PE Invasion: Invisible Job Killer for JD Class of 2029 (as well as for partners)

 Already, law students and junior associates are plenty worried if AI will significantly reduce the number of jobs in law firms. However, they might not be worried enough about how the private equity's "invasion" could further shrink the number of positions. And not only for inexperienced lawyers. But also for equity partners. There could be fewer voted in as equity partners and increased de-equitization.

Why PE could be such a game-changer for employment is this: PE wil exploit AI to boost overall revenue as well as revenue per lawyer. That's the reality of fewer entry-level slots made available and reduced mobility/employment security within the firm. 

And yet there's been an 8% surge in applications to law school. 

It takes a lot of funding for a law firm to grow. Two major expenses are the cost of recruiting/retaining stars and technology. 

For that funding and increased liquidity law firms ranging from Paul, Weiss to Quinn Emanuel, are exploring investments by PE firms. The largest plaintiff firm Morgan & Morgan has gone a step further:

" ... reportedly [it] hired J.P. Morgan to explore selling a minority stake to outside investors, particularly private equity firms. The transaction ... could be completed by the end of the year and may eventually result in a public offering for the firm."

Meanwhile the large Spanish firm ECIJA has already sold a stake to Alia Capital in order to fund global expansion, especially through mergers and acquisitions.

Agreed, as law school school deans preach, the JD is a versatile degree. For example, those with it could become legal AI engineers. The alternate paths are also open to de-equitized partners.

However, if law firms cut back on jobs there could be a glut of both inexperienced and seasoned lawyers chasing after a limited number of jobs.  That was the situation during the Great Recession. A number of those I coached even had difficulty landing survival non-legal work. 

Unfortunately, part of that scenario is likely with the current job market. With unemployment of new college graduates two points higher than in the general population there probably will continue to be a flight to advanced degrees.

In coaching, I warn those considering investing in any academic degrees that the market demand could change before they graduate. A generation entered college riding high on hope that computer science was their ticket. So did those matriculating for MBAs and doctorates, with some exceptions. That didn't turn out as so-well planned.

Today, in Bloomberg Law Roy Strom documents that demand is already plunging because of AI:

"Last year, firms with more than 500 lawyers hired 6,588 new graduates, down 538, or 7.5%, from the 2024 peak, according to data released last month from the National Association for Law Placement ..."

And, this is a non-recessionary time.

Careers. Forget all that. It’s about earning a good living, no matter what.

Complimentary consultation with Jane Genova, StreetSmart Coaching (janegenova374@gmail.com)


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