🤿 Sunday Deep Dive: The Cost of Legal Recruitment

By 

Legal Operations
Industry Insights

Recruiting permanent legal staff can be a major headache. In a poll of 55 law firm CEOs and CFOs, more than half said that recruitment is a “high risk” to firm profitability, even as client demand and profits are on the rise. These concerns represent a paradigm shift in the talent landscape that gives associates a hefty bargaining chip- namely better salaries, bigger bonuses, and broadened flexibility.

Let’s dive into what makes hiring so pricy and what can be done to make it more economical.

The Context

While the the current employment environment proves beneficial to talent, it throws up several challenges for employers looking to recruit and retain top talent. And, in-house teams have not been left out of the struggle.

Where did all the lawyers go?


A record-breaking number of Americans quit their jobs in April. That record was broken again in July and then again in August in a trend economists are calling the ‘Great Resignation’. Job openings are sitting wide open…for months. After many firms instituted hiring freezes during lockdown, business leaders are seeing high growth in demand for legal services in most practice areas - which means high demand for legal staff. These trends have combined to create a “white hot [hiring] market” and made it more difficult and time consuming than ever to lure quality candidates.

Some companies are veering forward by trying to ride out the quitting wave, and the end of the Great Resignation itself. That’s not going to be feasible quite yet. While experts predict that we’ll experience the same inflated levels of resignations to continue throughout 2022, we’re not likely to see any great spikes. Because companies were forced to up their salary and benefit packages, employees hired over the past few months are less likely to leave. But that doesn’t mean this “era” is behind us. Others are considering it less of a trend, and more of a cultural realization where resignations are due to be expected until workplaces lay out more freedom, flexibility, and overall respect for the workforce. In an industry rooted in tradition like legal, that could take years.

The talent war

In response to competition, many Big Law firms upped starting associate salaries from $190k to $205k. Experts describe a “bidding war” for new recruits and senior associates can expect bonuses of $100k as firms fight to retain staff. Legal teams within high growth companies face the unique challenge of hiring in a market where law firms can offer higher salaries and base services… making it more difficult (and expensive) to hire permanent in-house legal staff.

But it’s not all doom and gloom…in-house positions tend to offer flexibility and benefits that Big Law never could (you can even forget the words “Billable hour!”). And, talent is picking up on it fast. While legal may be seen by some as a walking cost center, in-house pros reap the benefits of an improved work-life balance, an important both Millennials and Gen Z are demanding. In fact, more than 80% of Millennials seriously consider how a position will affect work-life balance, and 42% of Gen Z workers find it as a top priority when job searching. In-house teams are leveraging generous 401k matching and equity packages to entice more attorneys. Yes, competition is tough. But in-house teams have some cards up their sleeves!

What’s taking so long?

The script has been flipped: candidates are sitting on multiple job offers, while employers are now interviewing for the candidate. The wide expanse of open positions is only slowing the hiring process even further.

New hires don’t happen overnight. The average hiring process takes between 33 and 49 days, depending on the industry - and that’s just from the moment the candidate clicks ‘apply’. It seems to be taking longer and longer. Employers are offering more benefits than ever before and want to ensure candidates are worth it. Complex, multi-stage interviews, extensive background checks and managers with busy schedules all contribute to the delay. War stories of candidates sitting through 6 rounds of interviews, and enduring 3 hour written exams are not uncommon. In an industry where time means money, delays are bad news.

Going flexi

The joys of working from home have been revealed in the past 22 months and they weren’t lost on lawyers. The freedom to receive a package, collect your child from school and wear your slippers during the work day is difficult to give up. And let’s not forget all the free hours you gain when you skip the daily commute. People are leaving the cities in droves for a more affordable cost-of-living. The term ‘Digital Nomad’ has increased in popularity for those who have taken up the opportunity to make the most of life and travel the world, all while working remotely.

Many companies understand the importance of flexibility and are promoting hybrid, or even remote-first models- especially those in the tech sector. Apple, Meta, Microsoft, Coinbase, and (many!) more have transitioned to offer fully-remote roles. 90% of corporate legal department employees say they want more flexibility in where and when they work and more than half say they will quit if that’s not on offer. And quitting doesn’t mean leaving the profession completely. The growth of freelancing as an increasingly mainstream route threatens to poach legal talent from traditional employers. This puts additional pressure on firms looking to hire and adds a layer of complexity to the hiring process.

The Math

In such a challenging environment, it makes sense for employers to turn to traditional recruiters to help them find new staff. But traditional recruiters aren’t kind to the budget. Most charge a commission of 25-35% of the employee’s salary. For an entry-level counsel, that’s likely to be $30-50k while a VP on a $1M salary carries a recruitment fee of $150-250k.

That might sound like good value for money if your new recruit settles in, stays put for 30 years and brings in hefty billable hours. But statistics show that's often not the case. Approximately 20% of associates say they want to stay with their firm for less than 2 years. Of those, roughly 5-10% plan to stay for less than 12 months. Consider also that new members of a legal team take an average of 7 months to get settled into a role and recruiters fees start to look like a seriously pricey investment.

What’s Next?

The last couple of years have led to a change in the status quo when it comes to hiring. Marketplace models are thriving. They provide a convenient and efficient way to hire qualified talent quickly and economically....a win-win for everyone involved. And no, we aren't talking about the recruitment agencies of the 90s. Freelance marketplace Fiverr has nearly tripled its revenue since the pandemic and counts over 4 millionpeople on their talent network. What's more, marketplaces are also experiencing modernization. They're becoming automated and, in some cases, offer fully async means of hiring. Web3 is even making a break into this space. Companies like Braintrust are offering user-owned talent networks with an incentivized token system for talent and client referrals.

For an industry like legal, sourcing outside counsel is customary. The bloated fees and minimum engagements are long outdated. If you’re a growing business and you’re forking out hefty legal fees for day-to-day work freelancers are the perfect middle ground. Freelance contractors can take a load of stuff off your plate when your team is overwhelmed, and can be perfectly tailored to suit your changing needs. And they’re quick and easy to hire through platforms like Lawtrades.

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