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Demand for legal talent continues

Geoff Adlam – Capital Letter Wed, 22 Mar 2023

New Zealand’s legal services market has a major shortage of appropriately experienced lawyers and that looks like continuing, says Jenn Little, Managing Director of legal recruitment technology platform Insource.

Little says she would describe the New Zealand legal recruitment market as “desperate” at the moment.
“As well as there being a shortage of lawyers, some firms are showing a conservative approach to hiring. As a former search recruiter of lawyers for 15 years, I have seen law firms make the mistake of placing recruitment on hold twice – firstly post the GFC in 2008 and then briefly after the outbreak of Covid in 2020. Many firms continue to scramble for quality talent today.”

Insource is a continually updated searchable platform of every practising lawyer in New Zealand and Australia and all registered New Zealand legal executives.

4-6 years PAE still in demand

Little says Insource does not foresee any change in the current market shortage for lawyers, particularly in the four to six year post-admission experience (PAE) level.

“So far, from Insource data, we can see the big seven law firms have hired no more than nine lawyers in this PAE band since January this year. Most of the recruitment has been in litigation and dispute resolution with a scattering of lawyers hired into other areas such as resource management and environmental, tax and competition regulation.”

She says lawyers in specialist areas that are in demand still need to be pipelined well in advance of there being a need to hire.

Panic hiring pushes salaries up

Asked about salary levels, Little says over the last two years she has seen firms panic, often paying starting salaries much higher than the actual experience level being recruited.

“The result being that some firms are now over-lawyered but still lack the specialists they need. Partners haven’t got time to train these lawyers to the level they require them to operate at. A partner described the situation to me in November saying their firm has more lawyers than they need but many hired in recent months are not business fit – meaning they are not the right talent for the work requirements.”

Little says she believes many law firms will come unstuck in the war for talent if they don’t start to seriously invest resource, time and tools into proactive recruitment – “prospecting talent in advance of there being a hiring need”.

“There is just not enough talent that is a fit for law firms, and they can’t expect to be able to fill roles on demand.”

HR staff also doing it tough

The problems with finding the right lawyers are made worse by a high turnover in those who must do the searching and hiring – the HR teams. Little says a lot is being expected of them.

“They may be exhausted, or they may not have the budget or resource to be able to devote time to building their talent pipeline, so they are always recruiting reactively.

“I think 2023 will continue to see many firms’ HR departments scrambling for talent and hiring low-hanging fruit simply because they don’t have the time or resource to apply a more sustainable approach to their talent sourcing and workforce planning. This will result in poor quality hires that cannot operate at the expected levels.”

She says the pressure in the HR area is showing with increased uptake of a new Insource service allowing the hire of experienced freelance recruiters to assist with any part of the recruitment process.

“Most firms are now paying at least $10,000 in referral fee hires, which is equivalent to 80 hours of freelance recruiter assistance. One of our subscribers was absolutely thrilled last week because within an hour of engaging our freelance recruiter they were able to present two warm leads for a new specialised role to the firm’s hiring partner.”

Overseas departures fluctuate

Firms continue to have to compete against the lure of experience and bigger salaries overseas. Little says Insource analysis showed that about one-third of the leaves from the top seven New Zealand firms left for opportunities overseas.

“In the third quarter that jumped to 50 per cent. Since November 2022, that figure is now 24 per cent. So, there has been some fluctuation of that number over the last year but – even in the best-case scenario – a quarter of these firms’ leavers are heading overseas.”

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