Suspension of partner profit distributions, pay freezes, furloughing staff and redundancies have become all-too familiar headlines in recent days as the Coronavirus pandemic continues to ravage the legal sector. Such stories remind me of my time as a journalist on The Lawyer, reporting on breaking news stories about the 2008 global financial crisis, including several regarding law firms offering future recruits bonuses to defer training contract start dates and in one high-profile example cancelling offers altogether.
Though no firm has to date publicly announced a similar move, I’m sure this is one of the many conundrums trainee recruitment and development teams are having to get their heads around. Indeed, the inboxes for such individuals will inevitably be bursting at the seams because the current crisis is already having a much greater impact on the trainee recruitment market than the 2008 crash.
The first and most pressing issue for graduate recruiters is of course LPC exams and whether current cohorts can successfully complete this stage of the qualification process and then progress onto their training contracts. At the time of publication discussions between law firms, law schools and the SRA regarding how to move forward on this issue were still ongoing.
But it isn’t just LPC students who are waiting on tenterhooks. Undergrads will also be feeling a significant strain with spring 2020 vacation schemes having already been axed and summer programmes now hanging in the balance. And then what about Freshers? Law firms typically rely on first year grades to assess applicants’ suitability for places on their vacation schemes, which is critically important because so many now only consider offering training contracts to placement students.
Meanwhile, further up the food chain I’m already beginning to hear stories about firms furloughing trainees and as a direct result postponing qualification dates to as late as January 2021. And for those trainees who are lucky enough to be able to carry on working remotely there is of course the ongoing headache of work allocation and supervision. And all this as firms prepare for the summer 2020 qualification rounds.
As a career coach and outplacement specialist, I’ve supported trainees who miss out on internal NQ positions for a number of years now and I’m gearing up for my eighth qualification round. The previous seven have confirmed to me that the NQ jobs market is often over-subscribed with the number of candidates actively looking for roles outstripping vacancies.
The spring 2020 qualification round was particularly challenging, presumably as a result of Brexit uncertainty. Add to this the unprecedented impact the pandemic is already having on businesses across almost every sector and it’s small wonder that the health of the NQ jobs market and indeed that of qualified lawyers is looking extremely vulnerable with some of my recruiter contacts telling me they’ve been made redundant as a direct consequence of firms instigate hiring freezes.
The prognosis for the legal jobs market very much depends on how the crisis unfolds and the time it takes for Governments to bring the pandemic under control. If as some economists are predicting the crisis results in a more prolonged period of recession then critical care will need to be prescribed in significant doses and law firm management teams along with their staff will have to hold there nerves for as long as possible.
I appreciate this will make uncomfortable reading for a lot of you so wanted to end on a positive note. Though the impact of the pandemic is having an adverse impact on all of our lives at either a personal or professional level or in indeed both. This crisis feels remarkably different to 2008, which was of caused by a fundamental failing in the global financial system, which in turn made certain practice areas such as structured finance obsolete overnight. In contrast, whatever direction COVID-19 takes the economy there will be some winners, including firms with expertise in restructuring and private equity.
Indeed, maybe the US firms bolstering their private equity capabilities have got it right all along. Because sooner or later, there will be plenty of bargain basement business ripe for acquisition. And in the meantime portfolio companies are going to need plenty of legal advice as well. Litigators should also benefit because that too is a counter-cyclical practice area and there’s bound to be a deluge of work resulting out of disputes concerning frustration of contracts. Indeed, the 2008 crash resulted in several high-profile cases which to this date nave kept law firms busy.
So if you’re a final seat trainee considering which practice areas to qualify into now might be a good time to think about restructuring, private equity or litigation. That said, the competition for such roles has always been fierce so better get those practice interviews in as soon as possible.
Employers, meanwhile, would be advised to think more long-term before they swing the axe and when they do start hiring again just remember to keep an open mind and rather thank hold out for candidates with a straight line CV consider those whose careers may have temporarily gone off course through absolutely no fault of their own.