Monthly and First-Quarter Legal Employment Numbers Show Slow Growth (but Growth)

The ABA Journal summarizes two positive trends for the U.S. legal employment market.  First, overall legal employment increased by an estimated 1,500 jobs in April; second, demand for legal services increased by 2 percent in the first quarter of 2011 on a year-over-year basis, and also grew slightly in the fourth quarter of 2010.

The increased demand for legal services was driven by increases in demand for litigation services.  That’s one indication of how odd this economic environment is for legal services.  Commonly, in an economic downturn, litigation demand increases while demand for corporate services decreases.  In hot economies, the reverse tends to be the case.  That didn’t happen this time.  Everything crashed.  And while corporate demand has increased, as we’ve reported on this blog, there was so much slack in the system that it didn’t (and apparently so far hasn’t) created a lot of new corporate lawyer positions, on a net basis.

While the April and first quarter numbers are good news (and may indicate that the positive undercurrents I noted last month are beginning to be reflected in actual employment numbers), the ABA, as is its wont, tends to chererlead more than is warranted.  I guess that’s understandable—the ABA has an industry to champion.  But it paints an overly rosy picture for those considering a career in the law, and that’s not ok.

There are a few cautions, even in the midst of positive overall numbers. First, the April legal employment numbers signaled the first increase in legal employment in several months, and the decline in legal employment in February and March was actually countercyclical, i.e., overall employment numbers were better, while legal industry employment was worse.  More important are the longer-term numbers. An increase of 1,500 jobs in a year’s time (April 2010 vs. April 2011) is better than nothing, but it’s important keep in mind that, in the same time frame, national unemployment has dropped from 9.8% to 9.0%.

In general, you do expect the legal industry to be a little behind the overall economic curve.  But these numbers seem pretty far behind that curve, and they raise the question of whether the legal industry has semi-permanently adjusted its employment model in important ways.  What the industry may have found over the last couple of years is that even hard-working lawyers can be worked a little harder, and that you can pay modestly higher bonuses as compensation, or hire temporary lawyers, rather than hiring significant numbers of additional lawyers.  That’s cheaper for the employer, saving both a higher salary and, more important, eliminating the need to pay health care and other benefits for additional lawyers.  The employment market for lawyers may continue to lag behind the economic recovery for some time.

~ by Kyle Pasewark at Advise-in Solutions on May 15, 2011.

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