The Legal Outlook: Determining the New Normal
In the late 2000’s when the economy slumped and many businesses faced severe cutbacks, the service industry consequently followed suit, and the legal field was greatly impacted. Less business translated into fewer legal needs in many sectors, and decreasing needs led to personnel cuts, hiring freezes and a rescinding of job offers by many firms. Many law graduates faced difficulty in securing their desired employment while those still in school scratched their heads and worried what the future held. Now that the economy is slowly but surely on the rebound, the legal field is, too, showing signs of returning vitality. But the landscape has been changed over the last few years by both economic and political factors, and the entire industry – firms, law schools, legal organizations and students alike – are wondering, “Where are we going from here?”
The Changed Industry and Prospective Legal Careers
Prior to the economic decline, law graduates and young attorneys had multiple positions from which to choose. Then a few years ago, everything changed.
“There were instances of firms rescinding offers and delaying start dates for up to a year, but this was primarily seen in the larger firms located in the Northeast. Our region was definitely impacted by the economy and some downsizing occurred with the subsequent slowing work, but the state was still somewhat insulated when compared to the rest of the nation,” says Phyllis Burkhard, Director of Career Services at USC Law School. “Consequently, the recruiting and hiring practices of regional firms have changed as firms are much more careful in considering offers. USC law students are getting jobs, but it is a much slower process than before. We are seeing indications of improvement as more firms are coming back on campus to recruit.”
Mark Moore, the Assistant Dean for Career Services at Charleston School of Law says he’s seeing a definite acceleration in activity across the board, with a significant increase in lateral hiring of three to four times that of previous years. “As young attorneys make lateral moves and we continue to move through that at present, there stands to be a pick-up in new hires as that activity settles. In South Carolina, we have a lot of small firms that are more heavily dependent on their local economies – economies that were never hit as hard as larger, more global communities and are better situated to bounce back faster.”
Additionally, businesses recouping from the downtrodden economy have also searched for ways to handle business matter more effectively and cost efficiently.
“The 2008 financial downturn has changed the way the legal industry operates and CEOs, CFOs, general counsels, and business owners will continue to scrutinize all costs related to operating their businesses, including fees for legal services,” says Luanne Runge, a shareholder with Gallivan, White & Boyd, P.A. “Clients look for top talent who can provide high quality work efficiently and cost-effectively.”
She adds, “Many corporate clients are reevaluating their attorney-client relationships, and some are consolidating their work with the goal of reducing the number of firms they retain. Others are emphasizing Alternative Fee Arrangements (AFA) as opposed to the traditional hourly rate billing model we have seen historically. Clients prefer AFAs because they provide certainty of costs on the front-end of a project. Because many corporate clients have in-house counsel and paralegals who handle routine day-to-day matters, they retain law firms to handle their more complex work which necessitates the use of more experienced attorneys.”
So how do things shake out currently in the legal field?
According to the American Bar Association, the number of resident and active attorneys in South Carolina in 2012 was at 9,537, growing to 9,587 in 2013. Nationwide, solo practices are down 0.4% while law firm positions are up 1.2%.
Here’s the bad news:
· Between 2008 and 2012, law firms dismissed a total of approximately 15,435 people – divided between 5,872 attorneys and 9,563 administrative staff.
· Excluding jobs funded by law schools, only 55.1 percent of all 2012 law school graduates were employed in full-time, long-term lawyer jobs on Feb .15, according to the analysis by the law school reform group Law School Transparency.
· 27.7 percent of 2012 graduates were either underemployed or not employed.
· Law School Transparency’s analysis showed fewer than half of the graduates at 66 schools—one-third of all ABA-accredited schools—were working in full-time, long-term legal jobs.
But there’s also good news:
· 95 schools, or 45.7 percent of all ABA-accredited schools, exceeded the national job placement rate, the analysis shows, including six schools with job placement rates of more than 90 percent.
· The U.S. Bureau of Labor Statistics anticipates that through 2020, job growth in the legal sector will increase 10%. The number of legal jobs added from 2013 through 2014 is estimated at 14,720.
Practice Areas: What’s Hot, What’s Not
“It’s still incredibly tough for new lawyers looking to get into the field, and the problem is really two-fold. First, there has been a significant slowdown in hiring over the last couple years and new lawyers are also directly competing with young lawyers looking to make lateral moves. Now, more than ever, firms must be focused on finding the top qualified pool of applicants available for the job,” says Ashley Cuttino, an attorney with Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
She adds, “The overall legal field is still much slower than it was prior to the economic slump. However, some sectors have seen an uptick, specifically in foreclosure work and labor and employment law.”
“Law is a service business – we are involved in solving problems, helping start new businesses, paving the way for a personal future, securing home financing, and much more. When the economy falters, the need for lawyers decreases,” says Burkhard. “For instance, during the last few years, mergers and acquisitions as well as construction work has definitely been down, and workers’ compensation has also significantly decreased, likely due in part to fewer active construction sites where injuries might occur as well as a reluctance on the part of workers to claim injuries for fear of jeopardizing a job.”
Lately, political platforms and pending legislation have also deeply impacted specific practice areas. According to Denney’s “What’s Hot and What’s Not in the Legal Profession” report, the growing legal sectors include intellectual property litigation, healthcare law, energy law, regulatory law, immigration law, and labor and employment law. The “cold” sectors include bankruptcy law, commercial litigation, IPOs, and securities fraud.
“The economic decline did give rise to a number of document review jobs in the industry,” says Burkhard. “These positions are often filled with new lawyers out of school and involve looking through all documentation, written and electronic, in a case and determining relevancy. It is generally a hire-per-project short-term contract through a temp agency. It’s a major change that’s happened over the past few years that probably will remain in years to come.”
Educating the Lawyers of Tomorrow
The USC Law School has been a staple in the Southeast for many years, and is responsible for the education for many lawyers in the state as well as across the nation. “We send lawyers to approximately 15 states every year and have created a network of alumni to offer support to our new graduates,” says Burkhard.
She adds, “At USC law, our career services department is committed to helping students make themselves more marketable. We offer individual counseling, professionalism classes, mock interviews, resume and cover letter writing, alternative career days and Capstone Classes, which bring in outside lawyers to instruct students in litigation and corporate practices in different scenarios.”
The Charleston School of Law, a recent addition to the state’s legal educational portfolio, welcomed its first incoming class in 2004 and has proven to be a valuable resource in educating and preparing new lawyers. “The Charleston School of Law has really increased the pool of talent here in the state. Haynsworth has hired two associates from the law school and we are bringing another on board in the fall,” says Anne Ellefson, a shareholder with Haynsworth Sinkler Boyd, P.A. “We think highly of them and their educational standards and actively recruit there now.”
Moore says, “We are dedicated to developing lawyers, leaders in the legal field who will pursue productive and responsible careers.” He, along with Michelle Condon, Director of Public Service and Pro Bono, work diligently to assist students in finding success in career planning and preparation through a host of services including programming, individual counseling, on-campus interviews, resume forwarding, employer database and resource center and pro bono program where students complete 30+ hours of pro bono legal service under a licensed attorney while gaining invaluable on-the-job training. The sixth graduating class of Charleston School of Law had a strong job placement rate, reporting that 170 graduates had secured employment while nine pursued graduate degrees full-time within nine months of graduation.
“The law school in Charleston has increased the pool of qualified candidates we have to choose from, which, in turn, makes the market more competitive for all law school graduates,” says Runge.
In addition to a good educational background, new lawyers must also approach their future careers with much consideration and a drive to secure hands-on training when possible.
“I would advise those considering law school to take a good look at the job market and determine if this career path is right for them. A law degree is costly and time-expensive, so it is pertinent you are sure the career is a good fit,” says Cuttino. “For those who do embark on a legal profession, it is a good idea to look for internships and judicial clerkships to gain valuable on-the-job training as well as get involved in community groups and the local bar to gain connections and networking opportunities. These things will help set you apart from the crowd.”
“Internships and clerkships are critical to job placement following graduation. Law firms weigh the experiences learned in these positions as well as legal oriented extracurricular activities heavily when deciding which associates to hire. Also, experience in business when combined with a law school education remains attractive to large firms,” says Runge. “There are many employment opportunities for law school graduates other than traditional law firms. Experience in these positions broadens the scope of experiences and can make for an attractive candidate for law firm openings.”
“I love law school – it changes the way you think forever,” says Burkhard. “I would tell young people looking to embark on a law career to carefully weigh their options. Don’t undertake legal training in the hopes of a position that brings money and prestige. Talk to lawyers in a multiple settings and really get a feel for the job before making that commitment.”
Attracting Top Talent
With a desire to attract and retain the best and brightest, many law firms have implemented diversity and work/life balance programs.
“At Haysnworth Sinkler Boyd, we have invested much time in growing and refining our diversity practices,” says Ellefson. “We’ve established a diversity committee, and our attorneys are involved in many community-based diversity groups. We have implemented the same practices in our hiring as seen in many football teams looking for a head coach in that we always strive to interview a diverse slate of candidates when selecting a new associate. It is just another way to consciously recruit all top-notch candidates for our firm.”
“Ogletree has a robust diversity program that aims to increase awareness and recruit and retain top talent in multiple career paths,” says Cuttino. “We’ve also committed ourselves to work/life balance, giving our attorneys options on how to customize their working experience to best suit their career and family.”
Runge says GWB is working deliberately to promote diversity throughout the firm and in retention practices. “Our diversity committee is comprised of members representing all facets of our firm’s workforce, regularly rotating in members to gain new perspectives. We strive to foster a more inclusive culture, implementing firm-sponsored diversity workshops and participating in community and regional organizations on developing diversity programs. We want our workplace to be welcoming to everyone – a place where the most talented lawyers would want to be a part of our firm’s story.”
Predicting the Future
Ambiguity still rules the future for the legal profession. “Understanding exactly what the future holds is near impossible at this point, but we can make some educated guesses,” says Cuttino. “New legislation, especially concerning healthcare and immigration reform, will undoubtedly create much work in helping employers navigate the changes in policy. For a firm like Ogletree Deakins that specializes in this type of work, we highly anticipate remaining active and busy.”
“The prospects for GWB are good as is the market for firms of our size. GWB has talented lawyers who regularly compete against larger firms and at more reasonable rates. Decision makers are seeing the value they receive from firms such as GWB and are hiring firms closer to GWB’s size and experience because of it,” says Runge. “We believe this trend will continue. And as always, the strength of the economic recovery and the debt crisis will govern the growth of the industry.”
“In response to the changes brought on by the economy, we are trying to define the new normal in the legal field,” says Burkhard. “We’re focused on building a leaner and meaner law firm that operates both effectively and cost-efficiently.”
Ellefson agrees, saying, “We are looking for the new normal, and, right now, we just aren’t sure what that is. The legal landscape is closely tied to the economic situation of the country. Firms have now changed the way hiring is done and are not as aggressive as before. Now, you must identify specific need areas and have plans on how to keep your associates busy.”
Moore says that despite the common notion that there are currently too many lawyers and law schools out there now, the statistics simply don’t support that. “Law school applicants have dropped off in the last few years, and we are expecting smaller than normal graduating classes than previously seen. If you look at the data, we now have fewer attorneys per capita than we did in 1980. Additionally, there has been a significant shift in the median age of the bar from a median age of 39 to 49 meaning that many are approaching retirement age, and this could open up new opportunities for younger lawyers.”
“The difficulty is that it’s hard to predict what areas will be “off” or “on” next. For instance, the dot-com boom created a huge need for patent lawyers during that time. After the bubble burst, there was still a need for this type of work but not to such a degree as before,” says Burkhard.
“There are a lot of variables that can change the landscape of the legal field, and there are numerous new graduates and young lawyers looking for lateral moves that are in direct competition for job openings. Looking ahead, people will still need lawyers – there will always be some type of work out there.”