As the economy hints at recovery entering the latter half of 2023, some practice areas within the legal sector are experiencing a steady or modest increase in hiring. Despite law firms over-hiring in 2021, which caused decreased productivity particularly among junior associates, an increase in deal activities in certain corporate sectors is fueling demand for certain practice areas.
Recent findings show a rise in demand consistent with broader economic recovery. A Q2 2023 report by the Thomson Reuters Law Firm Financial Index (LFFI) revealed a 1.5% demand increase for legal services — a leap from the 0.1% rise in Q1. The report also showed a notable 5.9% increase in rates agreed by clients, a historic high in the past decade. These demands primarily cater to countercyclical areas like bankruptcy and employment, and less volatile fields like litigation and antitrust.
However, the journey to economic recovery encounters some challenges for law firms, particularly overcapacity and efficiency problems. Conversely, a Decipher Investigative Intelligence report notes a significant drop in lateral hiring in Q2 2023 by 33% year-over-year. Here, partner hiring dipped by a mere 4%, but associate hiring took a steep fall of 43%.
Certain sectors continue to hire even with many law firms being overstaffed, such as Labor & Employment, Data Privacy and Cybersecurity, Restructuring, IP, and Litigation. These sectors range from traditionally countercyclical ones to those less impacted by economic fluctuations or those aligned with recent economic improvements.
Despite previous setbacks, corporate transactional sectors are observing a rebound in hiring as evidenced by recent data on M&A activity. As more economists predict an optimistic trajectory for the upcoming quarters and with the current firm hiring patterns, there is optimism regarding an increase in associate recruitment as we move through 2023 and into 2024.
If you are considering a move in this evolving scenario, the Lateral Link team, led by their Managing Director in the Chicago office, Jesse Hyde, is there to offer expert guidance and unwavering support.