The legal job market has witnessed significant shifts in 2023, with some unique challenges and changes compared to previous years. This blog explores the evolving landscape of legal hiring, the impact of artificial intelligence, and what we can expect in the coming months – taken from our in-depth Market Overview. You can download the full report here.
High Demand for Niche Skillsets
The legal field is no stranger to the ebb and flow of demand for specific skillsets. In 2023, lawyers with experience in areas like capital markets, derivatives, funds, banking and finance, as well as corporate and regulatory expertise, have been in great demand. This demand primarily stems from in-house legal teams within the financial services sector, where specialised knowledge is crucial.
However, what's noteworthy is that while there’s still a high demand for these skillsets, there has been a decline in hiring compared to the previous year. The first half of 2023 saw a 35% decrease in job listings within the financial services sector compared to the second half of 2022. Several factors contribute to this decline, including the economic climate, cost-cutting measures such as hiring freezes, and fewer transactions due to market conditions.
Despite the decline in job listings, some financial organisations have benefited from this situation. With reduced competition for top legal talent, they’ve found it easier to attract strong candidates. Notably, there has been an increase in excellent candidates moving from top-tier law firms within private practice to in-house roles.
The Impact of Artificial Intelligence
Artificial intelligence has emerged as a game-changer in the legal industry, significantly affecting the way lawyers work. AI technology is being employed to automate repetitive and time-consuming tasks, such as legal research and document review. This shift is freeing up lawyers' time and allowing them to focus on higher-level tasks, ultimately enhancing their effectiveness.
Reasoning and generation are two key areas where AI is making inroads in the legal profession. Reasoning involves using AI to analyse vast amounts of legal data, statutes, and case law to provide lawyers with relevant information and precedents. It helps in sifting through extensive data quickly and efficiently. On the other hand, generative AI has been utilised to summarise legislation and legal documents, albeit with some challenges like occasional inaccuracies.
While AI has immense potential, it also raises questions about job security and the potential privacy risks associated with handling sensitive legal information. The legal industry is working on developing specialised in-house teams to harness AI's capabilities effectively and safely.
Outlook for 2023/2024
Looking ahead, we can expect a shift in the legal hiring landscape. As the market gradually recovers, there will likely be an increase in job listings. The slowdown in hiring from private practice due to a drop in transaction volume is expected to reverse, leading to higher demand for banking and finance lawyers.
Moreover, regulatory lawyers will continue to be sought after as financial regulations evolve. The market is projected to see more job listings as organizations resume hiring to replace attrition following periods of hiring freezes.
In conclusion, the legal hiring landscape in 2023 has presented a mix of challenges and opportunities. Niche skillsets remain valuable, and AI is becoming an integral part of legal work. Adapting to these changes will be key for legal professionals looking to thrive in this evolving landscape. As we move into 2024, the legal job market promises to continue its transformation, offering both exciting prospects and challenges for lawyers and organisations alike.