With economic downturn on the horizon, legal teams looking for flexible resourcing can turn to legal marketplaces
Depending on where you look, a coming recession is either inevitable or just very likely. One thing is clear: Economic uncertainty will be a fact of life in 2023 and it will affect just about every industry, including legal services. Looking ahead, “new law” solutions that offer flexible resourcing, such as legal marketplaces, may help fill many of the gaps that companies will experience during this uncertain future.
To get a full picture of the current legal services market, you need to look back to the current economic downturn’s precursor, the Great Resignation, during which employees left the legal industry in record numbers. For law firms and corporate legal departments alike, the result has been vacancies that are taking too long to fill in the face of a workload that is as busy as ever, despite fewer resources to rely on.
So, what is the impact of the Great Resignation and economic downturn on the legal industry, and how will those trends fuel the rise of alternatives to the traditional law firm model? For many companies, one answer to the current predicament has been to turn to legal marketplaces, staffing firms or alternative legal service providers (ALSPs) to address their needs quickly and cost-effectively.
How the Great Resignation Affected the Legal Industry
From April to December 2021, an estimated 700,000 individuals in professional and business services, which includes the legal industry, left their jobs every month, according to the U.S. Bureau of Labor Statistics. The turnover rate for associates at law firms rose to 23.2% by November 2021, up significantly from the pre-pandemic rate of 18.7%. The associate turnover rate at Am Law 100 firms was even higher, at 23.7%.
These numbers are in line with attorney attitudes about work during the Great Resignation. According to Bloomberg Law’s Attorney Workload & Hours Survey from September 2021, one in ten lawyers were actively seeking new job opportunities, while 38% reported being open to new employment.
Budget Pressure on In-House Hiring Increases Demand for Flexible Resourcing & Lower Cost Alternatives
In light of these trends, much like everyone else, legal departments are looking to fill staffing vacancies that have increased in the past year. What companies are finding, however, is that it is taking significant time to replace their resigning lawyers.
Against this backdrop where hiring and finding the right replacement talent is difficult and time-consuming, some legal departments have seen hiring freezes preemptively put in place in light of the looming economic downturn. That means that departments that were already down in headcount due to the Great Resignation are being further hampered in their staffing efforts by being unable to bring on new full-time employees.
The unfortunate reality, however, is that employee shortages and hiring freezes don’t mean less legal work for in-house departments—they simply mean fewer resources. In fact, a 2021 survey showed a 6.5% increase in the demand for legal services since the Great Resignation.
Regardless of this increase in demand, executives are looking at the looming recession and increasing inflation and putting pressure on legal departments and legal operations professionals to keep budgets static or reduce them. Outside counsel rate increases add to this pressure, and create an environment where legal department leaders need to look to other means to meet their current service demands and reallocate their budgets to find new ways to accomplish the same (or more) work.
This downward pressure on outside counsel budgets, on top of hiring freezes and headcount shortages, is only making matters worse. For many companies, flexible resourcing alternatives to traditional headcount or law firms, like legal marketplaces, offer a release valve for their current staffing and resource allocation pressures.
The Benefits of Legal Marketplaces for In-House Departments
A marketplace model offers a number of benefits for in-house departments looking to address their legal needs in this economic climate. No matter the type of work departments need filled—whether it’s local counsel, niche expertise, flexible resourcing or diversity and inclusion goals, to name a few—marketplaces offer a solution. In a future post, we will address how legal marketplaces can help reduce overall outside counsel spend as well as focus on flexible resourcing. Using Priori Marketplace, departments have access to lawyers with a wide range of backgrounds, from solo practitioners to small firms to Am Law 100 firms. Here are four ways legal marketplaces benefit in-house departments:
Legal marketplaces like Priori offer in-house legal departments flexibility in addressing their legal needs in a number of ways. First, in the case of looking for headcount coverage, companies are not limited to traditional full-time staffing arrangements. Additionally, a legal marketplace is equipped to handle projects of nearly any nature, no matter how big, small, simple, complex or nuanced the projects since lawyers work for firms of all sizes. Finally, a marketplace model introduces price flexibility and transparency to the legal industry.
Going hand in hand with flexibility is scalability. A marketplace brings together a powerful, streamlined technology platform and a vetted legal talent pool to give companies access to the exact resources their legal departments need, when they need them. The marketplace allows in-house departments to quickly scale their resources up and down as needed, with the right legal support at all times.
In addition to introducing flexibility into the pricing of legal services, a marketplace model leads to in-house legal departments paying significantly less for those services overall. In the face of budget reductions and impending hiring freezes, a marketplace model offers corporate legal departments a way to fill their needs with top legal talent at a fraction of normal prices.
4. Access to Top Talent
The shift in employment preferences after the pandemic means that more attorneys are drawn to a marketplace model for providing their legal services, which, in turn, means that they have the ability to onboard some of the best and brightest in the legal industry. The result is in-house legal departments being able to access the same level of skill and expertise they used to receive from top law firms or through traditional hiring, but at marketplace prices.
Why Priori Marketplace Is the Future of Outside Counsel Hiring
Priori Marketplace partners with in-house legal teams, from Fortune 10 to fast-growing technology companies, to find, hire and manage a global vetted network of attorneys at firms of all sizes, from the Am Law 100 to solo practitioners and ALSPs. On average, companies securing legal services through Priori Marketplace save 60% over the solutions they were previously using for similar work while maintaining access to the same caliber of talent and expertise.
Whether you are looking for a long-term secondment, coverage for an ad hoc project or an attorney with niche expertise, Priori can help you find flexible resourcing and the scalable, high-caliber coverage you need at a price point that will help you make the most of your current resources.
Interested in reading more insight into the current economic downturn and its effect on legal services? Download our white paper. And learn more about Priori Marketplace to take advantage of its network of talented attorneys today.