Route1 discusses the current state and future of legal recruitment.
The legal recruitment industry has not seen meaningful change in decades. Standard recruitment fees are 20% to 25% of the candidate’s first year’s salary, which can add up to over £1 million per year for a mid-sized law firm in London. After salaries and rent, recruitment fees are often law firms’ third largest operational expense. Employers are keen to avoid these fees but, until recently, have not had the tools to do so.
However, the industry now faces disruption from new technology designed to improve the recruitment process for both candidates and employers. This follows other disruptive technology products like Uber and Airbnb, where technology has served to resolve market inefficiencies by cutting out middlemen.
Inefficient, expensive and unpopular
For paralegal and associate hires, many legal HR professionals believe that recruiters do not add much value to the hiring process beyond an introduction. Recruiters sometimes control the process in order to protect their own interests, adding inefficiency, by writing deliberately vague adverts in order to trawl for candidates for other jobs. Recruiters’ value lies in their candidate pools, but apart from placing job boards online, they have failed to apply technology to improve efficiency because the current status quo is so rewarding. The largest recruitment agencies in the UK turnover up to £1 billion each year and employ thousands of recruitment consultants to sustain their model.
Recruiters are financially motivated to move lawyers whether or not a job is suitable and are often unqualified to provide genuine advice on this. There is an unavoidable conflict in the fact that recruiters are supposed to represent the candidate but are paid by the employer.
Route1 recently surveyed 130 junior lawyers and found that a large majority distrusted recruiters, describing recruiters as a “necessary evil” because lawyers do not have the time to wade through various employers’ websites or vague job boards to identify opportunities and make applications for them (see box “Route1”). This accords with other third party studies, and these opinions are prevalent in other common law countries. For example, a study published on a leading US legal website reported that US associates rated recruiters just 2.8/5 for career advice and partners gave recruiters a score of just 2.4/5 overall.
The report concluded that less scrupulous recruiters mar the reputation of the profession for others and that the hawkish approach toward lateral searches that some recruiters take struck many associates as disingenuous. This is also the case in Australia, where Lawyers Weekly recently reported that over half of associates surveyed by them said they would now not use a recruiter in a lateral move. Candidates’ trust in recruiters is dissolving, and this has been accelerated by the ability for the more unscrupulous recruiters simply to use LinkedIn to identify candidates and cold call them. Until recently there has been no effective alternative. Although job boards could offer firms a chance to hire directly, over 85% of opportunities on the leading legal job boards are posted by recruiters. To protect these jobs from other recruiters, they mask the key information about each job, deterring candidates from applying for them.
Using technology to lower costs
An online marketplace which directly connects candidates with legal employers is a cost-effective and efficient alternative to traditional recruiters. Route1 is a mobile app for busy lawyers which puts detailed information about law firms’ jobs that are relevant to them directly into their hands.
Employers benefit from the lower costs of using an app compared to the manual matching done by traditional recruiters. Because an app does not require teams of expensive salespeople to call candidates, the fees are a fraction of traditional recruiters. For example, the fee to employers for using Route1 is set at 5% of the successful candidate’s first year salary. Compared to rates of 20% to 30% in the rest of the market, this could save a mid-sized London law firm over £400,000 per year in recruitment agency fees. As a result, this is becoming an increasingly popular way for law firms and in-house employers of all sizes in the UK and other markets to hire more effectively and cheaply.
Unlike most traditional legal recruiters, apps such as Route1 can offer access to international job markets, enabling UK firms to hire talent from Australia, New Zealand and South Africa. Peter Nankivell, the former chairman of law firm Herbert Geer in Melbourne, commented: “After almost 30 years in law firms it is very clear to me that access to talented lawyers in an efficient, transparent and cost-effective manner is an absolute essential to a modern legal practice”. In addition, since Brexit, the demand for jobs in Australia is expected to rise among UK lawyers who will have to look beyond traditional recruiters in order to find their ideal role overseas.
Feedback from lawyers and employers who use apps such as Route1 suggests that they prefer not having to deal with a recruiter in person. Lawyers report that they enjoy more autonomy, the ability to see only relevant jobs directly from employers, with prompts set at certain salary levels if requested, and being able to apply directly. In the end, the need for any disruptive service is demonstrated by its speed of adoption.
Looking ahead, apps such as Route1 will become the go-to solution for law firms, banks and companies of all sizes looking to hire legal talent. The race is now on to determine who will be the new leaders in this new paradigm.
Route1 is a new app which uses technology to create a more efficient recruitment market for employers and candidates in the legal profession. It uses algorithms to match lawyers with jobs based on their location, post-qualification experience, and specialisation to ensure that the right candidate finds the right role. Candidates remain anonymous until they decide to apply for a job. They can then review summaries of their job matches posted directly by employers and, if interested, request full job descriptions and apply by email.
The app has launched in the UK and Australia and already has 6,000 lawyers and 80 legal employers signed up, including Linklaters, Clifford Chance, Shearman & Sterling, Herbert Smith Freehills and DLA Piper. Route1 recently won the Thomson Reuters/LegalGeek LawTech Startup Award for best marketplace.