One day this will all be history. Law firms should prepare now to win the (inevitable) forthcoming ‘war for talent’
Supply and demand are rarely balanced in recruitment. For most of my two decades in the business, candidates have held sway. Talent shortages and ferocious competition amongst ever more profitable law firms have created long periods of salary inflation and an abundance of opportunities for good applicants. Every now and again though, it switches. Demand crashes, jobs dry up and for a time, clients dictate the market. The dotcom crash, the global financial crisis, and now Coronavirus have all done the trick. On a localised level, hurricanes in the Cayman Islands and the British Virgin Islands likewise. Brexit (remember that?), despite all the fears, never quite did…well not yet anyway.
It strikes me that the causes of these market shifts are inherently different - perhaps that explains why we have yet to find a way of ironing them out. But one thing is consistent. It will switch back, and when it does, there will be a brief glimpse of recruitment nirvana – those rare moments where we have both the jobs, and good lawyers to fill them. Blink and it is gone. Demand for talent surges and the status quo resumes.
The ‘opportunity cost’ of talent shortages in a post-recessionary legal market is substantial (1). Economic downturns invariably lead to a decline in trainees and fewer newly qualified lawyers going into the areas that prosper in good times. The dilemma is simple. Hire too early and a firm is saddled with excess personnel costs, never a good look in a bad market. Hire too late and risk being understaffed as your competitors capitalise on the upturn.
As a recruiter, I tend to share the view that investing early in hiring is worth the risk since the subsequent pay off can be dramatic. For example, there will be some exceptional newly qualified lawyers on the market this year – especially those looking for corporate/transactional work - and any firm brave enough to snap them up will be stronger for it when the recovery comes. Hire now with the promise of ‘jam tomorrow’? Easy to say when it is someone else’s money, right.
What a firm can do, at no cost, is prepare for the upturn. Some of our most strategic clients are already, amidst all the current challenges, thinking about the future. Questions abound. Which practice areas are fielding a lot of preliminary enquiries? What percentage of these enquiries need to convert to business for the team to be underweight? Where were the pinch points in capacity before the downturn? Where did we suffer hiring shortages post-global financial crisis? How does a reduction in NQ offers now, impact in two years’ when the likelihood is there will be a shortage of 2PQE lawyers? Where does logic suggest demand will be highest? Identifying the likely areas of future demand is the first step to capitalising in the recovery, particularly in the international recruitment markets where a six-month timeframe for hiring is normal.
Now is also the time to show what makes you different. In an upturn, when competition for talent is fierce, firms go to great lengths to demonstrate their unique culture, but it is when the stress test is applied that you really see the true colours. The consistently negative response elicited by the mention of one particular international firm to lawyers in the Middle East is testament, a decade on, to the lasting damage done by its brutal response to the last recession. Conversely, some of our clients have reacted impeccably to the current maelstrom, going out of their way to reassure future employees who are in the unenviable position of having resigned from their last roles but not yet started. These stories deserve to be told, and we can tell them.
So please do share your thoughts with your recruiters and we can start the groundwork now, with no strings attached. We understand that there will be fewer live roles, that processes are more drawn out, and that uncertainty reigns at present, but we are getting ready for the upturn and we want to help you to do the same. All experience shows that those firms who prepare to act as the market changes will prosper. Those who do not should steel themselves for another drawn-out ‘war for talent’.