Is it Back to the Future in the War for Talent?

Posted in Latest News on 30 Oct 2015

18 months ago Kevin Green – the CEO of the REC – told us that on the back of the recovering economy the recruitment sector should expect at least another 3 years of growth. And that business would be perceived as treading water if they only posted 25% more revenue in each of the periods.

Last week our MD attended the APSCO Awards for Excellence in London. The message there was that the good times are here to stay – that we are actually 3 years in to a 10 year business cycle so we should plan for 7 years of business in a positive trading environment. This is not just about recruitment; this is professional services and business in general. There will always local factors that influence the fortunes of different lines of legal services. It’s fair to say that there are different rules for public funded legal services and PI has also felt the hand of government. To some it may not feel like the good times at all but do not fall into the trap of comparing now to say 19 year ago. This is what the good times feel like in this cycle. And now is the time to take a risk and press the hiring button to maximise your firm’s potential for growth.

So that’s the good news – unless you are naturally risk averse because there will still be some tight calls to make but worth remembering everything is so much easier when the sun is shining. And sometimes it takes a reality check to wake you from a slumber. Yes this is a good time for business – so get on with it.   

The bad news is that like every other law firm in the UK you are going to need lawyers to achieve your ambitions and objectives. That’s not only because the role of a Solicitor is safe from automation for the next 20 years according to a study by researchers at Oxford University and Deloitte. But it is also due to the possibility that the growth in Solicitor numbers may not keep pace with Law Society’s financial forecasting. In this week’s Law Gazette Eduardo Reyes focused on the 4-6 PQE group of Solicitors – tomorrow’s associates. They are out there but some hirers have described them as being as rare as hen’s teeth - a legacy of the record 16% drop in trainee intake that occurred as the slump bit in 2009.

However it is not just the 4-6 PQE group that are causing concern. In August 2014 the Law Society valued the legal services market at £29.12bn and predicted 4.9% growth in 2015 which would take the value to £30.54bn. From the end of 2015 to 2018 they are forecasting 4.09% compound growth to £34.44bn. Assuming there is some correlation between the number of practising Solicitors and law firms’ ability to meet the future demand for legal services then applying the same 4.09% compound rate to current numbers would mean from the number of PC holders will have to increase by 17,103 to 150,940. As it happens the current run rate for compound growth in PC holders stands at 2.3% based on there being 127,874 in August 2013 and 133,837 in August 2015.

If the legal sector maintained that run rate then by the end of 2018 the number of PC holders will stand at 143,285 which is a potential shortfall of 7,655 and 842 alone in the Midland’s region that I cover, which accounts for 11% of all PC holders. So why is this? Is the recession still impacting on hiring strategies with law firms still reluctant to hire big numbers? And consequently is the legal sector failing to leverage the good times while they last?      

It’s going to be in interesting 3 years. The more straight line routes to qualification the legal sector has adopted will start to have an impact on PC numbers soon enough. Plus investment in IT and general streamlining of the legal process will help bridge the gap between supply and demand. However what is clear is that the war for talent is not going to go away. Anyone who has a responsibility for resource planning and/or is involved in the hiring process needs to appreciate that the day to day pain they are experiencing is indeed the new reality. It’s not just legal, we are feeling it in recruitment and it’s going to be the same across business sectors. There is an acute need to acquire and retain talent to facilitate future growth. And in the absence of a wholly scalable solution it’s the HR heads and decision makers who are going to be feeling the pressure more than anyone else in their organisations.

Sean Doherty is a Managing Consultant on Douglas Scott’s Midlands’ desk. He places 4-6 year PQE Solicitors, Associates and Partners in to the region’s Top 100 law firms and is a perfect complement to your own direct search. Call him on 0121 237 6499 for an impartial market overview.  

Share this post