The US legal services sector demonstrated its resilience in May as it continued to expand its workforce, despite sporadic layoffs observed at some of the nation’s top-grossing law firms. According to preliminary seasonally adjusted data released by the US Bureau of Labor Statistics on Friday, the legal sector saw an increase of 700 jobs from April, bringing the total number of legal professionals, including lawyers, paralegals, and other legal workers, to 1,180,400.
While overall job growth in the US picked up momentum in May, a rise in the unemployment rate to 3.7%, marking a seven-month high, suggests a slight easing of labor market conditions. This development could potentially dissuade the Federal Reserve from pursuing an interest rate hike this month.
At the onset of the pandemic, US legal employers initially downsized their workforce. However, many prominent law firms expanded their operations in 2021 and 2022, capitalizing on the unusually high demand for legal advice on corporate deals and other related matters. Although the number of legal sector jobs had dropped since last summer, it was a more modest decline, and a rebound began to emerge this spring. Based on the Bureau of Labor Statistics’ preliminary figures, the sector has added 3,000 jobs since March.
Despite this positive trend, a handful of major US law firms have publicly announced layoffs of lawyers, staff, or both since November. These firms include Bryan Cave Leighton Paisner, Cooley, Davis Wright Tremaine, Dechert, Goodwin Procter, Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, Lowenstein Sandler, Perkins Coie, Shearman & Sterling, and Stroock & Stroock & Lavan.
Industry experts attribute these layoffs to the significant cooling of the global mergers and acquisitions (M&A) market, as well as the contraction within the US tech industry. However, the impact has not been extensively pervasive or severe. John Cashman, the president of legal recruiting firm Major, Lindsey & Africa, stated that the legal sector remains relatively stable, albeit not experiencing a booming growth phase.
While the M&A market experiences a slowdown, there is an increased demand for litigation and regulatory attorneys, as well as certain areas of banking, according to Cashman. In other domains of legal practice, stability and steady growth persist.
As evidence of the sector’s adaptability, technology-focused firm Fenwick & West recently decided to defer the start dates for incoming corporate and technology transactions associates to January 2024, while entry-level litigation and tax associates will commence in October 2023.
This positive employment outlook in the US legal services sector reflects its ability to withstand challenges, maintain stability, and exhibit steady growth. As the industry navigates shifting market conditions, it remains poised to meet the evolving needs of clients while providing a solid foundation for legal professionals.
