The Great Legal Talent Margin Squeeze

Hire an Esquire shifts the employment agency payment paradigm from success fee to SaaS to help the legal industry balance rising talent costs, candidate experience, and fixed legal budgets

Hire an Esquire, the leading legal staffing platform, announced it is shifting its payment structure from an agency success fee model to a Software as a Service [SaaS] model, leading the evolution and automation of recruiting and staffing.

This shift is in response to Hire an Esquire’s customers’ continuing need for access to high quality, diverse talent while legal budgets remain flat and lawyer and paraprofessional compensation skyrockets. At the same time, high turnover and “talent wars” market conditions have made hiring recruiters even more competitive than hiring software developers — further increasing the costs and challenges of hiring both flexible and permanent talent. The SaaS approach, first pioneered by Salesforce in sales, is new for staffing generally, and will enable law firms and in-house counsel to reduce spend and increase staffing efficiencies. Hire an Esquire is uniquely able to move to a SaaS model thanks to a deep investment in automation technology over the past decade that has resulted in a 90% machine match rate between clients and candidates, requiring no assistance from human recruiters.

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Hire an Esquire CEO Julia Shapiro explains that the business has grown dramatically over the last decade in all market segments but larger firms were slower to adopt than their smaller peers. “Prior to the great resignation large law firms had leaned into contingent talent with 70% using contract attorneys, but many had remained loyal to their traditional staffing agencies. In the last year, we saw an influx of large firms and in-house legal departments who began seeking out new ways of staffing and recruiting. Their budgets could no longer stretch to afford the rising cost of talent and the 100% markup on contract attorney hourly rates or the high placement fees typical of their traditional legal staffing agencies.” Large enterprise clients are already expressing enthusiasm for the company’s SaaS option because “we’re already seeing contractor rates increase further for 2022 while corporate legal budgets remain fixed.”

Hire an Esquire founded in 2011 as the first tech-enabled legal staffing agency, is backed by an impressive investor list including the world’s largest law firm, the fund of Google’s Lawyer #2, and legendary investor, DCM founder, and former National Venture Capital Association Chairman Dixon Doll. The company helped the legal industry manage challenges long before “The Great Resignation”. Already by 2012, 20% of legal payroll dollars were spent on contingent talent—a number that has increased dramatically since. A contingent talent model helped the industry manage corporate demands for efficiency, a limited trained talent supply caused by a dearth of law firms hiring and training lawyers since “The Great Recession”, and a high burnout rate by matching talent spend to demand and re-engaging those who had left the workforce for more flexibility.

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Hire an Esquire made legal staffing and recruiting more efficient by coupling a hiring and workforce management software with a vetted network that grew to over 15,000 lawyers and paraprofessionals nationally. A staffing agency structure provided payroll, employment compliance, and insurance for contractors— a necessity in the highly regulated and risk-averse legal profession. To replicate the emotional intelligence of a skilled legal recruiter via automated matching, the company enhanced the typical staffing agency vetting process to include a proprietary research-backed psychometric assessment process that measured candidate soft-skills. This doubled to quadrupled customer satisfaction metrics like repeat engagements with contractors and the conversion of contractors to permanent employees — and the company also saw diverse hires on the platform increase by 15%.

Continual building of a vetted candidate network and refinement of automated hiring processes, allowed the company to achieve a 90% machine placement rate in 2021. Hire an Esquire COO Catherine Enck adds “We had considered a SaaS model in the past, but it wasn’t until we hit a 90% machine placement rate for 2021 that we were confident that a SaaS model could provide a better experience than a tech-enabled staffing agency model.” She also notes that many prospective clients wanted more ownership over their candidate relationships than an agency success fee model allowed and wished “to use the platform as a legal specific job posting site or a tool like LinkedIn Recruiter for legal”.

Hire an Esquire’s beta of the subscription model in late 2021 has proved a success. The hourly rates of contract-based attorneys and paraprofessionals have risen allowing clients to better attract talent in a competitive market. The average subscription user has received 4 qualified applicants per role within 24 hours. In addition to higher hourly rates, the candidate experience has improved to include less noise and more responsiveness. Subscription clients on average schedule their first interview within 48 hours of posting a job.

Enck notes, “In this frantic hiring market, with no cost to engage our network under a success fee model, we saw more of what we call ‘posting and ghosting’, where clients are non-responsive to candidates, creating a poor candidate experience.” Chief Technology Officer Benjamin Locher noted that while the company has made multiple product and operational adjustments over the years to address this, the subscription model appears to be the most effective product tweak yet with “zero posts and ghosts in our subscription beta.”

Hire an Esquire will retain limited aspects of the staffing agency model and will continue to offer a full-service, success-fee based “Concierge” option for clients and projects that meet certain requirements. Based on feedback from clients and contractors who highly value the compliance, payroll, and guaranteed payment services, subscribers can also elect to pay contractors via Hire an Esquire’s payment services at cost.

The company’s focus on client and candidate support will also remain intact. The entire Hire an Esquire team—including software developers—have experience in food service or hospitality; a preferred qualification listed in all of the company’s job postings. All clients will have a human customer success representative just as candidates will continue to have a human recruiter as a point of contact. The support chat will as always have humans, not bots, behind it.

“In 2022 we will continue to give both sides of our network the best of both worlds” Shapiro states, “whether by balancing automation and a human touch or the advantages of SaaS and a professional service model.”

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