What recruiters are witnessing right now

As has been reported by Lawyers Weekly over the past month, numerous law firms have – in addition to taking steps such as cutting partner draws, asking employees to accept reduced hours and pay or even temporarily furloughing staff – put a freeze on hiring.

Such partial stand-downs or redundancies are being implemented, Burgess Paluch director Paul Burgess noted, in conjunction with a focus on “filling only very in-demand vacancies”.

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Moreover, Gatehouse Legal Recruitment CEO Louise Hvala said some firms are reallocating their employees to busier practice groups “to maintain full utilisation”.

There has been a slow-down in the talent market, Carlyle Kingswood Global legal in-house director Phillip Hunter said, both from the candidate side and the opportunity side.

"However, senior roles are still moving ahead at their normal pace now that ‘transition week’ is over (i.e. the week when everyone moved to their homes)."

"People are just more cautious but there is a strong undertone that things will resume soon enough. Unlike the thick of the 2008-2010 GFC period, where people were made redundant with very little though for a future bounce back, companies are being creative with how they are staffing and setting staff up for a return to work," Mr Hunter advised. 

A short-term trend has been for legal employers to prioritise the “business impact of coronavirus”, Taylor Root partner and head of Australia Hayden Gordine noted, which he said naturally necessitates a pause on recruitment processes as that employer concentrates on the health of its now-remote workforce.

“Where recruitment processes did continue, the focus was the personal health of the interviewers and the candidate resulting in video interviewing replacing face-to-face meetings, contracts [have] been signed remotely via Adobe Sign and many discussions around how to effectively remote onboard. For all our clients, there is uncertainty as to the long-term impacts that the coronavirus may have on a firm’s performance and how that may change the requirements of the businesses with respect to their staffing needs,” he outlined.

“There is no doubt that many of our clients have placed a hold on recruitment in the short-term, but an equal number have asked us for guidance and assistance with a hiring process that is more flexible, that identifies and vets top talent, that focuses on candidate engagement over a longer period of time and that will retain a candidate’s interest where a possible start date could be six months away.”

Simply put, law firms are “focusing on saving their own businesses”, ALMA Search director Ilana Orlievsky proclaimed.

“In the short-term, firms are focused on protecting jobs and as such, will be redeploying their lawyers and staff to higher demand areas and providing options for people to modify their work arrangements. While many firms have put freezes on their recruitment activity, some firms are still recruiting in high growth areas,” she said.

Whilst the implementation of such processes comes during a period of turbulence, G2 Legal Australian director Daniel Stirling mused, there remain great opportunities out there.

“Most companies and law firms have reviewed their outstanding vacancies and are currently only proceeding with critical hires, while other positions have been put on hold. Those that are continuing with recruitment are having to adapt their operations to allow for video interviewing and even remote onboarding, which have their challenges,” he explained.

“Some roles have been put on hold due to market uncertainty while other organisations have had to do so because key contacts haven’t had enough time to focus on recruitment due to additional work flowing from the pandemic. Some of these vacancies are coming back online now that operations are up and running and business continuity plans are enacted.”

Are any demographics being hit harder than others?

In the in-house space, "cautiousness is key", Mr Hunter proclaimed.

"Doing more with less is what we are hearing most. Listed corporates are feeling the pinch more than privately held corporates across most sectors (eg retail, luxury consumer goods, travel, hotels and tourism, auto, entertainment and restaurant). We aren’t seeing many roles being put on hold, but we are seeing them ask for later start dates in most cases," he said.

According to Mr Stirling, BigLaw and mid-tier firms have been hit harder than in-house teams.

“The law firm roles that are continuing are in areas which are still in high demand such as employment law, litigation and construction. Some in-house roles have also been put on hold but there are still a number of existing and new roles that are active,” he said.

“This can vary, even within the same organisation where some vacancies are continuing and others are not. These ongoing in-house roles are not currently following a particular trend as they are across various areas of law (transactional and litigious), industry sector and level of seniority."

“I believe that the decisions are being made more operationally i.e. firstly, is the role critical and secondly, what cover do they have in the team.”

BigLaw has "needed a shake-up for a long time", Mr Hunter argued, saying that the pandemic will accelerate change.

"Law firms across the board are having to restructure their businesses by way of cutting partner draws, requesting salary reductions, implementing hiring freezes or furloughing staff and now Sydney-based SME firm Lehman Walsh has decided to restructure its own business in order to accommodate a 'partners on commission' strategy," he submitted.

"They will reduce their hiring to ‘must-have’ hires for the foreseeable future, which is smart because they are already looking to redistribute work to those that can pivot into another practice, a busy one."

Supporting this, Mr Gordine reflected that the recruitment challenging facing BigLaw at this juncture is “staffing the countercyclical practice areas”, including but not limited to employment, insolvency, bankruptcy, restructuring and litigation, which he said will remain busy over the course of the pandemic.

“Utilisation of junior lawyers from other practice areas is the likely solution for junior workflow. At the senior level, partners with countercyclical practice will be busy and less likely to be on the market, their practice will have a renewed value and they were also short supply prior to the pandemic which combined will make recruitment a difficult challenge,” he submitted.

Given this, those in the boutique space may come under the microscope, Mr Gordine hypothesised.

“There is a potential for boutiques to face competition from BigLaw for partners/senior lawyers with countercyclical practices as Biglaw place[s] more value on those practices and it becomes financially attractive to move. However, so far, we have seen the opposition, with several boutiques with strong government and countercyclical practices showing an increased interest in speaking with senior talent on a contingent basis,” he said.

This all said, Mr Burgess was of the belief that firms that “cull hard and pause recruitment” will find it very difficult to find talent once the market picks back up.

“What we also saw post-GFC was that the smaller and less desirable firms did it the hardest, as they lost their best talent to the largest firms as the market improved. The largest firms also did it tough though, as their volume of work increased at such a rate that their appetite could not be sated and they had not been developing lawyers or hiring at all in key front-end practice groups,” he explained.

“As in-house roles are always more highly sought after by lawyers, they will be less affected than law firms. One of the key areas affected by the downturn will be transactional corporate work, and following on from the pandemic we expect that this will be one of the hardest areas to fill.”

However, it is not just the big end of town that will have its work cut out for it moving forward, Ms Hvala argued – SME and NewLaw firms also face hurdles on the horizon.

“From what we are seeing, and the feedback we are receiving from candidates, smaller law firms (fewer than 15 employees) and NewLaw firms will need to prove to candidates that they are financially healthy and have a strong pipeline of work, as candidates are now more discerning and want security of employment,” she posited.

Boutique firms will have similar concerns to BigLaw, Mr Hunter noted, "however their lawyers generally have a broader practice mix//focus so they will find the pivot-and-adapt to a different focus easier than the BigLaw counterparts". 

Ultimately, legal recruiters “don’t have a crystal ball”, Ms Orlievsky espoused, and as such it is hard to determine which firms or legal businesses will be able to weather the storm better than their competitors.

“My thoughts are that BigLaw (both local and international top-tier firms) will bear the brunt of this situation, for such reasons as high overheads, large partner draws and decentralised decision-making. On the flipside, BigLaw may be more capable of attracting top talent in months to come, especially returnees from overseas who are seeking to re-enter the Australian market with a top branded firm,” she outlined.

“Conversely, mid-tier and boutique firms may find they have more access to top-tier talent who are ‘feeling the pinch’ from COVID-19 in BigLaw who, in a normal market, may otherwise have been very comfortable at their respective firms.”

Diving deeper

In order to better understand the shifting marketplace trends of legal recruitment during the pandemic, it is necessary to identify and appreciate the myriad issues and challenges that subsequently arise in light of these extraordinary circumstances.

The second story in this series will explore those challenges, as well as a handful of opportunities on the horizon.