Director Jane Gaunt gave her assessment of the legal recruitment market as we approach the middle of 2022.
Pace of legal recruitment
After the legal recruitment boom of 2021, the last six months have continued to be brisk, with a significant amount of recruitment reported at all levels.
The end of the financial year has also seen many clients looking in detail at their recruitment forecasting for the coming year. The level of recruitment in 2021 has inevitably meant that the start of 2022 has been a time for onboarding in many teams. We have also found as people are finally able to travel to visit family overseas and more easily take holidays after a prolonged break, some parts of the recruitment processes are taking longer due to lack of client and candidate availability.
At the start of the year the shock of the situation in Ukraine had an impact on many UK firms with interests in Russia, together with Russian firms with offices in London. Many firms have been assessing their client portfolio in light of the invasion and we have seen a number of talented candidates on the market as a result of office closures.
Our overall assessment is that recruitment is still busy and pressurised and competition for talent is stiff, but not quite so intense as it was in 2021.
Salaries continue to move sharply upwards, with many firms moving to twice a year salary reviews. Firms that made salary announcements in January are looking to a second round of salary reviews, in many cases to adjust discrepancies at the junior and senior levels or to react to competitor announcements.
While headlines have been created at a junior level we are seeing that mid-career lawyers are not experiencing corresponding salary rises, causing frustration and demoralisation. There is also a feeling that salaries are becoming unsustainable, with clients unhappy about the implications for their fees.
Top regional firms have been increasing salaries to create more alignment with London salaries than we have seen before. The firms in tiers below are simply not able to match. The question remains, is this level of salary increase sustainable for the market?
Perception v Reality
In our opinion, a great many of the headlines around salaries have been clickbait, with the reality inevitably much more nuanced and complex. Headline figures hide the overall package and bonus and don’t explain the structure of a pay increase over a six or twelve month time scale.
In reality these significant salaries and corresponding increases are only in the top 50-100 law firms. There are many firms below the top 50-100 firms where salaries are not increasing at such a pace despite a generalised view that all law firms have made record breaking salary increases.
There is a general feeling that this period of salary rising is unsustainable. We saw a similar market in 2006-8 prior to recession and anticipate that things will have to level out in the near future.
Shortage of candidates
As a result of the quantity of moves in 2021, there are not so many candidates wanting to change roles right now and salary increases mean that financial incentives are having less impact on a candidate’s decision to move. Other reasons to move, such as increased contact with clients, the culture of a team, or better work life balance/home working options are all becoming more important to candidates. Many clients are working hard to re-define their firm’s culture in this post-pandemic era.
Some firms are considering candidates with in-house experience who are looking to make a move into private practice. This is more unusual for a candidate with no private practice experience, but the practice salaries are making this increasingly attractive as in-house salaries have not kept pace with private practice. We are seeing this in more niche areas of the market where there has always been a shortage of candidates such as tax, pensions, funds and financial services.
There continues to be an interest in hiring candidates with relevant experience across the Commonwealth or offshore.
If 2021 saw much discussion about the new normal, 2022 has seen a collective decision in the legal profession that hybrid working is here to stay. Many clients have adopted a pattern of two or three days in the office or 50% office based working over a fortnight. Some teams are giving more flexibility, and this is very much a consideration for candidates when assessing the overall benefits package for a potential new employer. We have worked with a number of candidates who have made the decision to relocate to the Midlands, South West and other regional centres to enjoy a blended lifestyle, with 2 nights in London hotels to fulfil their 3 days a week in the office. In hard to fill practice areas, firms are allowing more flexibility or the option to work from regional offices and use technology to collaborate with colleagues in London. In a complete contrast to the profession 5 years ago, many firms and partners are actively looking for ways to make office working more attractive.
The exception to this move to hybrid working is for newly qualified lawyers, who are expected to be in the office at least 4 days a week for their development. We have seen limited evidence of employers reducing salaries for 100% home working roles.
While we believe this is a defining moment for gender equality, and the impact on families and working parents can only be positive, the potential negative impact on mental health for candidates spending long stretches away from colleagues is not to be underestimated.
Is this market sustainable?
Given the context of wider economic concerns and inflation, it is hard to forecast recruitment levels. However, our view is that for anyone looking to make their next move in the second half of 2022 there are interesting and lucrative opportunities to consider and now is a good time to make a move.
If you would like advice on your next move, or to talk about the legal recruitment market in 2022, please get in touch.