US Legal Industry Shed 64,000 Jobs in April as Layoffs and Furloughs Spread

To the surprise of no one, the April jobs report from the U.S. Bureau of Labor Statistics showed massive employment losses, totaling over 20 million positions for the month, and legal jobs were no exception.

The legal sector showed a net loss of 64,000 jobs—a decline dozens of times larger than the fluctuations normally seen by the industry. The overall unemployment rate across industries stands at 14.7%, according to BLS data, higher than any time since the Great Depression.

The report on Friday showed 1,097,006 people working in the legal industry, including attorneys, paralegals, legal secretaries and others. The figure is down by 50,000 jobs from this point last year.

Updated numbers for the prior month saw the overall job market lose over 700,000 jobs in March, with the legal industry showing a loss of 1,700 jobs.

But that was before COVID-19 had a full month of stay-at-home restrictions to bolster its devastating economic effects.

Pandemic-related cost-cutting measures at major legal employers—big law firms most prominently—have been accelerating since they began in March, with April and early May bringing increasing reports of furloughs and layoffs.

Some large firms, such as Mayer Brown and Hogan Lovells, have managed to get by thus far with pay cuts and dividend deferrals. But others, such as Nixon Peabody, Goodwin Procter and Sheppard, Mullin, Richter & Hampton, have all made substantial staff cuts to go along with pay reductions for attorneys and staff.

The last time the legal industry went through an acute economic crisis, during the Great Recession, layoffs were the norm. For now, many large firms are still opting, when they can, to enact pay cuts, hour reductions and furloughs instead.

Unlike during the Great Recession, though, the direct impacts of the pandemic are spread across every industry, the flurry of austerity measures has happened quickly, and there isn’t a clear path forward to recovery.

Mixed messages at the federal level, differing local situations in states and municipalities and the possibility of months or more of uncertainty over economic conditions put businesses, including law firms, in the unenviable position of trying to plan for something they can’t see.

Many of the geographic areas in the U.S. that were hit hardest initially by COVID-19, such as New York, Detroit and Seattle, have seen success in slowing new cases, but they are rising elsewhere. That could drive major regional variations in when demand will ramp back up and whether a return to the office is possible. With regard to the latter, it doesn’t seem firms are in that much of a hurry.

Other findings in Friday’s jobs report include:

• Unemployment overall rose by 10.3% in April, the largest monthly increase since records started being kept in January of 1948.
• Workers who identify as white had an unemployment rate of 14.2%; those who identify as Asian were at 14.5%; those who identify as black were at 16.7%; and those who identify as Hispanic were at 18.9%. With the exception of those who identify as black, the numbers are all record highs.
• Those who were on a temporary layoff increased by a factor of 10 to more than 18 million.
• Labor force participation rate fell 2.5% to 60.2%, the lowest recorded level since 1973, when the rate was at 60%.
• Leisure and hospitality lost 7.7 million jobs, or 47% of the workforce.

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