Forecasting 2006 Trends in the Legal Staffing Market
In This Issue:
Overview
Once again, we are at the dawn of another calendar year, replete with fresh opportunities for growth and change. This is also an excellent time to reflect upon the events of the past year and to form predictions for the coming year.
On a very positive note, the legal community continues to experience growth, hiring is healthy and on the rise for both direct hires and temporary workers. This is terrific news in what otherwise could be categorized as an uncertain economy.1 Additionally, more of you are looking to hire contract attorneys and paralegals to staff specific projects, particularly those related to discovery, to assist in managing your workload and reducing your litigation costs.
Benefits and Bonus Cuts: A Double-Edged Sword
Two recent monetary trends to watch in the coming year that will likely affect employee retention encompass benefit costs and bonus payouts. In 2005, most employers saw an increase in healthcare costs. These escalating healthcare expenses have forced some employers to pass on a greater portion of insurance premiums to their employees. Even though in many instances the contribution percentages between the employer and the employees will remain the same, the reality is that employees may feel quite different when they are annually paying more out-of-pocket in terms of dollars. In addition, we are also finding that this year, many associates and paralegals have raised concerns that the bonuses they received for the number of hours they worked were less than they had anticipated.
Why are these critical trends to watch in 2006? For employees, these concerns often translate into a need for change. From an employer’s standpoint, you must be strategic in combating these concerns with the goal of retaining your key performers. However, from a recruitment standpoint, you may be able to attract some top candidates who are for the first time willing to consider a move to a new employer. Being knowledgeable about your competition’s benefits, compensation and bonus structures, career offerings and opportunities will be critical to your success in recruiting these candidates. In addition, having an organized recruitment process with quick turn-around times for hiring decisions will enable you to capitalize on the dissatisfaction that some of these candidates may be experiencing in their current positions.
Efforts to Minimize Costs Are Raising Temporary Hiring
Temporary staffing continues to be one of the most valuable options in combating escalating employee-related costs. In addition to the economic strain of higher health insurance premiums for full time employees, corporate legal departments are ever diligent about controlling litigation expenses. This is particularly true in the wake of a series of court rulings that have imposed substantial penalties for failing to produce documents stored electronically.2
Last year saw a dramatic spike in the use of contract attorneys, primarily in electronic document review projects. For example, in the Chicago legal market, the number of contract attorneys on such projects ranged, on average, from 20-100, compared to only 15-20 contract attorneys on each project for most projects in 2003 and 2004. Seventy-one percent of organizations that have outsourced work to contract attorneys and similar third-party legal service providers reported having a successful experience.3 As such, the trend of using contingent labor to save on costs will continue throughout the New Year.
Real Estate and Litigation Will Continue to Dominate the Staffing Market
Commercial real estate and commercial/ corporate litigation were at the top of the list of hot practice areas for permanent placement in most major markets in the final quarter of 2005. This is expected to continue in 2006. Other hot practice areas to watch include white-collar criminal defense, intellectual property litigation, securities litigation as well as work in the securities-related regulatory and compliance arenas. Bankruptcy and financing law also appear to be thriving. If you plan to expand these practice areas in your organization in the coming year, know that your competition for them will continue to be strong.
In the temporary staffing market, complex litigation discovery projects continue to be the primary basis for contract attorney staffing throughout the country. Temporary staffing for mid-to-senior level attorneys as well as paralegals and support staff is more varied with regard to practice areas, and these hires are also on the rise.
The Bottom Line: Overall Optimism
To support your continued growth, implement a strategic staffing plan by utilizing multiple options in the direct hire and contingent workforce arenas. Direct hire candidates looking for greener pastures are going to become more available than in the past. Capitalize upon this talent in the marketplace by strengthening your recruitment process. The contract legal professionals market continues to be a strong option when your needs are finite. Partner with a staffing company you trust to assist you with contract staffing requirements. In sum, the overall outlook for 2006 is bright, holding abundant opportunities for job growth.
1 Yahoo! News. “Real Estate Job Engine Finally Slows Down.” 2005. 14 Dec. 2005. http://news.yahoo.com/s/ap/2005/20051214/ap_on_bi_ge/ye_job_growth_ye5a (“Employers, faced with spiraling health costs, have been conservative about hiring”).
2 Law.com. “Piecing Together EDD’s In-House vs. Outsource Puzzle.” 15 Nov. 2005. http://www.law.com/jsp/ltn/pubArticleLTN.jsp?id=1131542410056. See also Hopson v. Mayor of Baltimore, 2005 WL 3157949 (D. Md. Nov. 22, 2005).
3 Altman Weil, Inc. “Results of Altman Weil 2005 Survey of Major Law Firm Management Techniques.” July 2005. See also Jones, Leigh. “More Firms Using Temp Attorneys.” The National Law Journal 10 Oct. 2005:1+.