The market for lawyers is overheating, what does that mean for me?

There are two main driving forces causing this market heat:

1)   A record amount of legal work

2)   “Crazy” associate pay rises

The second point being a corollary of the first.

After a tumultuous start to 2020 where the future looked perilous for many, summer ended and with autumn came a tsunami of legal work that has continued unabated…

More work means your existing staff are overstretched; in short, you need additional people to handle the volume.

Law firms (and some companies) seem to act like reactive pack animals, they never stand apart from one another for long. So, in late spring last year, to my knowledge, almost no firms were boldly hiring associates en masse, instead they all decided hiring freezes were the way to go, with some even cutting compensation. Interestingly this wasn’t because their work dried up, it may have been the case for some at the bottom of the market, however, many firms were as busy then as ever.

Law firms advance and retreat as a clutch, led by the top paying US outfits. The problem with this herd mentality is laid evident when freezing recruitment is driven by an emotional instead of a business consideration.

By the time it was obvious to even the most cautious lawyer that work was only increasing not dropping off for the foreseeable future, they were way behind where they needed to be to handle it, so what did they do to fix this? Big pay rises to attract and retain talent.

The only problem with this idea is that everyone else copied it (to varying degrees), meaning you may get a day or two first mover advantage but beyond that it doesn’t achieve much for the firm other than as a PR "win".

If you are an in-house lawyer, you may have sat and watched all of this play out from the side-lines somewhat bemused. Whilst companies do not move pay scales in murmuration to the same extent that law firms do (due to the huge variations within industries) there is still a knock-on effect.

If there aren’t enough lawyers to handle the volume of work in firms, the same is also true for in house legal teams. Law firms have risen the bar for pay across the board, this means it is going to be more expensive to get the same type of person for the same money as before, even if they are okay with a pay cut.

The top corporates and funds have upped their offers to make sure they are still securing the best talent from law firms in this competitive market. Although... as there is less of a ‘trickle down’ effect in house the impact of this has been less pronounced, limited to pay gaps opening up in house only in specific markets.

What does this mean for a lawyer looking for a new role? For some, despite the broad heat in the market it may not mean a huge amount at all... These trends tend to apply to lawyers from NQ-10PQE, beyond that there hasn’t been the same huge spike in volume (at General Counsel level for example), although it is by no means a bad market at the very top either...

However, if you are a junior to mid-level law firm associate considering a change at a decent city or magic circle firm right now, the world is your oyster. The US firms want you, in house legal teams want you and more importantly I want you… so that I can confidentially introduce you to them and help guide you through the recruitment process.

A hot market doesn’t mean you can just trip and fall into any job you want, but the most in demand skillsets and PQE bands have a lot of opportunities open to them...

Generally speaking, the more new roles, the better. The only difficulty then is timing, steady and consistent increases are hugely preferable to this zero to one hundred approach we have seen this year.

When the next dip in confidence happens, be bold, if your business or firm looks to be unaffected, forge ahead with plans to keep on growing and lead, don't follow your market!