The job squeeze

As the recession forces law firms to reconsider their business models, the amount of training places is falling. Alex Aldridge takes a look at what the future may hold for law students

First came the wave of training contract deferrals, as many of the top law firms scrambled to find volunteers to delay their training contract start dates by a year. Next, as the recession deepened, recruitment targets (for training contracts starting in 2011) were scaled back, with Eversheds and Field Fisher Waterhouse going so far as to close their graduate recruitment programmes altogether until next year. Then, during the summer, firms took the opportunity to cut headcount further by reducing trainee retention rates on qualification to approximately 70% - a significant drop from the 90%-plus retention figures that were the norm in the boom years.

As winter arrives, the economy is showing tentative signs of recovery, but there is still a concern that there may not be enough work around to sustain the numbers of lawyers firms have become used to employing. This is reflected in the fact that intake targets for the latest round of trainee recruitment (which begun last month and continues until 31 July 2010, for training contracts beginning in September 2012) have been cut by 10%-25% at many firms, with proportionate reductions being made in vacation scheme numbers.

For the last five years, magic circle duo Linklaters and Allen & Overy (A&O) have each taken on at least 120 trainees a year. This year, however, they plan to recruit 110 (to start in 2012), with A&O planning to further reduce that figure to 105 during the next couple of years.

"Our business has reduced in size by around 10% as a result of the recent restructuring. We think it is appropriate to reduce our graduate intake by roughly the same proportion so we can continue to provide top quality training and keep on as many trainees as possible on qualification," explains A&O graduate recruitment partner Richard Hough.

Meanwhile, mid-tier pair Simmons & Simmons and SJ Berwin, both of which took on around 50 trainees a year during the boom times, have cut their recruitment targets for this year by 20% - meaning each will offer 10 fewer training contract places to 2012 starters. And Field Fisher will cut its annual trainee intake from 20 to 15, which equates to a 25% fall.

The situation is made worse by the increasing numbers of applications law firms are receiving for training places. Slaughter and May, for example, this year received about 2,000 applications for 95 places in its 2011 intake - an increase on previous years of about 10%. The quality of those applying was also up, said Slaughters executive partner Graham White, with many candidates who might have formerly favoured investment banking or private equity opting instead for the relative security of law.

A temporary measure?

The question anxious prospective lawyers are asking is whether the cuts in trainee intake will be a temporary measure or the beginning of a lasting trend.

Field Fisher's HR director Charlie Keeling thinks that it may be the latter: "The law firm business model is changing, and as a result I am not confident about a return to previous graduate recruitment levels," he says. "The demand for greater value among law firm clients who are under pressure to reduce legal spend, and resultant cost-cutting initiatives such as outsourcing, could hit trainees."

Simmons graduate recruitment officer Anna King has a similar take: "While it is hard to predict, I can see numbers staying slightly reduced, particularly with the offshoring arrangement we have recently put in place whereby some commoditised work is being sent abroad," she says, adding that the firm hopes to give the trainees it does take on higher quality training than before: "We have just started running a legal MBA for our trainees; one of the aims of which will be to give them greater responsibility and make their learning experience a better quality."

And even Slaughters' White - one of the firms still not to have cut trainee intake targets - believes clients' quest for better value for money could hit graduate recruitment in the future. "Clients may object increasingly to firms putting trainees on a file, which could obviously lead to a change in the pattern of the law firm business model, with the pyramid's base becoming narrower," he says.

Others, however, downplay the potential impact of changes being brought about by pressures to cut costs:

"We have never done any offshoring and, frankly, we have no intention to do it. But where it does occur elsewhere, I understand that what gets offshored are the unskilled, repetitive tasks that we wouldn't want our trainees doing anyway," says SJ Berwin graduate recruitment partner Bryan Pickup.

Meanwhile, Linklaters trainee development partner Simon Firth suggests that graduate recruitment levels may creep back up again as the economy recovers. "Essentially, graduate recruitment is governed by attrition rates which at the moment are down at quite low levels. I suspect that once the recession is over attrition will go back up again," Firth comments. "Having said that, a lot of the attrition comes from people leaving law firms to go to banks - and now banks are much smaller than they used to be pre-crisis. So it is hard to say."

With law firms recruiting so far in advance - and difficult-to-predict variables at play such as the Legal Services Act (which from 2011 will, among other things, allow outside investors to buy into law firms and non-lawyers to become partners) - it is no surprise that graduate recruiters are not keen on making concrete forecasts. But, whatever happens, it is worth remembering that the falls in graduate recruitment targets are from peak levels that in many cases only existed for four or five years when the economy was running at full pelt. Intake at SJ Berwin and Simmons, for example, was around 40 trainees per year in 2004 - the same as the reduced 2012 targets. However, A&O has recruited 120 trainees annually for around 10 years, making the cuts being brought into this year's recruitment round significant.

Of course, worrying about all of this is futile for students enrolled on law degrees and Graduate Diploma in Law courses. Instead, graduate recruitment partners advise aspiring lawyers to devote their energy to making applications stand out from the crowd. According to White this means: "Avoiding gimmicks - we get some awful ones, such as photo collages of applicants - and providing evidence that you are genuinely interested in law as a career. Something that demonstrates you have got a life beyond law helps, too."

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