Law firms have appeared reluctant to concur with the government’s message that the recession is finally over. Throughout 2012 businesses have demonstrated caution by either withdrawing opportunities or placing them on hold indefinitely.
Regardless of this caution, recruitment has continued throughout practice; from the US firms right down to the more boutique companies. There has been particular growth on the US side, with stateside firms seeming to buck the cautious trend and recruitment being particularly prevalent in:
- White collar crime
- Financial services
- Life sciences
Beyond the US market, there was steady recruitment throughout top tier and mid tier firms, albeit with a noticeable dip in recruitment during the summer months. The good news for candidates was the increase of opportunities in both real estate and commercial litigation, areas of which were relatively static during 2011. This increase does hint to the fact that firms are now beginning to obtain more confidence in undertaking lateral recruitment.
The main challenge throughout 2012 was on the candidate side. Candidates are expressing even more caution than law firms and are proving reluctant to be considered for opportunities when they have the fallback of current job security. The last 12 months demonstrated that, even where candidates are interviewing externally and receiving offers, they were cautious in accepting the offers. These candidates may use outside interest as a means to progress their career internally, often with an increased salary or adaptation in role.
The last quarter of 2012 suggested that the market was beginning to pick up again, with firms releasing multiple opportunities from US and top tier, right down to the mid tier/niche market, and we remain hopeful that things will continue to move in this direction throughout 2013. Candidate generation is key for 2013 and we hope that increased confidence from the firms looking to hire will pass to job seekers. One of the main areas of movement during 2012 was on the partnership side, with a number of high profile moves taking place. With firms historically recruiting at the senior level before building up teams at the more junior level, this bodes well for associate recruitment in 2013.
Although the market remains slightly unsettled, particularly with the introduction of ABS structures threatening to change the practice market and multiple mergers likely to stifle recruitment, we saw enough activity in late 2012 to suggest that 2013 can provide candidates and employers with renewed confidence moving forward.
Industry and commerce
The industry and commerce market continued to demonstrate its stability and resilience in 2012 by sustaining a steady incline in recruitment and remained more buoyant than the private practice market.
We saw no significant change in average team size, so the market is unlikely to be especially larger than it was two years ago. Firstly, it’s clear that private practice candidates remain nervous about moving firms unless absolutely necessary. In-house candidates on the other hand may feel they have no choice, having traditionally found it necessary to move more often to secure a change in role, advance their career or receive any significant increase in package. As such, industry and commerce lawyers are on the move again, often taking employers unaware and leaving vacancies that need to be filled quickly.
The second reason for the incline was the continued increase in first legal hires, particularly prevalent amongst foreign businesses expanding their London office. The Fortune 500, 75% of which have offices in London, provide a good example of this trend.
Other market trends included; added stringency with search criteria set by employers with tight budgets, who were unable to take a risk on the wrong candidate. There was also an increased necessity to headhunt candidates, particularly where the talent pool is in private practice and increasing salary expectations from candidates unable or unwilling to make horizontal moves. The future of the in-house market nevertheless remains strong and we look forward to seeing what 2013 will bring.
Not surprisingly, public sector spend has dropped over recent years, and the cuts in personnel have been widely reported. However, 2012 started to see this trend slow down, and recruitment picked up across the public sector and not-for-profit space, with both permanent and temporary recruitment increasing.
Traditionally, local authorities have taken on high numbers of locums and fixed term contract workers, and this continued as constraints on budgets and headcount remained an issue in 2012. There was movement among the not-for-profit sectors such as charities and membership bodies, with some restructures allowing for new hires or replacement hires. New legislation to regulate sectors which are fast losing credibility in the eyes of the general public increased hires within central government and NDPBs.
With limited budgets and the pressures of a bad perception amongst the press and public, many public sector organisations were keen to ensure they secured the best talent. They looked for the highest academic qualifications, as well as truly relevant experience for the roles they recruited. This made it a challenging market for candidates, as competition for the roles available was fierce.
Financial services market
One of the most significant patterns we saw at Michael Page Legal has been a number of banking institutions swing back to more traditional areas of work with a rise in the need for lawyers with retail and commercial banking experience. This was driven by the British institutions as well as a couple of international houses making a foray into this area in an effort to generate new revenue to offset falls in investment banking activity.
Derivatives remained relatively buoyant, however it should be noted that there was a decreased appetite for risk and debt within the sector. Coupled with a sharp increase in the levels of new and proposed regulation, that’s likely to impact the market this year, means demand focused largely on lawyers with experience in OTC and vanilla products as well as prime brokerage, rather than those who have done more complex structured transactions.
Despite these trends, candidates’ salary demands didn’t fall. Employers had to work harder than ever to persuade candidates that a move into the financial services sector was a good idea. The impact of the ongoing political and economic issues affecting Europe should not be underestimated and general sentiments can change from week to week. That being said, there was still a steady demand for candidates with top level academics, and at the 3-7 year PQE level, which will continue to dominate the market. The fact that the fluctuating state of the market is regarded as the norm, rather than a temporary setback, meant employers were prepared to hire when they needed to, instead of sitting back and waiting to see what happens.