The new year is bringing with it a new legal landscape and numerous hiring trends. According to the Sacramento Business Journal’s Book of Lists, 62% of the top 40 law firms in the Sacramento area are planning to increase their staff in the first six months of 2024. This reflects a proactive response to the evolving demands of the legal market. The remaining 38% of these top firms are looking to maintain their staff size in the next six months. Along with these hiring trends, law firms continue to face shortages of qualified attorneys going into the new year. There is an increasing number of opportunities for associate-level and partner-level attorneys amongst law firms across the board, which has prompted a competitive market for legal professionals at all levels.
A growing candidate-centric approach to recruitment is pushing law firms to understand their talent's motivations and preferences. In turn, law firms must take a proactive approach in identifying areas for improvement in their hiring practices which includes considering professionals who do not meet every requirement. And while hiring managers are open to these ideas, partner-level attorneys often resist.
In 2024, law firms are also starting to provide more incentives to attract top talent. Attracting and retaining top talent requires ongoing motivation and engagement, not just a one-time hiring effort. Benefits, hybrid work, compensation, and ongoing mentorship are all features that attorneys are looking for in their next role. On the recruiting side, we have observed a shortage of support staff including legal secretaries, assistants, and paralegals. These specific roles remain competitive and crucial as law firms struggle to find candidates that meet all requirements. We project many of these top Sacramento-based law firms will need to consider training and mentoring for candidates who may not fulfill all requirements.
Candidates continuously changing jobs are no longer receiving the pay increases seen during the peak of the 2020 pandemic. Data from ADP shows that in January, job switchers saw a mere 7.2% increase, previously 16.4% in 2022, in annual pay, compared to a 5.2% growth for those who stayed in the same job. ADP's Chief Economist Nela Richardson notes that candidates switching jobs are more attuned to real-time labor market conditions and are getting jobs in the current market, which is not as hot as before. This will likely keep annual pay growth in the 4% to 5% range for 2024. Employers are now more strategic in their recruitment efforts, offering a mix of compensation and benefits beyond just salary increases, such as flexible work arrangements. Simultaneously, candidates are still advocating for higher pay, with a majority feeling their wages have not kept up with the rising cost of living.
California law firms are offering more opportunities for legal professionals in rapidly growing practice areas. Specific areas of law including Labor & Employment, Environmental, and Healthcare continue to stay in demand. Further, according to Clio legal trend report, the areas experiencing growth are Cybersecurity, Cannabis, Elder Law, Energy, Intellectual Property, and Student Loan Law.
Another trend in 2024 is the implementation of AI tools in legal technology. This has prompted changes in firms wanting specific requirements related to tech knowledge and mobility. We anticipate candidates will become familiar with AI systems and automatization as target firms are likely to adopt these systems. We recommend reading more about this in “A Fast-Changing World Calls for New Strategic Business Principles,” at Sacramento Business Journal and checking reports on Clio offering insight into lawyers’ perspectives on AI.
Aspiring lawyers have a strong incentive to focus their careers on these areas in the state's fast-changing legal environment, and legal professionals are beginning to build their skills. Law firms are positioning themselves for expansion, hoping to attract top talent while candidates are trying to build their marketable skills. Understanding these trends, insights, and the evolving legal market is essential for law firms and candidates as we move further into 2024.