At the beginning of 2021 new lawyers entering the world of work had the sky at their feet.
The U.S. Bureau of Labour Statistics predicted that between 2021 and 2031, 131,000 new jobs would be created in the sector – and that’s after the 110,000 new openings which would have been created by people retiring from their roles.
On top of that, the average lawyer in the U.S. Takes home $36,670 more than the median salary across all other sectors with a pay packet of $82,430.
And yet this week even more legal experts will be on the hunt for a new role after Goodwin Procter announced it was axing associates, professional track attorneys, paralegals, science advisors and employees in its global operations team.
In a memo seen by Coins2Day, Goodwin’s chairman Rob Insolia and managing partner Mark Bettencourt said it was a “difficult decision which had not been made lightly”.
It comes after a raft of job cuts in the industry late last year.
Bloomberg Law reported in November that Cooley LLP was letting go 78 attorneys and 72 paralegals and business personnel across the US, while Kirkland and Ellis laid off between 20 and 25 corporate associates in Texas in the same month.
Goodwin and Cooley both blamed decreasing client demand – with key markets such as housing and mergers and acquisitions (M&A) slowing down.
The memo from Goodwin added: “For the last several months, our clients have encountered macro-economic headwinds. With the continuing slowdown in the global economy, we too have experienced a slowdown in demand.
“While overall we remain busy, demand has dropped from its extraordinary heights of the past several years. This is true not only for our firm, but for the legal industry overall.”
According to data from analytics company FactSet, M&A activity in the U.S. Decreased in the vast majority of sectors for the three months to November 2022, when compared to the same three-month period in 2021.
The sectors which saw the largest drop in activity included finance and technology.
Meanwhile, the housing market has similarly been pushed to the brink, having entered four months of home price decline after 124 consecutive months of growth.
Is now a good time to be a lawyer?
News of further layoffs was “not a surprise” to New York-based legal recruitment specialist Alice Thomson, a senior consultant at Robert Walters.
She said: “There are two reasons for job cuts. The first is rebalancing the workforce and the second is preparing for an economic downturn.
“I work very closely with the technology sector and that saw a huge amount of activity during the pandemic which may now be needing to be equalized. Likewise, the economic outlook is predicting a recession in early 2023 and this could be boards trying to prepare for that.
“Having said that, the legal profession is still a really solid career choice and this could represent an opportunity for smaller firms to attract talent who have been let go at bigger firms.
“The wages can also be astronomical in the legal profession – especially in the U.S. When compared to Australia and the UK. That’s particularly for specialized attorneys such as data privacy, entertainment or artificial intelligence.
“Likewise having seen the California Privacy Rights Act come into force on January 1 and federal laws turning to look at AI, it seems compliance isn’t going anywhere.”
However the slow down in major areas of the legal sector are going to trickle through the global economy warned Peter Talibart, co-head of the international employment law practice at Chicago-based Seyfarth Shaw.
He said: “This is not simply a U.S. Issue or a legal services issue. It is a global one.
“Any economic downturn will inevitably also hit the legal services sector. However many international law firms have practice areas that are both cyclical and counter-cyclical, so those differing components of the practice become busier to support that which is less so.
“We all hope that any downturn is short lived. Everyone has been through a lot these past few years, no business wants to have to restructure at this stage.”