Pete Ryan/The Globe and Mail
On a warm night this past July, Bay Street finally came back out to play. Over a glittering view of Toronto’s entertainment district from the rooftop terrace of the TIFF Bell Lightbox, 300 guests — including lawyers, students, clients, bankers and businesspeople —enjoyed mini Jamaican patties, jerk shrimp, rum punch and ginger beer, while a steel-pan band and dancers in traditional Caribbean dress entertained the crowd. Caribbean Fête, hosted annually since 2018 by the Caribbean Practice Group at WeirFoulds LLP, made its long-awaited return after a two-year COVID-19 hiatus.
“We had people constantly asking us, when is this thing coming back? Are you guys ever going to do this party again?” says partner Kayla Theeuwen, who barely had a chance to enjoy the food and drink, flitting about as the consummate host and reconnecting with her network.
Indeed, WeirFoulds had been trying to get this popular shindig going again since it was last held in February 2020, to mark, per usual, Caribbean Carnival. Pandemic waves kept pushing the event forward, until the practice group finally put together an outdoor party to coincide with Toronto’s Caribana. “The reception was amazing. Everybody was so excited to be social again, and in that setting,” says Theeuwen.
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While lawyers and their clients undoubtedly missed these soirées, lavish lunches and other opportunities to schmooze throughout the pandemic, the lack of in-person networking surprisingly didn’t hurt firms’ prospects. On the contrary, firms reported their best year on record in 2021, according to Law.com, with lawyers working “flat out” in private equity, litigation, and mergers and acquisitions, while simultaneously recording slim expenses related to social events, conferences, travel and court appearances—costs that can drag the bottom line. And that wasn’t the legal profession’s only silver lining of the COVID cloud. Staff shortages led to jacked-up salaries and generous bonuses, and the need to work remotely disrupted traditional office dynamics, levelling the playing field for a diversity of lawyers and creating more work-life balance.
But with a push to return to in-person work and a recession looming, will any of the benefits law firms gained over the past three years stick? Or will everything go back to the way it was before? We spoke with some of the legal industry’s in-the-know recruiters and consultants to find out.
Revenue growth
There were several factors that made the pandemic period so lucrative for Canadian law firms, some of which won’t be easy to replicate. For one, a lack of in-house counsel at the onset of the pandemic had businesses reaching out to their partner law firms for assistance. “The legal departments at companies had shrunk, they’d stop hiring,” says Calgary-based Sameera Sereda, managing partner of legal recruitment firm The Counsel Network. By the time companies were ready to hire more lawyers, the staff shortage had hit the legal sector hard, and there was no one to take the jobs.
A surge in M&A deals and bankruptcies also came into play. M&A activity in Canada increased 117% in 2021, and deal volume was up 24%, according to PwC Canada. Meanwhile, bankruptcies and proposals under the Bankruptcy and Insolvency Act went up by 70.2% in the first quarter of 2022 compared to a year before.
Now, with M&A activity cooling and a possible recession on the horizon, the work may start to dry up. “We’re already seeing a slowdown. The work isn’t coming,” says Toronto-based legal management consultant Deborah Glatter. “I think the glory days have come and gone.” U.S. statistics concur with that assessment, as Thomson Reuters’s Law Firm Financial Index shows a dire slowdown at American firms in the second quarter of 2022, charting the longest slide and lowest score ever recorded in the history of the index.
For her part, Sereda has a more sanguine outlook. “When you look at the legal market in its totality, it rides the wave. There are different areas that are busy at different times,” she says, noting that bankruptcies can keep transactional groups in clients, while family law is “recession proof,” and those who do environmental compliance will continue to be in demand.
Hiring, retention and salaries
The pandemic was a time of increased staff turnover for many industries, and law firms—along with in-house legal departments—were no exception. Junior lawyers, some of whom went straight to working from home, never got the chance to build camaraderie with their colleagues in person, so they felt little connection to their firms. And since remote work removed the geographic limitations of a commute to the office, when U.S. firms offering big bucks came calling, young lawyers went for it. “When loyalty to the firm isn’t there, it’s much easier to leave and go to another job,” says Sereda.
Meanwhile, senior lawyers and support staff who found more work-life balance when commutes and travel were off the table began re-evaluating their lives, especially if they were worried about their health or that of family members during the pandemic. Many departed from the field or looked for greener pastures. A February 2022 survey by Thomson Reuters Institute, for example, found 64% of associates at law firms in Canada were likely or somewhat likely to leave their current employer, with compensation as the top deciding factor, followed by issues around career progression. (“Feeling underappreciated” and “lack of genuine regard for employees’ well-being” were also significant factors.) “It’s affected our ability to grow,” says Theeuwen about the impact of the skills shortage on her practice group.
Indeed, firms had to get creative around hiring, says Michelle Dunnill, regional director, Toronto, for recruitment agency Robert Half. Tactics included poaching new grads into support positions, for instance, and training them on the job. Of course, they also leveraged their ample profits to woo staff and get them to stick around. Data collected by The Counsel Network tracked lawyers’ salaries at the big firms going up an average of $15,000 between 2020 and 2022.
But that trend is already starting to reverse, says Sereda, who has seen a slowdown in bonuses in the past few months. Even worse, young associates with jacked-up salaries now risk looking unworthy of their premium price tags. “You’ve got a number of people out there who are worried that they may have priced themselves out of a job,” says Glatter. “They know if a slowdown comes, they’re vulnerable.”
Pete Ryan/The Globe and Mail
In-person vs. remote work
During the pandemic, many professionals departed for new area codes, hoping to never commute to work again. Sereda recalls a de facto assumption that remote work was here to stay, with Canadian lawyers expecting they could work for overseas firms, or maybe keep their Bay Street jobs but do it all from a laptop in Muskoka or Costa Rica. “That is not what happened,” she says.
Big law firms with gorgeous offices adorned with the finest in art pieces now want their staff to come back. But it’s not just about real estate. “For young lawyers, their skills haven’t been developed in a way that they should,” says Sereda. “Firm loyalty and teamwork hasn’t been developed.”
Still, hybrid work arrangements risk becoming a sore point between partners and associates and staff. “You can’t give someone a perk and then take it away,” says Glatter, especially when the revised rules aren’t applied equally. “If you’re being asked to come into the office and you’re the only person sitting anywhere around you, you feel like the firm is the puppet master.”
A return to the office also risks compromising some of the hard work many firms have done on equity, diversity and inclusion over the past two-plus years. Without the need to adhere to rigid in-office schedules or partake in the informal rituals that the legal profession has often relied on to identify partner material, women with kids and BIPOC lawyers had finally experienced a more level playing field. But if everyone must appear at their desks again, that equity could vanish, says Glatter. “With the resurrection of face time, you’re going to see proximity bias. If I’m an associate and I’m coming into the office, and I’m young and single and I have no childcare or eldercare responsibilities, and I live in a little condo nearby, I’m going to get more work because I’m physically present,” she says. That goes double if firms start to embrace the cutthroat ways of the past and hire on the golf course or shun lawyers who can’t work 24-7. “I think it’s going to be a struggle,” says Glatter.
Having said that, in practice areas where there are still shortages—Dunnill says family law is especially understaffed—a lack of commitment to a progressive culture could work against recruitment and retention efforts, so employers might have to reassess their return-to-work protocols. Similarly, Dunnill says an enduring shortage of support staff is causing firms to allow these workers to operate on hybrid schedules, a set-up that was unheard of in the past.
Travel and networking
In the few weeks between Jan. 1, 2020, and the shutdown that March, Theeuwen’s Google Maps Timeline reported she had travelled around the world one and a half times. “Then, in April, my next update was, you went to the grocery store.”
The respite of staying put came as a welcome change to many lawyers, and created an expectation to maintain a more life-friendly balance between travel and teleconferencing moving forward. Much of the litigation work Theeuwen does in the Caribbean, for example, continues to take place online, and she suspects it’ll become hybrid over time. “I think it’s refreshing to get to back to spending some time in other places, especially if it’s a happy medium,” she says.
Firms are also looking at a more moderate return to travel, retreats and conferences after realizing just how much they could save when lawyers had no flights, accommodation or client wine-and-dines to expense. Of course, while Zoom may be an adequate solution to keep in touch with existing clients, it doesn’t provide the networking opportunities critical to building new business—a serious problem in a slowing economy. The compromise for some firms is to invest in more selective events.
“For a retreat, instead of going to the Bahamas, you might be going to Niagara-on-the-Lake,” says Glatter, who adds that flying 200 people to a far-flung locale may not be in keeping with a firm’s commitments to corporate social responsibility, either. The ESG angle can also provide a convenient out, she says, noting such events sometimes do cost more than they’re worth, and firms dealing with a slowdown will want to curb unnecessary expenses without looking cheap.
While a looming recession, a return to in-person work, and tighter purse strings on compensation and perks make it seem like the party’s over for the legal profession, Theeuwen is more optimistic, and hopes firms will permanently embrace a personalized approach to work. “That’s the thing with this pandemic—we have all experienced it in slightly different ways. What’s good for some people is not necessarily the best for others,” she says. “Now that things are getting better, we should have more flexibility to develop our businesses, our practices, our lives, in a way that suits us.”
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