same time as the broader U.S. economy. In the wake of the Great Recession, legal occupations experienced numerous spikes in unemployment over a period of years, and those changes did not coincide with unemployment changes in the broader U.S. economy. So while the Great Recession hit the industry in smaller waves, this downturn is creating a large wave.
When we look at corporations, more distinctions appear. Corporations around the world have been hit hard, having to (hopefully) temporarily close facilities and deal with significant loss of revenue as individuals have reduced spending on non-essential items. The result is expected to be increased pressure on in-house legal departments to cut costs, including compensation and outside counsel expenses. While the Great Recession resulted in more in-house jobs as corporations performed more legal work internally, such a shift may not occur during this downturn. Instead of hiring to handle more legal matters internally, corporations may choose to avoid increased employment expenses by working existing in-house attorneys harder and pressuring firms to cut their legal rates or provide alternative fee arrangements. With so many corporations suffering, firms may be left with little choice but to bow to such pressure. If this happens, firm profits will drop, aggravating attorney stability and career path issues.
Lack of Career Path
It is expected that, as before, firm partners with the ability to continue practicing will respond to this downturn by deferring retirement. The result will be an oversupply of senior attorneys in firms. With compensation decreasing, workload increasing, and no path to partnership, some senior attorneys may seek to exit firms in favor of positions with more defined career paths. And those who remain in firms will likely experience a significant increase in their billable hours as they deal with attorney and staff reductions and expanding or shifting practices.
The primary incentive for firm attorneys to work extremely long hours—high salaries—is already dwindling as firms implement pay cuts. The effective lack of equity partnership options, combined with reduced salaries, may create the necessary incentive for attorneys to reconsider firm careers altogether. Firm lawyers would typically consider roles in governmental agencies or corporations as alternatives, but these may be less available during this downturn, as many corporations are struggling financially and state and federal deficits are increasing. Instead, we may see lawyers fleeing the profession entirely or, in the case of those considering entering into or recently graduating from law school, never entering the profession at all.
However, lawyers have career options today within the legal industry that did not exist during the Great Recession. Thanks to the rise of alternative legal service providers (including legal technology companies) and litigation funders, lawyers can pursue careers within their chosen field without having to work at a law firm, in-house legal department, or governmental agency. While alternative legal companies are not immune to Covid-related issues, they do provide increased opportunities for lawyers. And more innovative, creative, or analytical lawyers may find such careers—once labeled alternative, now arguably mainstream—more suited to their skills while providing them with more paths for advancement than they would otherwise find.
Preparation Is Key
Attorney preparedness and flexibility is crucial in times of uncertainty. (Toilet paper is important too, but it’s not all-important.) Professional networks were a key tool used by lawyers seeking employment in the last downturn, and we expect the same to be true now. Now is the time to make sure professional networks are active: Keep in contact with people who know and value your work. Now may also be the time to acquire new skills or certifications. Pro bono opportunities may both expand legal skills and result in new professional connections. Additional degrees (like an LLM), training courses, and certifications can help keep skills relevant, making it easier to re-position either within or outside of the legal community. And, for those interested in pursuing opportunities in legal technology, now may be the time to refresh your technological and data skills.
The silver lining? Because this is the second significant downturn to hit the legal industry in the past 15 years, resources exist to help lawyers weather the storm—perhaps most importantly, the experiences of practitioners who effectively managed their way through the Great Recession. While this downturn will be different, lessons learned by colleagues and mentors during the last downturn should be valued. And, while the attorney career situation is likely to be uninspiring for a time, lawyers who use this time wisely will be positioned well for success, regardless of whether they find themselves among the displaced.
Access analyses from our Bloomberg Law 2021 series here, including pieces covering trends in Litigation, Transactions & Markets, the Future of the Legal Industry, and ESG.
Bloomberg Law subscribers can find related content on our In Focus: Lawyer Well-Being resource.
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