Potential Headwinds for Legal Employment in Spite of Strong General Labor Market

U.S. Bureau of Labor Statistics (BLS) data released in mid-July shows a contraction of 5.1% in total legal employment from the first quarter to the second quarter of the year. In total, legal employment levels—including lawyers, paralegals, and legal support positions—declined from 1.89 million to 1.79 million jobs. During the same period, the overall job market extended its expansion streak to 18 months.

From Q1 to Q2, lawyer employment shrank from 1.15 million to 1.07 million, while paralegal employment dipped only slightly from 452,000 to 449,000, and legal support employment dropped from 88,000 to 65,000.

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It was the first time in the pandemic era that BLS statistics showed quarterly employment losses in three main legal job classifications: lawyer employment, paralegal employment, and legal support employment. The decreases reversed a three-quarter trend that had shown healthy legal employment recovery that approached pre-pandemic levels.

However, a deeper look at the BLS data show that the Q2 overall unemployment rate in the legal field slipped to 1.4% from the Q1 figure of 1.7%. Most noticeable within that overall decline were lower unemployment among paralegals (Q1 3.8% to Q2 1.5%) and among women in the legal field (Q1 2.7% to Q2 1.6%).

A decline in overall legal employment coming at the same time as a decrease in legal unemployment rates might seem counterintuitive. However, the numbers could indicate that many of the legal professionals who left their jobs—voluntarily or not—have also simply left the legal job market entirely.

Another possibility is that the legal field is beginning to be more heavily affected than the overall labor market by macroeconomic factors such as high inflation, gross domestic product (GDP) contraction, and rising labor costs. The relatively high compensation in the legal industry and the significant costs of managing client relationships could cause these macroeconomic factors to have a greater effect on legal industry budgets and staffing levels. Fewer overall legal transactions in the context of economic contraction could also play a role.