We talk a lot in our articles, FAQs and blogs and newsletters about the economic cycle and our companies produce a regular monthly legal job market report outlining our experiences of the market over the previous four weeks. We often refer to the legal job market and the effects it’s having on recruitment as well as other departments including our law firm sale and purchase work. We enjoy a fairly unique position in the market because not only are we dealing with locum and permanent legal recruitment we also buy and sell law firms and value them, so we see law firm accounts of all different shapes and sizes; we see how much they spend on recruitment & external support and we can also see their growth and negative growth areas.
We often refer to the economic cycle because it affects recruitment in so many different ways and the results can be both blinding and devastating.
In our experience there is an economic cycle that occurs every year and it doesn’t take much to impact the recruitment world. In fact to a certain extent, the recruitment industry is a little bit like a canary in a coal mine when it comes to seeing how the markets are doing. Here’s a few examples.
Firstly, whenever there is a football World Cup our permanent recruitment drops. It doesn’t just drop slightly, it completely falls off a cliff until the World Cup has finished or England or one of the other home nations has been knocked out! Secondly, if the property market is affected in any shape or form by negative issues, no matter how minor, our locum business order levels drop.
Every year in December from about the second week in we see a virtual cessation of all business across all sectors within our company. Over the years we have discussed whether we simply close from the second week in December and reopen the first week in January, so as to give our recruiters and advisers a nice long break without too much impact on ourselves as a business.
January – New Start
We think the usual economic cycle starts from the 1st of January every year. You can almost guarantee that on the 1st of January anything that was happening before this date, whether it is a job interview, a CV being considered, or a new vacancy being posted, will now have ended and everything starts afresh as of the 1st of January.
We usually do a vacancy check at this time of year and it’s amazing how many vacancies posted a few weeks before Christmas are miraculously filled over the Christmas break as the partners of a law firm have had time to think about it and decided that they don’t want to recruit anymore! We then move through with a steady increase in work until we get to the February half term when quite a few people, including our directors, head off to go skiing for a week. The business then gets very busy until the Easter break and this is one of our busiest times of the year, both in recruitment and law firm sales and purchases.
End of Tax Year
The next part of the economic cycle is when the end of tax year for quite a few businesses kicks in at the end of March and we often see a drop in business going into the first and second week of April as a result. However, as soon as this is up and finished we then see a dramatic increase in work that continues all the way through May and June before starting to decline in the third week in July and dropping off completely until the second week in September.
At this time of year you can almost guarantee that if you get to August and a vacancy has not been filled, then in September no one will be the slightest bit interested and everything will start again. Most businesses get very busy near the first couple of weeks in September as they start trading flat out following the summer holidays and we then see two busy months and usually half of November before the whole cycle drops off again as we go into December.
Locum work is at its busiest from May through to September and it is usually at this time of year that most locums will pick up the majority of their bookings if they are providing short term cover. Short term cover is particularly relevant for commercial property, residential conveyancing and wills & probate, as well as family law at certain times of the year.
Most other sectors don’t tend to use locums as regularly because they are able to deal with the capacity in house and have no need to get additional cover in for a short period of time. Longer term locum cover tends to be booked in at the start of any year and will often start two to three months in the future.
This cycle has been fairly consistent in the 20 plus years we have been in business, but it has been substantially affected over that time by major external economic factors. So the economic cycle will change completely if something major happens on the world stage, so the invasion of Ukraine, the pandemic and the bank failures in 2008 are very good examples. As I write this article in 2023 we may be about to see huge declines in conveyancing work due to the mortgage interest rate increases, which may or may not force a number of homeowners to sell their houses.
In summary, there is a very regular economic cycle when it comes to the business of recruitment in the legal sector, but at the same time there are external economic factors that exacerbate the points within the internal economic cycle as discussed.