The preliminary jobs numbers for 2012 are in, and while last year’s herky-jerky hiring in the legal sector resulted in a net increase of 7,800 jobs for the year — or 0.7 percent more than in 2011 — the legal industry nonetheless grew at just half the rate of the broader economy, where the total number of jobs increased 1.4 percent, according to the Bureau of Labor Statistics.
The mild uptick in legal hiring, combined with the even smaller gains of 400 jobs in 2011 and 4,800 in 2010, has done little to make up for the combined 60,100 jobs the sector lost from the beginning of 2008 through the end of 2009.
The 2012 BLS jobs data, whose monthly figures are revised for two months following their release and on an annual basis for five years, serves as further evidence that employment in the legal sector might never fully bounce back.
In a separate set of data collected by the BLS, the legal services sector — 93 percent of which is made up of employees in law offices, and the remaining percentage is composed of nonlawyer legal practitioners like paralegals and notaries — is projected to grow by 64,200 jobs, or nearly 6 percent, between 2010 and 2020, according to BLS’s Office of Occupational Statistics and Employment Projections, which generates its figures based on household surveys that includes the self-employed. (The current employment statistics that the BLS releases every month are based on a payroll survey of business and government agencies and excludes the self-employed.)
For that projection to hold true, however, the industry has quite a lot of ground to make up since it gained only 12,300 jobs in the first three years of that timeframe, leaving it about 6,300 jobs off of the projected 6 percent rate.
The total number of lawyers — who also fall into industry sectors other than legal services — is expected to grow at a rate of 10 percent between 2010 and 2020, down from the 13 percent increase the BLS had projected for the 2008–18 period.
Law firms’ tiptoed approach to hiring — a fixture of the leaner postrecession model — isn’t helping the matter.
“Firms don’t just hire a body anymore. They’re hiring with much more caution for specific positions,” said Mark Kwatcher, president of Kwatcher Legal Placement in Boston.
A heavier emphasis on as-needed hiring may have contributed to the swings in legal sector employment in 2012, a year in which there was never more than two consecutive months of employment growth. Last year’s best and worst months came back-to-back when the biggest loss of the year — 2,900 jobs in March — was immediately followed by the biggest gain — 3,200 in April.
“Firms are not overhiring, and they don’t have too few people. Firms have become very savvy in that regard,” Kwatcher said.
Not that they’ve had much of a choice.
The decreased demand for legal services, which dipped 0.4 percent from 2008 to 2012, according to a report released last week by Citi Private Bank’s Law Firm Group and Hildebrandt Consulting, has played a significant role in firms’ restrained hiring.
“Large companies are still trying to find ways to reduce legal costs. They’re asking the fundamental question, ‘Do we need lawyers to do this?’” said Clifford Winston, a senior fellow at the Brookings Institution whose op-ed in The Wall Street Journal last May advocated for the deregulation of the legal industry. Corporations will be reticent to return to their old ways, he said, since they’ve become reliant on the cost-savings they’ve reaped by using their own in-house departments or less expensive third-party advisers instead of big law firms as outside counsel. “There’s no reason to think that things will return to their pre-crisis ways because the recession exposed law firms’ inefficiencies and prompted the market to move in a direction that uses lawyers less frequently,” Winston added.
The report by Citi Private Bank and Hildebrandt fell in line with that outlook when it predicted that legal services demand in 2013 would be “somewhat weak.” That projection will likely hamper hiring this year. In fact, only 21 percent of respondents of Legal affiliate The American Lawyer‘s December 2012 survey of law firm leaders said that they planned on hiring more first-year associates in 2013 than they did in 2012. Sixty-eight percent said their associate hiring would stay the same; 11 percent said their associate classes would shrink.
But all is not lost. The current lackluster hiring trends, Winston said, is based on the current profile of legal work. Firms could send a surge through the stagnant legal job market and increase the odds of finding employment for the 44,000 students who graduate law school annually by renewing demand for their own services, Winston said, citing such possibilities as blockbuster litigation against pharmaceutical or food processing companies, and patent work that will accompany tech innovation.
One area that could provide a lift to this year’s hiring is capital markets work, said Jeffrey Lowe of recruiter Major, Lindsey & Africa. “It seems like there’s a lot of money sitting on the sidelines at the moment. If that area gets hot, we could see high demand for capital markets attorneys across transactional work,” he said.
What’s certain is that if jobs return to the market in large numbers, it’s likely that they won’t be the same as the ones that left, given firms’ new reliance on contract attorneys and the emergence of nonpartner track attorneys. “I don’t know if we’ll get all the jobs back, but it’s clear that the mix of associates and partners will never be the same,” Lowe said.