Legal market to ‘cool substantially’ following post-lockdown boom
Decline in corporate work but uptick in competition matters, new report predicts
A new report indicates that the legal market is due to “cool substantially” following a post-lockdown boom which saw a surge in demand for legal services in the second half of 2021.
Demand for legal expertise is expected to decrease for a variety of reasons including rising inflation, new regulations and sanctions, and the threat of a recession, according to data from LexisNexis’ latest Gross Legal Product (GLP) index.
The index, which highlights areas of law that are growing or falling in demand, predicts that this will effect the demand for corporate law the most, forecasting a decline of 22% compared to last year by the end of 2022 as corporate transactions and IPOs dry up.
By contrast, competition lawyers are expected to see a strong increase in demand of 17% to the end of the year, a trend that is expected to continue into 2023. This comes off the back of the Competition Markets Authority’s growing interventionism as well as new security and sustainability measures amongst other things.
Commercial lawyers’ workloads are only expected to be bumped up 1% according to the index, although it is anticipated that this number will rise again in 2023. This is down to a rebound in activity for imports and exports, foreign investments and new companies being created.
The report’s editor, Dylan Brown, commented that the index “gives law firms and in-house teams some helpful hints as to where they could invest or reposition their resources. However, it is purely prediction, as we have drawn conclusions from publicly available data.”
He adds: “Today’s economically uncertain times have caused a great deal of unrest in the corporate world. There’s a constant barrage of conflicting reports coming out, and despite everything still being up in the air, the default setting for most businesses right now will be risk aversion.”
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29 Comments
Bin Their Dun That
Still, litigators are sorted for the next decade.
barrister
That’s what I thought too.
My income has gone up 30% in 18 months. This is a significant uptick as usually I would expect no more than 10% pa. (Decent) colleagues report the same.
Nona
Competition litigation is the way!
Anon
Kirkland NQ to become Former Kirkland NQ
so lame
Hopefully it’ll shut them up
Anon
Nah, if anything there will be more material which I welcome as people are so triggered by it.
Dunc
Kirkland associates will need to remember the phrase “do you want chips with that?” for their next role
4th seater
Does anyone have thoughts about the finreg sector? Hoping to qualify there but currently holding a cap markets offer.
Trainee
Is this a bad time to move at NQ? Was planning to try and move at NQ (at a mid-tier US firm) as did not get first choice preference but seems like the market is flatlining.
Anon
Speak to a recruiter not first years on a legal gossip site
4PQE
Latest I am hearing from recruiters in my sector is that firms are doing their hiring now with expectation that there will be hiring freezes in 2023
Balrog
Ha the recruiter will give you the worst possible advice. They don’t get paid for saying “no”.
4PQE
There are good eggs out there
Legal Recruiter
That’s why you should always choose a recruiter you can trust. One that get’s to know the candidate in great detail, not just professionally but personally too.
I have been a recruiter for the last 7 years a a large proportion to stay where they are. A good recruiter is consultative rather than a salesman and not treating a candidate as a commodity
Legal Recruiter
I would say yes it is a bad time as a newly qualified. There hasn’t been a lot of movement in the NQ market this year compared to previous. Most firms haven’t entertained NQ candidates, with retention rates being so high.
You are best staying put for at least a year, maybe two as firms are struggling to recruit at 2-5 PQE. That one year post qualification experience will make all the difference when you begin your search.
GP
Really depends on the firm you’re intending to go to and the area of law. I’d be a little more wary of those US firms that have huge intakes of NQs vs. those that are naturally filling the NQ gap with one or two hires internally/externally. An NQ isn’t a big drain on a firm but I’d still be thinking carefully re the firm you’re planning to move to, as when times get uncertain, you want to be in a position where the partners know you and you have some leverage. My firm (US) is struggling in the mid-senior level market currently and I very much doubt we’ll be recruiting juniors anytime soon following a big influx of juniors over Covid. I’m coming from a transactional viewpoint though, so your situation may be different and I’d have some conversations with a few recruiters to understand the market better, as things have changed frequently over the last two years.
Trainee
Thanks – very helpful. I was looking to qualify externally into a more general M&A/PE team as my internal offer is for M&A in the infrastructure sector. I had a couple of interviews but did not get over the line so was starting to reassess given the economic climate. I think I’m just conscious of the fact that moving soon rather than later is probably better if you’re not sold on the area/team/firm that you’re qualifying into.
Jaded
For the most part, and especially at the junior end, M&A is M&A. I wouldn’t worry too much about being infrastructure for a year or two if it comes to it. It can be different once you get into mid/senior level and you’re starting to specialise but for now, DD, disclosures, schedules, deal mechanics, sitting on waste of time phone calls on Sundays are the same across each industry.
Anon
M&A in infra probably one of the better shouts in a down market. Utilities for example provide stable, regulated revenues and in a downturn they are often scooped up as they are undervalued in boom times.
homesick
would it be easier to move to a regional office from the city in the next two years? just started my TC at a good mid-tier firm but miss Manchester desperately, was thinking of applying to the likes of DLA Piper, AG etc but don’t know if the market will be in the sh*tter by the time I’m an NQ
Legal Recruiter
It would be very easy to move to a regional office from the city. There is the risk the market crashes but even during the last recession there was lot’s of movement in the market.
It will be more jobs driven than candidate driven but there will always be a requirement for junior lawyers with a solid period of training .
BK
The American Lawyer:
“Cooley has reportedly implemented a freeze on hiring associates, while sources say Reed Smith is responding to dipping profitability in lower performing regions by easing out senior lawyers who lack substantial books.”
yea rite
“Reed Smith is responding to dipping profitability in lower performing regions by easing out senior lawyers who lack substantial books.”
Sounds about right for a two-bit bucketshop out of Pittsburgh. 😀
A Nonnie Mouse
I’m really not sure I buy this. The pound is weak. That has always historically meant loads of private equity deals as US PE houses hoover up cheap British companies.
Random passer by
I mean, its not like the US economy is struggling either right……nor other parts of the world right…………. Also the City doesn’t just thrive because of US based funds or companies buying British companies.
Mouse Mouse My Kindgom For A Mouse
The pound is expected to get weaker, it is part of the sunlit uplands of Brexit jumbo freedom package. The PE market might pick up when sterling gets to 0.95 or 0.96 to the dollar. But everyone is short UK plc at the moment.
Anondozer
I expect restructuring and insolvency work to go up by 100% Q1 2023. But an uptick in R&I usually means catastrophe for “regular” transactional lawyers.
My US firm has recently made three corporate and finance associates redundant. Time has changed – be prepared to jump if your hours have been consistently low.
Me
The thing about hour drones that populated templates is that they are replaceable and fungible. So that covers every associate that has ever “smashed” a PE deal.
Anon
Does anyone know about Akin Gump’s private equity / funds practice? Considering applying but trying to get as much research done before I do.
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