The state of the legal job market

In the face of high interest rates and a looming recession, the largest law firms on Bay Street are doing just fine

It’s no secret that the global economy is on shaky ground. Interest rates have soared. Inflation has driven up prices in almost every industry. And the bigshots in finance continue to forecast a recession in the near future. The job market on Bay Street, however, has rarely looked better.

That’s the core takeaway, at least, from the final tally of our annual Summer Job Watch. Later this year, 16 of the largest law firms in Toronto will welcome a collective complement of 336 second-year summer students. That represents a slight decline from the previous summer, when those same firms took on 344 students, but it’s one of the highest figures on record since Precedent started to collect such data 15 years ago.

How is that possible? The primary reason is that, when building an annual student cohort, law firms have to land talent that will allow them to thrive in the long term. “We aren’t making decisions based on short-term trends or blips in the economy,” says Kim Bonnar, the chief professional resources officer at Cassels. “We have a multi-year time horizon.” (Cassels has hired 24 students for the upcoming summer, matching its highest number in our data.)

Natasha Bhimji, the director of student programs, diversity, equity and inclusion at Stikeman Elliott LLP, makes the same point. “The number one way that firms build their talent pipeline is through the student recruitment process,” she says. “We hire based on what we think we’ll need in five years.” (The firm has hired 24 incoming summer students. Two of them will split their time with law firms in New York, but Stikemans latest round of summer hiring still sits at the high end of its historical average.)

Although law firms have to adopt a long-term view, it doesn’t hurt that the legal marketplace is in excellent shape. “The demand for legal services last year was incredibly high,” says Bonnar. “I think all the firms were incredibly busy.” Bhimji adds that Stikemans, despite the bleak economic headlines, remains busy with work.

Beyond the latest summer-job numbers, Bay Street has also struggled to retain its best associates. At the height of the pandemic, American law firms ruthlessly poached mid-level talent all over Toronto. That phenomenon has largely come to an end, but associates continue to leave Big Law in search of other opportunities. “The market, since COVID, has been pretty crazy,” says Emily Lee, the co-founder of ALT Recruitment Partners. “Lots of people are moving in-house or even leaving the profession.”

The competition for junior talent is fierce. Some in-house legal departments now offer salaries that match those on offer in private practice. Companies have also started to hire first-year associates. This is a major departure from the past: historically, corporations preferred to hire mid-level associates who didn’t require much on-the-job training. “This year, we did place a number of first-year lawyers into in-house roles,” says Lee. “There’s definitely been more appetite to train.”

With a recession looming on the horizon, Bhimji predicts that movement to in-house roles could slow down. “There’s a lot of uncertainty in the market,” she says. “I think people are being more cautious, generally, about changing roles.”

Bonnar, for her part, is taking comfort in the latest summer job data. “The stability, I think, is generally a positive sign,” she says. “I’m optimistic.”

Illustration by Sam Island.