Q1 Performance, Comp Wars, & Mental Health Survey
Thomson Reuters’ Peer Monitor Index, which collects data from 160 major law firms, reports only a 1% decrease in overall demand in Q1 2021, compared to pre-pandemic Q1 2020 which had set the high-water mark for the past 13 years (Peer Monitor Index, Thomson Reuters, Q1 2021 Executive Report, 5/10/2021). M&A showed the most growth in hours worked over Q1 2020 at 7.8%. Tax also showed some growth .6% while patent prosecution (-3.6%), real estate (-2.6%), litigation (-1.3%), and labor & employment (-.9%) all fell.
Worked rates grew 4.7% over Q1 2020, not quite hitting Q2, Q3, and Q4 2020 levels of 5+% rate growth. Peer Monitors suggests that the slight drop in rate growth is not a negative sign but simply reflects a return to more typical leverage and a greater share of associate hours in hours billed.
Race to the Top?
The battle for talent continues to rage. There are over 8,000 openings for attorneys nationally at present, greatly exceeding pre-pandemic levels (Leopard Solutions Data Shows Skyrocketing Demand for Lawyers and Highest Number of Open Legal Jobs in Years, Leopard Solutions, 5/24/21). For context, between 2017 – 2019 (a healthy lateral market), open job count numbers fluctuated between 6,000 – 6,500. January through May is typically a period of job opening growth, but this year’s increase has been staggering (4,873 in Jan 2021 to 8,268 as of May 14).
As predicted in last month’s update, several firms paying at the major market scale are recruiting associates to work remotely without regard to location. This has prompted at least 9 Am Law 200 firms to increase salaries in smaller cities to match (or move closer to) the major market scale (As Associate Pay Scale Gets Set Across the U.S., Market Will Fill Ripple Effects, Andrew Maloney, 5/11/2021, American Lawyer). It will be interesting to see whether equity partners fully absorb the increased cost or whether associate billing rates will rise as a result.
Mental Health & Substance Abuse Survey
Speaking of staffing, commentators fear that the stress of the pandemic, combined with remote working’s blurring of work/home boundaries, will lead to significant lawyer burnout and potentially exacerbate pre-pandemic challenges with mental health and substance abuse. Earlier this month, ALM Intelligence released its 2021 Mental Health and Substance Abuse Survey (“Survey”); 80% of the 3,200 respondents were at firms with 200 or more lawyers.
76% of attorneys surveyed believed that the practice of law has had a negative effect on their mental health over time. Chief among those negative impacts were:
· Always on call/can’t disconnect (71.50%);
· Billable hours pressures (62.89%);
· Lack of sleep (53.24%).
While 63% believe that their law firm has a sincere concern for the mental health of lawyers and staff, only 45% believe their firm takes well-being into account when making changes to the business. 64% responded felt they could not take extended leave to tend to mental health or substance abuse issues. The primary reason was fear of “what the firm would think” (76%), closely followed by “will hurt career trajectory” (75%).
45% drink alcohol to deal with stress, which may have additional health consequences due to alcohol’s effect on quality sleep in a profession that is already sleeping less than the recommended 7-8 hours (72% respondents reporting 6-7 hours on average; 17% reporting just 4-5 hours). Perhaps, most troubling nearly 1 in 5 of the 3,200 respondents had contemplated suicide (18.81%).
