There is a sentiment among associates along the lines of: “I would lateral if it weren’t for the economy.” After hearing this a few times, I thought it would be helpful to write this post.
The larger economy of course has an effect on the legal market generally. However, it should not be the end-all-be-all of whether or not to look for a new job. If an associate is unhappy in their current job, automatically deciding not to lateral or even look for a new job because of the economy is not a good approach. There are a lot of factors involved and the larger economy is just one of them.
Here are five reasons why you should not hesitate or pause your job search just because you are in an uncertain economy.
There Is Never a Universal “Right” Time
Like many things in life, there is never a universal “right” time. If you feel that you would benefit from a new job, or your current job is not the right fit for whatever reason, waiting for the “right” time in the market can be futile. When is the “right” time? How long will it take for the “right” time to come? If you are unhappy in your current job, how long are you willing to wait it out until the nebulous “right” time?
Even in a booming legal hiring market (such as in 2021), you might even feel it is not the right time. Many firms paid lucrative special bonuses during 2021 to help retain associates, making it harder for them to peel away to an attractive role at another firm or in-house (even with the appeal of high signing bonuses). There are also more qualified candidates in the mix during a booming hiring market, and you might tell yourself that you are better off waiting until the market is less chaotic and you have less competition.
Waiting for the universal “right” time can be detrimental to your job search. Instead, focus on when the “right” time is for YOU. Are you ready to make a move? What is your experience? Will the next job advance your career?
Firms Hire Attorneys for Many Reasons Other Than the Economy
A firm can be hiring for various reasons that are not necessarily tied to the economy. For example, the firm could be focused on growing a specific office or practice group over the next few years, and the economy isn’t halting those plans. I recently spoke with a well-known mid-size firm that is planning to hire 30-50 laterals in 2023, a large number given the size of the firm. The firm has planned for this type of growth and is able to sustain it with its growing client base. The economy plays only a small factor in that analysis.
Another example is that the firm might have lost several associates and is understaffed. This is especially the case after bonuses are paid at end of year. This is also the case for many midsize firms and Vault-100 ranked firms that lost laterals in the hot hiring market in 2021 to larger or higher-ranked firms. Now, many of those firms are still looking to hire high-quality talent to replace them. The economy doesn’t change that if the firm is understaffed and cannot meet client needs.
Not Every Practice Area or Practice Group Is Impacted by the Economy
Many people talk about countercyclical practice areas picking up steam in a down economy. Litigation and bankruptcy are classing examples. This is certainly true. But there is more nuance. There are some firms with stable large clients that provide a ton of business regardless of the economy, particularly in corporate and private equity funds. In firm practice groups with a client base like this, the impact of the economy can be small, since there is a steady stream of work. In fact, sometimes these clients use the uncertain economy as a time to jump on new opportunities, creating more work. Other firms focus on a different sector of the market, for example mid-cap clients, who often work on deals that are less tied to the public markets.
If the Firm is Hiring, the Firm is Hiring
This is probably the most important reason to not pause or hesitate your lateral search during an uncertain economy.
Firms don’t post job openings if they aren’t hiring. Quite the opposite: in a more uncertain economy, firms may be selective in only posting those roles they definitely need to fill, and could be less inclined to throw up a posting and hire opportunistically (something they might do if they were more optimistic about the economy). If you are interested in a job opening, you would be costing yourself by not applying simply because of the economy – at the end of the day, the firm is looking for someone!
One common question in response to this is whether you are more likely to get laid off at a new firm. This is a valid question. However, it is difficult to know which firms will decide to let associates go, and there is rarely a correlation with size or prestige. Recently, multiple large and highly-ranked firms have publicly announced layoffs. Certainly, associates joined those firms in the last couple years thinking they would have more job security, but that ended up not being the case, which is very unfortunate. Those firms made the specific business decision to lay associates off. And other firms decided not to.
In many cases, your potential new firm may not be any more likely to lay associates off than your current firm, especially if the potential new firm is actively hiring in early 2023. It is important in this case to do your due diligence. During the interview and offer stages, understand why the firm is hiring. Hear from the other associates what their hours have been like. Learn about the practice and the goals for the group. Try to find out if the firm has conducted layoffs in the past during tough times. Then, you can assess whether you are comfortable jumping in or if you feel there is a risk that you will be vulnerable. Make this decision after doing the research, instead of deciding on your own beforehand that you shouldn’t even apply.
You Can’t Predict the Future
Macro-economics are extremely difficult to predict. The famous book “Black Swan” by Nassim Taleb provides insight into this – many people feel they can see what is coming in the future, only to be thwarted by a “black swan” (a highly unpredictable event) that is so significant and undoes any plans or predictions. Think the Great Recession in 2008. Many “experts” touted that the economy and real estate market were as strong as ever in the late stages of 2007, even weeks before the market crash. Think Covid-19.
Making decisions based on the macro-economy is like trying to read a crystal ball. The economy goes in cycles, and it is plausible that the economy will bounce back quickly. It is also plausible that the economy will continue to move in the other direction. Perhaps the economy will recover, but very slowly. You may benefit from waiting, but you also may lose out on an opportunity that could be great for you, only to see it not come back.
Nobody can predict the future and making individual decisions based on these predictions that can be dangerous.
2022 has been an interesting year and many are looking for a fresh start in the new year. If you are considering a new job in 2023, hopefully these thoughts are helpful for you as you think about the larger economy should or shouldn’t play a role in your personal career choices.
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