Eye on ESI October 2022: Ediscovery Pros Hold Fast to Job Flexibility

For the October webinar on the state of the ediscovery industry, TRU Staffing Partners Founder and CEO Jared Coseglia met with ACEDS President Mike Quartararo and Maribel Rivera, VP, Strategy and Client Engagement to discuss the latest job market metrics. Rivera started the discussion by showing slides provided by TRU Staffing Partners.

Maribel Rivera: Jared, walk us through some of the changes we have been seeing and what we are looking at on the screen:

Speed of Hire
2021 vs Q1-3 2022

Jared Coseglia: We will bring you three key metrics each month. This is the speed of hire chart. Since last month, there was a slight change: Midmarket, non-contract professionals are still at about 20-30 days for the complete hiring process. This stat relates to hiring by vendors. The bullet under that one is for law firms. Law firm hiring has extended to 60 to 90 days. It’s taking law firms twice or three times as long to fill the exact same roles vendors are filling. Why? The No. 1 reason is the enforcement of in-office mandates. Many TRU law firm customers are moving to a three-day in-office mandate, and this is slowing things down considerably. There are two key metrics I want to share with hiring managers that relate to this statistic:

• The number of applicants that a law firm will receive for open positions if they move from a three-day a week mandate to a two-day a week mandate in the office is nearly 50% higher. (If you see two candidates while holding onto a three-day a week mandate, you will see four or more with a two-day a week mandate.)
• If you have a one-day a week mandate, you’ll likely have far more candidates to choose from.

There is a lack of willingness by job seekers to go into the office three days a week. Many more are inclined to go in one or two days but have become accustomed to working remotely and don’t want to switch back. These roles comprising PMs, managers, data analysts, general analysts, processing pros, etc., hold 80% of the jobs in the industry. But the remote-work issue is what is taking law firms longer to find the best talent.

MR: These timeframes and speeds are taking us back to what we were seeing pre-pandemic, aren’t they?

JC: More or less, but it used to be that vendors were in the same time cycle as the law firms in terms of how long it took to fill open roles. But because vendors have basically adopted a fully remote culture for those who want it, and law firms are moving in the other direction, there is now a divide happening in the marketplace.

Mike Quartararo: Jared, why is this happening? I’m overemphasizing but I feel like we were going “digital” and we’re moving back to “analog.” What’s going on here?

JC: During the pandemic, we experienced a new way of working and there has been a critical shift in American culture. People want more time with family and having flexibility matters more. This need for flexibility ranks above even career ambition.

Ediscovery mid-market professionals face a concrete ceiling in terms of vertical growth mobility. So, they tend to look at job specifics very closely. They are looking for more money, more flexibility, and people who are interesting to work with. The need for these things is what is driving people to change jobs and start over. So, many firms are finding it increasingly difficult to get people to come into an office.

MR: Jared – we have a question from the audience. “Why is it that job seekers won’t go into an office for three days a week when many attorneys and paralegals already are? It’s a bad economy with inflation and such getting worse. Our systems are depressed with many buildings only half full. Why is this a problem?”

JC: There are a lot of assumptions in that question. The first is: are attorneys and paralegals all really going into the office three days a week? TRU recruiters hear that this is NOT the case. Often, the attorneys are never coming into the office, while the staff is being told to come in and have face time with the attorneys. So the support staff come in and no one is there. That dissidence creates job dissatisfaction.

The second assumption in that question is that the expectation is that “all employees across the entire ecosystem” need to have the same level of facetime with stakeholders and attorneys – that’s not the case either. Project managers work very differently than data analysts or people who are running production processes – the standards are held differently based on role. That is creating dissonance as well.

Hiring managers need to set expectations about how important coming into the office is, and then live up to those expectations. The lack of both things is what is causing the cyclical turnover. The mandate must resonate with a value proposition. This is a shift in culture and we all must adapt.

MR: It looks like there is a comment in the feed: “Jared is correct. I posted a job opening multiple times for an ediscovery professional, and until I added that this was a “remote” position, almost no one applied. I think remote work is here to stay.”

JC: Yes, people want flexibility. That doesn’t have to be 100% remote, but it does mean entertaining the idea that employers need to compromise to attract and retain talent. And just to the other point – about the economy falling apart and people should just be lucky to have jobs – here’s what is different about this recession than any other: unemployment is lower than it was before the pandemic – that’s not how it usually goes.

Usually when interest rates go up, the Consumer Price Index goes up, the stock market goes down and the unemployment goes up when people get fired to maintain corporate margins. Right now, companies can’t afford to fire people. Salary inflation is so rampant that employers can’t afford to replace people. Ediscovery professionals are still getting 20% increases when they change jobs.

Employers are not firing ediscovery pros. That might change, but until it does, this is going to happen:

US Law Firm ESI Salary Averages by Region
(rates at point of hire, not rates of existing market comp)

The PM/Coordinator row has changed in the last 30 days, specifically the price point has gone up significantly. The Sr PM/Consultant level has also gone up. We’re seeing major law firms pay between $150K and $200K for these folks with up to 7-10 years of experience. With more than 10 years, these folks are commanding salaries over $200k. This is not only being seen at the point of hire, but we are also seeing people get equivalent raises to keep them employed.

MQ: These numbers are shocking to me. Are these billable roles?

JC: 80% billable.

MQ: OK, that makes more sense. The firm is making money from this role, and they can support those salaries. Years ago, many lit support and ediscovery operations were cost centers. That’s why salaries were so depressed for so long.

JC: Keep in mind that law firms now are outsourcing most of the tactical work. They have a higher expectation of what they want from a project manager. These folks need to be very consultative, strategic, and technical. That evolution has moved the salaries up and we’re seeing that more “basic response” work goes outside. People in managed services agreements get the heavy lifting done, and project managers are really coordinating customer service. Now you are adding leadership into the equation of valuing that person financially.

MQ: It’s interesting to point out as well that these numbers are at the point of hire. This is not someone in a role for 5, 7, 10 years. These numbers are probably lower than those salaries.

JC: Yes and no. Anecdotally, we are seeing people come to us for jobs who are being told they are priced out. If they are making $225k a year, there aren’t a lot of places who can pay much more for you to do the same job somewhere else walking in the door. We are also seeing some of that correlate to retention. But these numbers are derived from actual placements.

MR: I want to move to our next slide on average salaries.

US Service Provider ESI Salary Averages

JC: This is for service providers, and not much has changed. The changes are in Project Manager and Senior Project Manager – these are the two areas where we’ve seen it tick up. Vendors are having to increase here because they are fighting for the same talent as law firms and when someone gets an offer at $135k from a vendor and $185k from a law firm, it becomes very difficult to argue that someone will take a position with a $50k drop. Most people are saying they would go into the office occasionally for that extra $50k. But what a chasm that is – what law firms are willing to pay versus vendors. So vendors are starting to pay more and over-incentivize on variable compensation for senior project managers. Variable comp used to be about 5 to 10%, but we have seen that number go as high as 20%, which gets their total comp closer to the law firm money.

MQ: Do you have any sense of whether there is a difference between work environments across law firms, service providers, government, or whatever else there is, of remote, hybrid or in-office?

JC: Government wants people in the office five days a week. But in these roles, there is no need to be tied to a smartphone after the day is over. It’s strictly 9 to 5 work, certainly at the federal level anyway. Vendors provide a certain sense of autonomy. As vendors get bigger, people are working in smaller groups. At law firms’ lit departments, there is no surplus of people, they run much leaner, and everyone is visible. Generally, there are fewer jobs at law firms. Vendors command 65% of the open hiring requisitions on the market. There is a greater ecosystem of opportunity with vendors.

MR: Let’s move forward to our next slide – Workforce Evolution.

Workforce Evolution
Percent of Total Placements

JC: Not much has changed here. Next month we’ll have 2022 through the end of Q3 to show. Most jobs are still remote or hybrid. We are about to dip into a recession. Get ready: people are going to get fired, hiring managers are going to lose headcount approval for full-time hires, and the market is going to shift to contract work. TRU is hearing from customers that they want to put their FT headcount on hold until Q1 or Q2 of next year. This means that when the rubber meets the road, clients are going to hire contractors because they will be 100% billable, can plug right into things they need done, and then can be phased out as the work dries up.

MR: Jared are you also seeing outsourcing to more legal service providers starting to increase? You said it can be billable…

JC: I think it’s already like a pedal to floor. I don’t think law firms are able to hire fast enough or at a sufficient volume to be able to do the work in-house. Law firms have a priority on getting work done and making money. They are looking to do things in the most cost-effective way. That means outsourcing.

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