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Overview of the legal recruitment market in the US

Posted by: Laurence Simons 17/04/13

Overview of the in-house legal recruitment market in the US

The legal recruitment market has ebbed and flowed throughout 2012 with most recruitment activity taking place at the senior level. While there is certainly a return to growth and profitability in many sectors (namely manufacturing and retail) caution remains, particularly due to the Eurozone crisis and the 2012 presidential election in the United States. As a result of this caution, recruitment processes have become lengthier and there is generally a lower level of movement in the market, particularly within the technology sector. For those working in healthcare, there seems to be more of a clear direction since the permanence of Obamacare has become a reality.

Streamlining legal departments’ processes as well as cost cutting has been a priority for all organisations and as a result has led to corporations looking to handle legal work in-house by exploiting their existing resources rather than outsourcing these requirements. As such any new roles that have been recruited have tended to have a greater breadth of responsibility with lawyers having to accept the increase in workload. Some organisations have looked further afield to bolster their growth, making lawyers with international experience, market acumen and cultural sensitivity particularly marketable. Interestingly, 79% of lawyers in the US would consider relocating internationally which is perhaps a sign of the times.

Compliance continues to grow in importance and plays a vital role in most organisations both locally and internationally, with 57% of respondents indicating that the compliance function within their business forms part of the legal team and 62% preferring to source compliance professionals from a legal background. Lawyers with regulatory experience will remain in demand, particularly those with experience navigating the highly regulated pharmaceutical industry.

During 2012 there was a greater demand for candidates with litigation, employment and other controversy-based experience, although these positions were still fairly few and far between in comparison to more transactional and commercially-oriented roles. Remuneration levels changed dramatically in 2012 and although 56% of lawyers in the US indicated that they received a bonus in 2012, bonuses linked to company performance have been more carefully scrutinised by candidates and the track record for bonus payouts has been given more weight than in the past. This is likely to continue into 2013, particularly within publicly traded companies where salaries at the executive level will need to be moderated. As confidence returns to the economy, employers will be under pressure to evaluate compensation metrics, particularly as the competition for highly qualified lawyers increases and organisations face the possibility of counter offers and multiple offers.

Depending on the performance of the global economy, 2013 should see the legal recruitment space shift from sporadic replacement hires to more strategic organisational growth, however it is unlikely that recruitment levels will return to that of the past.

Overview of the law firm legal recruitment market in the US

As a whole, the U.S. market on the law firm side continues to steadily improve, with certain cities and regions experiencing more activity than others. Laurence Simons expanded with a new physical office in Chicago and found that in that market, in particular, it was a very active year.

A number of key trends emerged in 2012, including considerable growth in areas requiring regulatory and transactional experience — such as compliance and healthcare. There was also a significant demand for patent attorneys with an undergraduate (or graduate) degree in electrical engineering (EE). While, in certain instances, firms have been willing to consider attorneys with degrees in computer engineering or computer science, the greatest demand remains in the EE sector. This need spans both patent prosecution and patent litigation, with a slight favouring of litigators by the Big Firms.

We also saw an increase in IP transactional / technology-focused work, whether hiring as part of corporate deal support or due to an increased focus by firm clients on outsourcing, licensing, and / or strengthening their intellectual property practices.

Despite a high demand in 2011 for attorneys with experience in labour and employment law, this trend subsided in 2012. The demand for litigation attorneys also dropped in 2012 even though there remain a disproportionately high number of attorneys with this focus in the market.

As expected, the demand for corporate associates was steady, with many firms hiring during the first half of 2012. This desire tapered towards the end of the year as law firms shifted their focus away from hiring and toward deal closure at year end.

In addition, 2012 proved, once again, that "out of the way" markets are sometimes the best activity-generators in terms of hiring. Cities such as Cleveland, Boston, Phoenix, Milwaukee, Indianapolis and Minneapolis continue to have buoyant legal markets. However, the main challenge within these regions is attracting highly-qualified candidates as many attorneys are reluctant to relocate unless they have an association with the area, sometimes making it difficult for law firms to fill open positions. These cities, however, are hidden gems due to their strong legal practices, excellent school systems, relatively low cost of living and strong communities. Attorneys from the larger cities in the United States and abroad who are looking for a friendly, liveable city and continued exposure to sophisticated legal matters would be well placed to look at these regions when considering a new role.

Do the major cities continue to attract candidates? Yes. New York, Chicago, Washington, D.C. and parts of California, in particular were very active this year in terms of law firm hiring. Of these cities, Chicago seemed the most active of the major metropolitan legal communities, and candidates flocked to the area in 2012, resulting in a strong supply of attorneys across the region.

Across the board we continue to see significant activity in most major cities with a corresponding increase in the competition pool therein.

As for compensation, we are still seeing a mix of lockstep and merit-based systems. Mid and Large sized firms, in previous years, have started to move away from the traditional “lockstep” compensation structure to a more merit-based system designed to reward the high performers. This resulted in limited changes in compensation in 2012 as most of the variation happened in prior years.

On the whole, however, compensation for both associate and partner-level attorneys in the U.S. varies wildly, depending on the size of the city in which the attorney practices, the size of the law firm and levels of business generation (for partners). This trend will continue in 2013. Pre-economic crash, we certainly saw more of an even-keel nature to compensation levels; however, post-crash, firms are doing what is best for them to remain financially sound. Thus, we are seeing more variance amongst compensations, and we expect that to continue through 2013.

In sum, if we can use 2012 as a benchmark, 2013 should be a very positive year for legal recruitment in the Northeast, Midwest / Rocky Mountain, and West Coast regions of the United States.

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