COVID-19 Update - w/c 20th April
What is the latest when it comes to COVID-19 and your law career?
As you have no doubt seen many law firms are pausing promotions, salary raises and bonuses, and some are even furloughing staff (though most furloughed staff are support staff, not fee-earners - for obvious reasons).
What does that mean? Well, when you see headlines like that your first thought might be to worry about the health of the businesses and what that means for your future career in law.
We are likely to enter a period of recession. This is part of the normal economic cycle. This is what happens with the system we have. It isn’t perfect but, for the most part, it functions. It is important as an aspiring lawyer that you understand how the economy works. Ray Dalio, the billionaire hedge fund manager, explains very simply in this 30-minute video and comes highly recommended. The reasons for a recession are wide-ranging and almost always come out of nowhere.
As nobody can see into the future, law firms like all other businesses need to see what the future might look like and take steps to adapt to that part of the economic cycle. It might be that M&As take a nosedive, and restructuring and insolvency grow. Firms aren’t sure, though, so it’s prudent they keep their cash so they have as much room as possible to react when it is clearer what the future might look like. This is why some are furloughing staff, stopping pay rises and postponing bonuses.
Having said that, law firms are continuing to invest and plan their recruitment strategies for this autumn. They know that in two or three years time they will need the talent in the business to deal with the upturn. This isn’t the first time law firms have been through a recession and it won’t be the last.
So what are we likely to see? We are likely to see firms cancel summer schemes and maybe even defer some training contracts that will be starting this year, so it is most likely to affect anyone who already has an offer. If you are in your first or second year, there is a long time to go until you graduate and things will have changed by then.
During the 2008/2009 crisis, there were 16% fewer admissions to The Law Society’s solicitors roll by trainees, from the peak to the trough. If that happens again the number of training contract places will drop from around 6,500 to around 5,500, so there will be 1,000 fewer. However, the number of trainees has grown a lot since 2008. There were 1,300 more trainees in 2017 compared to 2008, and 5,500 is almost as many places as there were in 2008! That means if the drop is similar it will be about as hard to get a training contract as it was in 2008, but easier than in 2010 when the market bottomed out.
The story has been the same for many years in the legal sector. Law firms are looking for the best candidates and during a recession or not, only the top candidates will get a training contract. Many more people want one than exist. We estimate that around 30,000 people per year want a training contract, which means at all times, recession or not, between 16% and 22% of aspiring solicitors become one.
You will need top academics, work experience, charm, excellent commercial awareness and probably some luck. Concentrate on the things you are in control of, do well academically, apply for work experience and work on your commercial awareness. If you haven’t tried the commercial awareness toolkit, maybe it’s time to give it a go.