It is true—the legal economy is backing off the frenzied pace of 2021–22 and we see resultant shifts in the market. Between 2021 and 2022, legal hiring and demand hit record numbers as the economy rebounded and the industry tackled pent-up demand from the initial effects of the global pandemic. Now that the market has cooled from boiling, organizations are wisely re-evaluating the past few years, tightening their budgets, and recalibrating their strategic plans based on what they think is best for their business rather than on perceived talent supply famine in the marketplace. Lawyers with strong skills who are the right fit for organizations are still in high demand. However, that match as to skill and fit is being more arduously scrutinized during every hiring process.
In-house legal leaders are paying particularly close attention to economic volatility. We see many continuing to execute a prior plan (perhaps in a more measured fashion) but also having an alternative plan ready if a change in course is necessary. While some have had to make the decision to let lower-level lawyers go, others are hiring steadily. Once again, the Midwest has not seen the substantial layoffs or large-scale corporate restructuring that other regions are experiencing. Instead, evaluation of legal department proficiency and efficiency is happening quarter by quarter with organizations erring on the side of conservatism; that is, avoiding big sweeping actions and reactions.
That cautious approach means tightening budgets and prudent planning. However, legal workloads are not shrinking. Not only has budget tightened around headcount, legal spend is being closely scrutinized, and legal teams are being more discerning about which projects they take on and which ones they send to outside counsel, with a strong preference for keeping work in-house. With more work executed internally, law departments are finding that using high-skill consulting attorneys can help them manage the ebb and flow of work while achieving cost savings and management stress reduction.
With corporate clients executing on more work in-house, law firms, too, are being more cautious when hiring. However, economic and regulatory volatility almost always drive an uptick in legal work and, right now, law firms are reporting a steady flow. Consequently, the law firm lateral hiring market remains steady. Firms continue to seek lateral partners with profitable practices, particularly in private equity, M&A and real estate. At the associate level, firms are focusing on shoring up specific skill sets in response to market shifts; litigation and intellectual property have picked up pace in Chicago thus far this year. Law firms are also turning to high-skill consulting attorneys to tackle temporary waves of increased work. And law firms continue to explore mergers to enter new markets, increase competitive advantage, and grow bench strength and practice breadth quickly.
As the year progresses, we expect legal hiring to remain steady. Companies, firms, and individual lawyers remain interested in exploring opportunities to advance. That said, 2023 is bringing back market normalcy with a refocus on efficiency, need/skill match, and cultural fit after the overenthusiasm and frenzy in 2021 and 2022.