The tight labour market for lawyers is easing. That’s unless the law firm or in-house team needs to staff teams in areas such as resource management, litigation and a few other in-demand roles, say recruiters.

The legal recruitment market tends to follow the fortunes of the wider economy. It’s not a surprise, therefore, says Kirsty Spears, director at McLeod Duminy Careers, that there are fewer jobs in the wider property sphere and banking, but that litigation and insolvency lawyers are in demand. Overall, says Artemis Executive Recruitment managing director Kathryn Cross, her team is seeing a perceptible slowing in recruitment for the law firm market. “The heat has gone out of the urgency to hire for the law firms. But there definitely is still need for staff.

“One of the effects of the pandemic has been that we have been so intensely skill-short for such a long period of time [that] many teams are still running very lean, in terms of resourcing,” Cross says. “We aren’t seeing roles withdrawn.” There is still capacity to hire to service existing workflows or make the workflows more comfortable. Anand Ranchhod, managing director at CoLegal, says the real sweet spot in the recruitment market is lawyers at intermediate and senior levels who can operate with a good level of autonomy and support partners.

Two words

When LawNews spoke with legal recruiters, the same two words popped up repeatedly: “resource management”. That’s because lawyers with resource management experience who are willing to change jobs are few and far between, especially at the senior associate level, Spears says. It was a story repeated by both Cross and Ranchhod. “There just aren’t many of them,” Spears says. “It’s a supply and demand thing. It’s always the same with law. There are never enough of whatever [skills] they need. Never.”

Reforms and infrastructure projects are driving the demand, says Ranchhod. “[Employers] need people that can hit the ground running. It’s so busy with urban development projects, consenting issues and appeals.” Also in demand, recruiters say, are litigation lawyers and those experienced in areas such as insolvency, debt recovery, insurance and construction disputes. Litigation in particular was cited many times. Lawyers with law firm experience in any area that is not too niche will be snapped up in a heartbeat, Ranchhod says.

In part, the current shortages in resource management and litigation are due to the lag between graduates choosing a practice area which may be booming at the time and the demands of the market when they reach intermediate and senior levels, Spears says. Litigation may look attractive as an option now, and property unattractive. Come 2030, the economic conditions may be the reverse. “What will happen is in this quiet period, all the grads will come in and they’ll do litigation. Then in three or four years there will be a shortage of commercial lawyers because they won’t have trained them.”

More caution

The legal recruitment market in 2023 isn’t about bums on seats. “There is a focus on quality universally,” says Cross. “We’re seeing cautious hiring behaviour in the market, more scrutiny in the hiring process and increased focus on integrity of process, which we consider to be a good thing. “Some firms, particularly in the pressures of the pandemic, hired very quickly and mis-hired. They don’t wish to repeat those mistakes. So, there’s an extra overlay.”

They’re also watching for a recession on the horizon, although there are mixed views as to how impactful that will be, says Cross. “I think most hiring managers are cautiously optimistic.” Spears is also seeing more caution from employers. “There are long-standing gaps that still need to be filled. But we’re sensing more caution in recruitment. “We’re having conversations more along the lines of ‘well, if you see somebody good let us know, but we’re not really active’.

“So rather than being absolutely desperate to fill a role and get a bum on the seat, there’s a lot more deliberation. “ Cross notes that her team is seeing an increase in the number of what she would loosely refer to as “recession indicators”, which are likely to have an impact on the legal recruitment market. “Things like an increase in the number of litigation, insurance and insolvency positions. And we’re starting to see a bit more has started to happen in the employment law space.”

By the numbers

Not all legal jobs are advertised on Seek.co.nz. However, many are and the job advertisements are still down on April 2019, the pre-covid baseline. Currently, the number of job ads for lawyers is minus 19% compared to April 2019. There are 57% more applications per job in April 2023 compared to April 2019, although some of that could be attributed to changes in applicant behaviour.

Legal industry job ads and applications per job ad over time

April 2019: pre-covid baseline

April 2020: the nadir of job ads (at the height of the covid onset)

April 2022: post-covid boom (or close to, May 2022 was when NZ hit peak job

ads as a whole)

A Seek spokesperson says the fact that job ads have not returned to precovid levels is unique to the industry. Many other industries experienced a boom in job ads in May/June 2022 that saw them rise far above their pre-covid levels. “In fact, despite job ads levelling off since the great jobs boom of last year, most industries remain higher than their pre-covid levels as at April 2023. Legal is one of only eight industries from a total of 28 industry categories where job ad levels have declined since April 2019,” he said.

Heading overseas

Despite much-higher-than-expected net migration figures in the past few months, Spears says she is not seeing large numbers of returning New Zealand lawyers looking for work. The trend is still in the opposite direction, with young lawyers heading overseas, especially to London and Australia. How long they will stay, with recession looming globally, is the question. “The markets over there, we’re hearing, are a little bit subdued. The opportunity is not the same as it was maybe a year or even six months ago.

“In the past where we’ve seen recessions kicking in, what has happened [is] when they get there, they haven’t had fabulous jobs that have forwarded their careers. They’ve just gone for the adventure and then come back. The trend is looking like that might be where we’re headed.” The only anomaly is that it’s not just second- and third-year lawyers leaving for an OE, Spears says. Some in their fourth or fifth year who would have been due an OE slap bang in the middle of the pandemic, are doing it now. “There’s still a little bit of a backlog of slightly more senior lawyers taking an OE. Because of the types of visas, they have a very small window to go, based on age.“

The other geographical trend, says Ranchhod, is a movement of lawyers looking to relocate from regional areas to bigger cities. “That [might be] because of lifestyle reasons or family reasons.”

In-house

Cross, like Spears and Ranchhod, is seeing a healthy level of recruitment for inhouse lawyers. “There are more newly created roles in the in-house environment than there are in law firms,” she says. “And part of that is a desire to reduce external legal spend.”Ranchhod says that unlike law firms where lawyers are a revenue generator, in-house lawyers are a cost to business and he is seeing the need for a strong business case before those hires are made. Nonetheless, he has seen steady hiring.

“The majority of those hires are at the five-plus year level, because New Zealand’s in-house legal teams are often lean. They need people who can work with a good degree of autonomy.” Some of the more recent inhouse legal counsel jobs CoLegal has filled include hires for the property and infrastructure sectors. “We had one for an insurance organisation, which had a couple of bigger projects they were expecting.”

Partners

At the top end of the recruitment market, Ranchhod is seeing demand for partners. “We are still seeing firms interested in expanding their partnership, particularly if they have a gap within their current practice that they want to grow or it’s a complementary practice area to other work they do or they want to bolster.

“The fit’s important, as is the transferable client base that [the candidate] might have, and what synergy there might be with the firm’s current client base and practice offering.” The most demand for partners is in the corporate and commercial law practices, he says. “They tend to be the engine room from which other work can flow. If, for example, you have a client doing work in the mergers and acquisition space, then there might be property or employment law aspects of that transaction, which can feed into the other teams.” He says there is demand in particular for litigation and employment law partners, and seniors moving from a senior role into their first partnership.

Candidate demand

When it comes to what candidates are looking for, Cross says they are giving greater scrutiny to the integrity and the quality of opportunities. “For example, there is a lot more questioning from our candidate community around the industry [and] there is also more scrutiny from the candidate perspective on things like the different package components. They’re not just looking at the base salary. They’re really drilling into the details of short-term incentives and any other benefits that the firms offer.

“There’s still a lot of focus on flexibility in working from home, [although] there is a slight shift towards more working in the office. These days, three to four days in the office is increasingly standard, and often preferred. But I don’t think we’re ever going to get away from the flexibility. People enjoy that flexibility.” Spears is also seeing a move away from the hybrid model of working. She agrees that where lawyers may have worked two or three days from home during the pandemic, that’s more likely one day now.

“Firms are keen for people to come back in [and] employees themselves are keen to be coming back,” she says. “They’re liking being back in the office and being around people.” Spears plans to survey the market for her 2023 annual research report, about the transport problems in Auckland and how they have affected lawyers’ views on hybrid working. “That’s obviously quite a major thing at the moment,” she says.

Salaries

Salaries are rising, Spears says, although in line with inflation rather than ahead of it. “There have been big jumps [as] clients have tried to keep pace with inflation and any corrections from covid times.

“Somewhere between seven and 10% is what most people are looking at in this round. That’s just what we’re seeing so far.” She says with the job market being quieter and the workflow not as reliable, the next pay round “might be a little bit more interesting”. ■