With talk of recession now impossible to avoid, many lawyers have started to wonder about their job security. It’s worth emphasizing that actual hiring data still looks healthy by historical standards. Nationwide, lateral moves in Q3 2022 were down more than 20% from the Q3 2021 level, but keep in mind that the 2021 market was unbelievably active. If we use Q3 2019 as a more normal base case, we find an almost 10% increase in lateral moves in Q3 2022. But even if widespread pain is not yet evident, there is much anecdotal discussion of so-called stealth layoffs. Additionally, at least one firm has deferred start dates for its incoming first-year associates, reviving an approach that was widespread in the Great Recession.
Making the conservative assumption that conditions will get worse before they get better, now is the time to assess your situation and take steps to position yourself to survive a downturn. Here are some things to consider.
- Are you a restructuring lawyer? Can you become one?
There’s nothing like a countercyclical practice to help you ride out a recession. If you do happen to be a restructuring lawyer, you should be worried more about a coming deluge of work than about job security. But assuming you haven’t worked in bankruptcy, now may be the moment to wedge your way in. In the old days, corporate lawyers tended to have broader skill sets, with bankruptcy being one component of a more diversified transactional practice. Even though modern law firms tend to be all about specialization, this historical legacy can still serve as an inspiration. If you’re already in a corporate or finance practice, call up a restructuring partner and ask if the group needs help. With the next wave of restructurings presumably on the horizon, if you can get in the door now, you might find yourself in the enviable position of having plenty of work.
More broadly, you may want to think about retooling, if not to restructuring then to another more recession-resistant practice. This is especially worth considering if you are a junior corporate associate who never particularly liked your work. The best time to retool is when your group is not busy — a slowdown in deals might present an opportunity to escape.
- Assess your firm: is it well-positioned for a downturn?
In thinking about your firm’s relative strength, it’s helpful to consider the past, present, and future. As the disclaimer goes, past performance is no guarantee of future results. But if your firm is known to have conducted stealth (or outright) layoffs in the last recession, that’s probably a relevant consideration.
The present is relatively easy to assess. Are you busy? Is your group busy? What about your friends in other groups?
The future is inevitably murkier, but you can still make some educated guesses. Is your firm unusually reliant on corporate M&A and capital markets work? Bad sign. Is it well-diversified, with strong offerings in litigation and restructuring? Good sign.
- Consider your alternatives
Keenly observing conditions at your current firm is an important first step, but you also need to contextualize against the rest of the industry. Talking to friends at other firms is a good idea. But for deeper insights informed by data, having a relationship with a trusted legal recruiter can be invaluable. We spend all day talking to people at various firms, so we’re always informed about how the market is trending. And we have access to extensive proprietary data specific to individual markets and practices. We know which firms are growing and which are losing people to the competition. As stealth layoffs pick up, you can be sure that seasoned recruiters will be among the first to know the real story.
If you learn that your firm is underperforming relative to peers, or that it’s perceived to be at greater risk in a downturn scenario, you’d be well advised to investigate whether firms in a stronger position may be seeking someone with your skill set. Naturally, a trusted recruiter can help with that diligence as well.
- Watch the partners
Even in a good economy, most partners are open to hearing offers from rival firms. But with conditions deteriorating, it’s especially safe to assume that your partner is taking calls. Many partners feel the ground shifting under their feet, and they are just as worried as associates about potentially being pushed out. To the extent there may be concerns about the health of the firm overall, partners will be especially eager to flee: nobody wants to be the last person on a sinking ship. If you notice an uptick of partner turnover at your firm, it could be a sign that you too should look elsewhere.