The saying “History doesn’t repeat itself, but it often rhymes” is proving to be true in the area of contract legal staffing. The burgeoning demand for contract attorneys post-pandemic is reminiscent of what took place in the late 1990s following the recession at the beginning of the decade. I joined the legal staffing industry in 1997, just as contract staffing was about to come into its own.
The early 1990s recession caused a lot of law firms to lay off junior associates. By 1997, these firms were becoming engaged in a great number of multibillion-dollar conduit securities lending transactions.
The trouble was, they didn’t have enough mid-level associates to do the due diligence. Their tremendous need for both real estate and corporate attorneys prompted them to seek out contract attorneys.
Fast forward to 2021, and we’re seeing a similar surge in contract staffing demand as the economy opens up again. There’s plenty of business to go around but, due to circumstances similar to the ’90s—namely, law firms are left with fewer lawyers on staff post-crisis—there aren’t enough people to do the work.
Thomson Reuters Institute’s Q4 2020 Peer Monitor Index confirms that many law firms laid off lawyers in 2020, with the average law firm employing 1.6% fewer attorneys by year-end. At just over a year since the start of the pandemic, many law firms are now faring better, but many initially cut pay and trimmed staff, fearing an economic fallout from the pandemic. But it isn’t just that. There is also a rising trend of attorneys choosing to leave their permanent, full-time positions for contract work.
Technology and Burnout Are Driving the Trend
The legal industry learned an important lesson from the pandemic: The work lawyers do remotely can be every bit as good as the work they do at the office. And while no one expects the work-from-home model to fully replace the traditional on-site model, its proven success over the past year-plus has lawyers weighing their career options.
Here’s what they’re thinking about: Thanks to the power of technology, they now have the choice of working remotely, living wherever they want, and enjoying flexibility they simply didn’t experience at their full-time office jobs.
The money in contract work isn’t bad, either. If someone is earning $125-an-hour and working 40 hours a week as a contract lawyer, their annual gross is $260,000. In instances where the contract attorney is employed by the ALSP, they are also eligible for benefits. All considered, it’s no wonder so many highly talented attorneys are seriously considering, or have already moved to, contract work.
What caused so many of them to begin reevaluating their circumstances? Burnout. As lawyers left their offices to work from home, the lines between work and family life blurred quickly.
When they weren’t working, they were home-schooling or caring for their small children, or tending to other home responsibilities. Work hours took on a certain fluidity that, more often than not, resulted in attorneys’ being plugged in and available to clients and colleagues practically 24/7.
Of course, lawyers are no strangers to long hours. Respondents to Bloomberg Law’s Attorney Workload and Hours Survey reported working 53 hours a week on average; one in five said they’ve billed more than 80 hours in their busiest week. But at home during the pandemic, attorneys essentially needed to be “on” all the time. Burnout was inevitable.
What It Means for Law Firms
Just like in 1997, law firms have been put into a position where they have no choice but to consider contract staff. The work has to get done, after all. And we all know there’s an abundance of work. Take a look at the rise in M&A, private equity, and capital marketsactivity.
And just as we saw then, even law firms and corporations that have never before hired contract help are turning to alternative legal service providers (ALSPs) to help them resolve staffing issues.
In the ’90s, many of the lawyers in the contract staffing market were there because of their circumstances: They didn’t make partner, so they became solo practitioners, or they were just out of school and hadn’t landed a full-time job yet.
Today, the available talent is extraordinarily strong and varied because, as mentioned above, many of these folks have made the intentional choice to go to contract work. Law firms looking for contract help have their pick of highly qualified, experienced and, in many cases, specialized attorneys. Even better? They can get his talent at a price far lower than if they were to add headcount.
I mention cost not because it’s necessarily top of mind for law firms at the moment—getting the work done takes precedence—but because, as we’re seeing increasing competition between large and small firms, cost is playing an important role. Large firms are recognizing that a lot of corporate legal departments and firms use counsel from states where bill rates are lower to stay within budgets.
They need to come in with competitive price points; building contract attorneys into certain areas of their proposals enables them to do that. Contract staffing helps even out the playing field for smaller firms, too, by giving them the capability to scale so they can compete with large firms on large-scale projects.
As businesses continue to reopen and markets begin to flourish again, law firms will be faced with a rush of business they simply can’t handle alone. As in 1997, contract staffing is in position to save the day. And now that pandemic life has changed attitudes about the effectiveness and career potential of remote working, it stands to play a major role in law firms’ success well into the future.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Leslie A. Firtell is the founder, president, and chief executive officer of Tower Legal Solutions. She’s a 24-year veteran and pioneer of the legal staffing industry and an attorney.