The U.S. legal services sector witnessed job growth in May, despite facing scattered layoffs at some of the country's highest-grossing law firms. According to preliminary seasonally adjusted data released by the U.S. Bureau of Labor Statistics on Friday, there were 1,180,400 jobs in the legal sector last month, reflecting an increase of 700 jobs compared to April. This count encompasses lawyers, paralegals, and other legal professionals.
While overall job growth in the United States accelerated in May, the unemployment rate rose to a seven-month high of 3.7%. This suggests a slight easing of labor market conditions, potentially influencing the Federal Reserve's decision to forego an interest rate hike this month. Initially, U.S. legal employers experienced job losses during the early stages of the pandemic. However, many prominent law firms expanded their workforce in 2021 and 2022 to capitalize on the exceptionally high demand for corporate advisory services and other legal work.
Meanwhile, at least ten major U.S. 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, Stroock & Stroock & Lavan. The layoffs can be attributed to the cooling of the global mergers and acquisitions market and contraction in the U.S. tech industry, as explained by John Cashman, the president of legal recruiting firm Major, Lindsey & Africa. However, the overall impact has yet to be significantly widespread or severe.
Cashman stated, "Legal is pretty stable without major booms and busts. It's not booming, but it remains stable."
Amid these developments, Fenwick & West, a technology-focused law firm, has decided to defer the start date for incoming corporate and technology transactions associates to January 2024. However, entry-level litigation and tax associates will commence in October 2023, according to a spokesperson.
According to Cashman, there is an increased demand for litigation, regulatory attorneys, and some banking regions. "Everything else is just sort of stable, steady," he added.
