2021 was an unexpectedly prosperous year for big law firms. The year started out ominously, with daunting uncertainty about how the pandemic would impact firm economics. Often, this uncertainty led to dramatic belt-tightening steps. By the end of the year, however, even while the pandemic was still ravaging many industries, big law firms were posting impressive results. The AM Law 200 experienced an annual increase of 14.7% in revenue and 6.6% increase in demand.
Obviously, a law firm’s talent pool is its most valuable asset, by far. But talent pools — especially in a bull market — can be volatile and fickle. And, unsurprisingly, in a booming market for legal services, a dog-eat-dog “talent war” broke out.
2021’s “sellers” labor market induced many firms to take aggressive steps, including offering significant retention bonuses. Firms needed to ensure, of course, that they were adequately staffed to service an anticipated further uptick in business in 2022. Practices in financial services, corporate law, government-relations, real estate, health care, cybersecurity and technology are all expected to grow significantly in 2022.
Likewise, new and increased regulatory compliance issues, increased infrastructure spending and fast-changing labor issues are all expected to substantially increase demand for legal services in 2022. And these anticipated trends directly impact the labor market for both lawyers and staff.
Industry-wide growth has led to extraordinary efforts by firms — to keep the talent they have and then, conversely, to “steal” talent away from competitors. Retention bonuses have become wide-spread and the competition for top-flight talent is not limited to strictly financial considerations. For example, among professional staff, “path to partnership” issues and expectations for annual hours billed can often be as seductive as monetary compensation. Retention inducements are, however, often neutralized by competitors offering to match (or exceed) them for employees who “jump ship”.
The take-away from all this volatility is that — on both the employer and employee side — staffing professionals are more important than ever in guiding hiring decisions. Because staffing professionals tend to have a higher understanding of the dynamic, industry-wide market forces, their expertise is more important than ever in achieving employment satisfaction and competitive success.