Hiring activity in the legal market has slumped, falling back in line with pre-pandemic figures while demand for in-house roles has also plunged, especially in the banking sector.
According to data from Search and VacancySoft, shared exclusively with City A.M., throughout 2023, both quarterly and monthly total vacancies were consistently lower than the previous year.
The most significant fall happened in the second quarter of 2023 when vacancies dropped 34 per cent from the same quarter in 2022, this was primarily driven by steep falls in April and May of 38 per cent and 34 per cent, respectively.
The data highlighted in the report noted Magic Circle firms did not feature in the top ten law firms that were the most active in the past year. The list was dominated by mid-tier firms instead, with City-based DAC Beachcroft leading the way with 175 vacancies last year. Despite that, it was still a drop of 16.3 per cent drop on its 2022 vacancies.
Activity in the UK legal sector hit record levels last year as the sector generated £43.7bn in revenue.
Within law firms, real estate was the top skill in demand, but again, despite that, its market share slipped from 22 per cent in 2022 to 18 per cent in 2023. This is partly due to a hefty 37 per cent fall in vacancies in this area in 2023 as the commercial property sector has slowed down.
On the other end of the scale, vacancies in personal injury roles increased by 15 per cent, taking the segment’s share of the overall market from 6.4 per cent in 2022 to almost 10 per cent in 2023.
James Chaplin, chief executive of Vacancysoft comments: “The tidal nature of the economy can be seen when looking at the legal sector.”
When it came to in-house legal roles, the data showed a year-on-year 29.4 per cent decline in position vacancies; this trend was consistent throughout its dataset, with every month showing a decrease, ranging from a significant 55.8 per cent in April to almost flat in November.
Banking and technology sectors saw the biggest drop in in-house vacancies. The data showed a 45 per cent and 54 per cent fall respectively.
The report stated that within the banks, “the cause is clear, in that the slowdown in corporate finance has meant that the demand for lawyers to facilitate contracts and deal-making has fallen significantly.”
On companies, the data stated that TikTok was a notable outlier within Tech, posting over 100 per cent growth in vacancies, as the report stated it was possibly driven by increased regulatory scrutiny. Amazon reduced its open roles by 71 per cent, moving it from number two in its top 10 in 2022 to number 10 in 2023.
Banking roles showed a similar decline, evidenced by Barclays and HSBC where job openings fell by 49 per cent and 46 per cent, respectively.
Despite the drop in vacancies between 2022 to 2023, the report noted that the figures in both law firms and in-house were broadly consistent with the levels seen in 2019, the year before the pandemic.
Commenting on that, James Franklin, director at Search said: “Whilst 2023 saw the impact of quantitative tightening on the sector, the signs are positive looking forward, with that, as interest rates fall and corporate finance gears up, we anticipate a busy year for both the law firms and the banks.”