Biglaw firms now find themselves in a rather curious spot in our post-pandemic world. While 2021 and the start of 2022 were marked by frenzied hiring, pay raises, and bonuses galore, the tail end of 2022 is looking a little gloomier. Coupled with a slowdown in work, legal recruiters are saying that “demand for associates no longer exceeds supply,” with some firms reportedly enacting hiring freezes while others have performed stealth layoffs. Is legal hiring in a recessionary slump, or are we just approaching a new(er) normal?
A new report at Law.com examines this issue, and further opines on the question everyone is wondering about: could layoffs be ahead for associates?
It’s not just the lower volume of lateral movement that’s indicating a cooling of the legal industry’s hiring environment; recruiters interviewed for this report said firms are investing less in their talent acquisition teams, while the sign-on bonuses offered to associates have been reduced to a minimum.
Firms are also reportedly becoming more circumspect about the productivity of their associates and business generation of their partners, pushing out those who aren’t worth the inflated personnel costs that firms have incurred.
According to Jeff Lowe, global managing partner of legal recruiter Major, Lindsey & Africa, the lateral hiring market is “very level” right now, but recessionary fears are real indeed. “Firms are taking time to pause and take a breath, and also the market has started to slow down, particularly the M&A market,” he said in an interview with Law.com. “They’re thinking we better slow things down to more of a normal hiring process that was common in pre-pandemic times.”
Albert Tawil, founder of Lateral Hub, told Law.com that while the hiring market seems to look strong, firms are trying to cut their lateral hiring costs. “One example is a chief talent officer or partner will be given a directive to say we’re continuing to hire laterals, but let’s try to cut our recruiting costs,” he said. “Let’s try to be more mindful of that as part of our business.”
But what about layoffs? Are there going to be layoffs? Lowe has some thoughts on that — and you’re probably not going to like them very much.
If the economic slowdown exacerbates after such minor austerity measures are implemented, Lowe said at some point firms will begin to move people out following performance reviews, otherwise known as “stealth layoffs.”
While the Major Lindsey head said he hasn’t heard about impending mass layoffs, he said there is a sense among firms that they need to be more circumspect about associate ranks and making sure they can try to keep people busy.
Layoffs can — and will — happen, but only if things are truly dire. “It just depends how severe the economy becomes,” Lowe said. “We’ve seen before many times: Some firms, at the first hint of crisis, will fire a ton of people. They’ve done it before and they’ll do it again.”
Yikes. We sincerely hope that you’re not a victim of a stealth layoff — or any other kind of layoff, should it come to that. Good luck out there, everyone.
If your firm or organization is reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).
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Payroll Cuts or Normalization? Law Firms Scale Back Recruiting as Recession Fears Loom [Law.com]
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.
