The legal recruitment market has continued at the same levels we saw through H2 2021 and we are seeing dramatic increases in Salary levels on the Private Practice side being mirrored by an increase in in-house salaries as firms struggle to keep pace.
Private Practice
Private Practice demand has continued to be strong amongst the transaction teams with M&A and Structured finance associates being poached by Magic and Silver Circle law firms with accompanying large increases in compensation. The US law firms continue to outstrip the UK firms in terms of salaries for key areas with some 3rd or 4 th year associates earning £200 K + salaries. Six figure salaries for NQs at Magic & Silver Circle firms are now becoming the norm and this is having a knock effect with more experienced Associates now earning well into 150 -160 K in the sectors of most demand.
Many Law firms have moved to a flexible working model which is proving very popular with those below Partner level. Nonetheless this has gone hand in hand with a marked increase in billable hours and the upshot is that whilst Associates are being paid as never before they are in general working longer hours and this is creating issues with burn out. Firms are experiencing a slow down in DCM / ECM as new issues are being put on hold due to the current market uncertainty over the War in Ukraine but this is being viewed as a temporary hold and the expectation is that these deals will come out later in the year
Investment Banking
Demand for Banking lawyers has increased dramatically, key areas of demand are:
- Prime Brokerage
- Derivatives
- Structured Finance
- M&A
- Regulatory
Regulatory is an interesting case as demand for stand along Regulatory lawyers has increased markedly over the past few months with firms hiring across all entities.
Private Banking & Wealth Management
There has been increased hiring for Lawyers within Regulatory and Products particularly concerning Funds and Structured Finance. This is a key area of growth and we expect to see more demand for Legal Counsel, Paralegals and Company Secretaries in this space going forwards.
ESG
The demand for Lawyer with ESG experience has continued to increase and we have begun to see both sell and buy side firms hiring ESG specialists. These can vary from horizon scanning policy type roles to more hands on implementation and Regulatory roles. A ESG is a relatively new area this has opened opportunities for Legal Counsel who have been developing an interest and speciality in ESG. There has been a surge in interest from candidates with many seeking to switch from their specialisms and move into ESG. Academic courses with an ESG focus are proving popular and this coupled with the increased potential for flexible working has meant that more lawyers are able to take these external courses to up- skill.
Investment Management
The Public funds area has continued to a sharp increase in demand for legal counsel particularly for those with UCITS experience as UK based firms continue to establish & manage funds in Dublin or Luxembourg to sell funds in Europe post Brexit. There has also been a demand for Fund Distribution Lawyers with IMA experience as well as an increasing demand for Regulatory Legal Counsel. We are starting to see a shortage of lawyers in this space, particularly in the middle 4-10 years PQE range. The traditional route of hiring from private practice has become more problematic as 1) Associates are becoming very well paid 2) Business levels have been very high and hence it is difficult for Associates to find time to consider new opportunities. A number of Asset Managers have been offering training contracts and we are starting to see a number of lawyers qualify in-house in AM via this route.
Private Funds Legal Counsel have also been demand, the talent pool here remains smaller in comparison to the Public funds area and coupled with the overall market increase in compensation this has created issues in finding suitably qualified candidates even at the lower PQE levels.
Private Equity & Hedge Funds
Demand here has remained steady with Leveraged Finance and other Funds related areas. Legal Counsel here tend to be more hands on and transaction focused is this is reflected in the higher compensation levels on offer. The counter point to this is that the structures tend to be flatter and so there is less potential to move into a management role.
We had seen an increase in demand for candidates with CLO experience as this market was very active in 2021 the number of qualified candidates here is quite low, however, which has created issues for firms looking to hire in this area.
Insurance
The Insurance Market has been extremely active across all areas during 2021 with legal no exception.
Current demand for generalist, commercial lawyers in the insurance market.
Insurance companies offering good flexible working policies and attractive bonus packages. Slightly behind the rest of the FS market in relation the increase in salaries. With the majority of insurers keeping salary banding tight and looking for lawyers outside of London in other areas on the UK and Scotland.
Insurers recruitment processes often much slower not as much urgency to secure talent and tend for vacancies to remain unfilled for a longer duration has developed across the legal insurance sector. The new wave of candidates are showing more interest in the “insurtech” companies rather your traditional market leaders.
Company Secretarial
2021 has seen a market increase in the number of Company Secretary or Assistant Company Secretary roles across FS. Demand for subsidiary governance specialists is very high, minuting and board management experience is highly sought after. Candidates in this area who are fully or part qualified via ACIS are sought after for permanent or temporary roles as firms seek to add headcount and support in this area.
The demand for quantity has shifted to quality. Companies are now seeking high-calibre candidates and are prepared to pay. The increased work load generated in this area of the business shows companies are investing in top tier talent. The salaries are competitive with a 10-20% rise compared to 2021.
Demand for temporary and FTC company secretaries is still booming. A demand for dynamic company secretaries with legal backgrounds or additional skills in share scheme management is evident.
Candidates seeking higher salaries and more flexible WFH policies has promoted movement from “dormant” candidates in the co sec market.
Europe
Dublin and Luxembourg are continuing to be very active in terms of the legal market. Demand for Funds Lawyers & Company Secretaries has soared particularly in Dublin. This has created a shortage of qualified legal counsel and paralegals in this market particularly in the areas of fund set up. The Luxembourg market continues to grow with a demand for Luxembourg or French qualified Lawyers strong. The Corporate Associate market is also very active in Luxembourg. Elsewhere across Europe we continue to see strong demand in Frankfurt, Paris, Amsterdam and Italy in the DCM space.
Back to the office / WFH
With the relaxation of Covid restrictions and the vaccine program there is a general trend of firms seeking to bring employees back to the office with some firms moving at a quicker pace than others. Generally firms are offering a 3 days in / 2 from home or 2:3 solution which seems to be the preferred option for the majority of candidates that we speak with. There are firms who are requiring a full return to the office which is not proving popular in general with existing staff or prospective candidates and in our view a flexible working policy is going to be a key element both in attracting and retention of the best candidates going forwards. There are very few who wish to return to 5 days a week working in the office.
Visas / Cross border working issues.
Post Brexit the visa situation has become critical in the UK. UK firms have been clamping down on employees who have been working remotely from another country as there are now significant tax liabilities for employees who are not based in their home locations. European regulations mean that those who cover European clients must be based in Europe. As most firms now have internal log ins and portals they can track where employees are logging in from. In most cases it is no longer possible to be based in Europe and work in London where the role and headcount is UK based. Employees will need to be based in the UK.
In general FS firms have proven extremely reluctant to provide visa sponsorship in contrast to Law firms who have large number of employees working on Tier 2 visa. The UK’s new point-based visa system should enable firms to provide visas to employees via a simplified process. We have seen some of the larger firms establish internal HR teams to provide specialist support in these areas whereas some of the smaller firms are less likely to do so. It will prove to be a significant competitive advantage for firms that can work within the new visa rules to secure the most well qualified candidates.
Contracting & IR35
The contract market has remained buoyant and we are seeing an increased number of longer-term interim roles particularly in the Funds & Company Secretarial areas.
The change in IR35 rules means has resulted in a shift towards Daily Rate PAYE roles or Umbrella where candidates are paid via an umbrella company with income tax etc deducted art source. FTC roles where candidates receive salaries, benefits and in some cases bonuses akin to a permanent employee are increasingly becoming a favoured option amongst candidates as they can receive full benefits including pension and in some cases bonuses as well. Firms are no longer permitting contractors to be based outside the UK & working remotely. This is for tax and reporting reasons.
Compensation – Increasing
Since the start of 2022 compensation has continued to cross the board for Legal Counsel, Paralegals and Company Secretaries in Financial Services and in Private Practice.
In-house base salaries have increased by 10 – 25 % YoY for most areas with candidates being able to move for large salary increases particularly in the AVP / VP space.
Areas in the most demand are: Investment Funds, Derivatives, M&A, ECM, Cosec.
Bonuses appear to have been move generous this year with firms paying generally at the maximum level they can: 20 % of base salary is the norm with some firms paying in excess of this. Bonus percentages do tend to rise in line with seniority and some D or MD level candidates will have seen bonuses in the 30-50% range.
Private Practice – as previously noted compensation has been on a steep increased within the top tier Private Practice firms for teams that cover FS in particular. Base salaries have seen a steep in increase of as much as 20 – 30 % year on year for some areas in high demand. NQ salaries are now generally at the 95 -100 K level with some firms paying more.
Looking ahead
As we go into Q2 we are continuing to see a strong demand for legal counsel, paralegals and Cosec across all areas of Financial Services. The most sought after candidates are generally in the 4-8 PQE range and we expect to see a continued increase in salary for these candidates as firms compete to attract and retain the best candidates.
Flexible working will continue to pay a key part in decision making from Candidates and firms that offer a flexible approach will be best positioned to attract a) a wide range of candidates b) a higher quality of candidates.