[Legal Trends] The Changing Landscape for the Legal Industry – a Challenge for Fresh Law Graduates

The legal industry is renowned for its competitiveness and constant evolution. Each year brings forth new challenges and trends that significantly impact the job market, making it crucial for fresh law school graduates to stay informed and adapt to the changing landscape. Leopard Solutions has been compiling legal hiring data for over 20 years and reporting notable trends, including entry-level and lateral associate movements. The recent annual State of the Industry Report shed light on the current dynamics for entry-level associates and lateral hires in the legal industry. The legal hiring landscape continues to shift as follows:

No Longer a Direct Career Path

Gone are the days when fresh law school graduates could expect a clear roadmap to partnership at a top law firm. The report revealed that the hiring gap between lateral and entry-level hires has widened, presenting new challenges for aspiring lawyers. Many young attorneys are now content with being glorified associates rather than equity partners, opting to avoid the pressures and responsibilities of ownership, such as maintaining a book of business, leadership roles, financial obligations, and risks. These attorneys prefer well-paid employment stability and financial rewards throughout their careers.

Transparency and Flexibility

Today's young attorneys seek more transparency and flexibility in their career paths. They are increasingly inclined towards a non-traditional law firm trajectory, focusing on upward mobility within a firm rather than aiming for equity partnership. This shift in mindset reflects a growing desire for work-life balance and the ability to advance professionally without being tied to the traditional partnership track.

Law Schools and Top 200 Firms

The law school rankings are continuously shifting, and the low return on hiring has given the firms second thoughts at hiring from top law schools; fresh graduates are further challenged even before they have started their careers. In 2022, Georgetown and Harvard were the top law schools from which the Top 200 firms hired the most entry-level associates. However, despite the initial engagement, a significant number of these hires have already left their firms. The total number of entry-level hires in the Top 200 firms in 2022 decreased by 33% compared to the previous year, indicating a recalibration within the industry.

Shift Toward Lateral Hires

The hiring pattern in the Top 200 firms has seen a significant shift toward lateral hires. While these firms would hire more entry-level associates a decade ago than laterals, the trend has reversed in recent years. The preference for lateral hires stems from their proven success and transferrable business or considerable experience in the firm's needed areas. Lateral hires are expected to become high-fee earners more quickly, leading to faster career progression and potential partnership opportunities. Leopard Solutions data pointed to the increased hiring of lateral associates, also noted by an American Lawyer article on a growing number of law firms pivoting to partner-focused growth mode.

Factors Influencing the Job Market

The legal industry is influenced by several factors that shape the job market for fresh law school graduates. Demand for transactional practices has decreased, resulting in a slowdown for many law firms. As noted recently by Reuters, some firms have even downsized their workforce, and profits have decreased compared to previous years. In this climate, entry-level associates face fierce competition for a limited number of positions.

Academic Credentials and Practical Experience

Law firms are placing a higher emphasis on practical experience when making hiring decisions. While a candidate's performance in law school is essential, firms value the practical experience gained through internships, externships, or other legal work. Demonstrating practical skills alongside academic achievement can give candidates a competitive edge in the job market.

Diversity and Inclusion

Another significant trend highlighted in the report is the increasing importance of diversity and inclusion in hiring. Law firms actively implement strategies to enhance diversity and inclusivity in their candidate pools. Promoting diversity has become a priority for firms, reflecting the growing recognition of the benefits of a diverse workforce in fostering innovation, creativity, and better client representation.

As a fresh law school graduate, navigating the legal industry requires a keen understanding of the evolving job market dynamics. Aspiring attorneys must adapt.

The Leopard Solutions State of the Industry Report offers valuable insights into the current trends for entry-level associates and lateral hires. Get the full report here.