Quarter 2 of 2024 saw the top New Zealand law firms[1] continue to lose more lawyers than they’re hiring with every 1 hire seeing 1.8 lawyers departing – an increase from quarter 1 where every 1 hire saw 1.3 lawyers departing.
Hires
The two main sources of talent for the top 7 firms during quarter 1 were in-house (32%) and specialist/boutique firms (32%), with the next two largest sources being other top 7 firms (16%) and national firms (10%). Most of the talent hired had less than 7 years PAE (58%).
Departures
Ignoring the lawyers where it’s unknown where they left to, there is no overwhelming trend when looking at those who left the top firms in quarter 2.
Lawyers left the top firms to go overseas (17%), to city firms (14%), in-house (11%), national firms (9%), boutique / specialist firms (9%), to the bar (6%), and to another top firm (3%).
Interestingly, a third of lawyers who left the top firms have not updated their public information to show what their next role is. While there is never a complete data set, quarter 2’s departures information is notable as the ‘unknown’ group is so large compared to previous quarters (a third larger than quarter 1 2024). We can only speculate what is going on here – it could be because they’re heading overseas and don’t have their next role lined up (often travelling first before getting a job), taking a career break to study or raise children, or they’re leaving the profession entirely.
Attractive overseas opportunities
There is continuing intense competition for top talent, including from overseas as reported by LawFuel recently. The Insource data supports this with 17% of quarter 2 lawyers who left the top firms heading to overseas opportunities. Also keep in mind that a portion of the unknown departures (another 17% of departures from the top 7 firms) will likely appear overseas in the future.
LawFuel also noted that some firms are making considerable efforts seeking to recruit lawyers returning home or considering living in New Zealand. One Insource customer, a top tier firm, used Insource to set up an alumni event in London and invited top-tier alumni. From this, the firm established a warm pipeline of 16 top-drawer NZ lawyers that will return to NZ and take up work at this top tier firm between 2024 and the end of 2026. In front footing the market, this firm (and others using Insource) are playing the long game and hiring candidates on their timeframes to win the best talent.
While many firms are making considerable efforts, the figures do not show these efforts have yet come to fruition – we will watch this space as the year progresses. In addition, while we know that speaking to offshore candidates is a great way to source talent, there can be considerable lead times with this approach.
Government restructure has had an impact
The wider economic situation is also likely having an impact on talent movement. With the change in government last year there has been upheaval in the public sector with recent budget cuts and restructuring. LawFuel commented that this has not led to a significant reduction in legal jobs in the public sector, however while the jobs might still be there, the talent who used to sit in these roles appears to be moving – particular to the top firms in quarter 2 with in-house being the largest source of talent for these firms.
It was also noted that the precarious economic situation has made some lawyers hesitant to change jobs, preferring to remain secure in their current roles. However, the numbers of lawyers leaving the top firms and being hired by them are roughly the same as quarter 2 of last year (2023). The actual number for new hires and leavers is also more than quarter 1 of this year. So, while there may be hesitancy in the market, it does not appear to be having an actual impact on the recruitment market – at least for the top firms.
Firms would benefit from diverse sources of talent
Top firms generally hired out of in-house and boutique / specialist firms in quarter 2, whereas the lawyers that left those firms went to a variety of roles. With the shortage of talent in the legal market and the difficulty in hiring, firms should consider all sources of available talent and specifically look to their competitor firms’ alumni (wherever they’ve ended up). Tides have changed and in-house legal teams are now a real source of talent for law firms too.
If you are a data driven law firm that looks at data to inform your future hiring decisions about where your top performers come from and assess methods that have proved to be most effective, Insource can assist your firm in making effective and quality hires. Don’t hesitate to reach out and book a demo.
[1] Bell Gully, Buddle Findlay, Chapman Tripp, Dentons Kensington Swan, MinterEllisonRuddWatts, Russell McVeagh, Simpson Grierson.
