Market activity in 2015:
The practice areas with the most activity during 2015 were:
• Corporate – in particular ECM, public M&A, private equity. Although much slower to pick up in 2014 than Banking/Finance and Real Estate, Corporate was the quickest growing area in 2015 and it is the area with the most vacancies across the City.
• Banking/Finance – leveraged finance and in particular specialised areas of finance: structured finance, capital markets, derivatives, real estate finance, asset finance, project finance – this was one of the most buoyant areas last year.
• Real Estate – Real Estate recruitment peaked in the last quarter of 2014 and there was not the same urgency to recruit in 2015, although real estate finance continued to be an under-resourced area.
• Financial Services Regulatory – in particular non-contentious, but also contentious – there were a large number of vacancies across the City which firms found particularly difficult to fill.
• Construction – in particular non-contentious construction / projects.
• Tax - Other buoyant areas, although without the same volume of new vacancies as those above, were:
• Litigation – in particular niche areas such as banking/finance and financial services regulatory, white collar crime and, to a lesser extent, international arbitration.
• Commercial IP/Technology.
• Patent/Life Sciences – these roles are often hard to recruit for because of the lack of candidates with hard (as opposed to soft) IP experience and the usually requisite science degree.
On the non-fee-earning side:
• PSLs – the most in demand areas were Corporate, Financial Services, Finance, Litigation and Commercial Technology. Firms found it particularly hard to fill the Corporate and Financial Services (and Finance) PSL roles due to a shortage of good candidates. There are generally more Real Estate and Litigation PSLs on the market.
• Risk Management / Compliance – remained steady, although there was not the same volume of risk management roles in 2015, compared to 2014.
As always, the greatest demand for fee-earners was at the 2-5pqe level. There were more external NQ roles on the market than any time since pre-recession, with a broad range of roles spread across a wide range of practice areas.
The major challenge for most law firms in 2015 was attracting candidates of sufficiently high quality. With a large number of vacancies and a small candidate pool, most good candidates found themselves in receipt of multiple offers and competition for the best was fierce.
This is partly because the last few years have seen a great deal of movement in the market so there wasn’t the same volume of new candidates coming on to the market in 2015 as there had been immediately post-recession.
Also in the years immediately following the financial crisis, many law firms made large scale redundancies and areas such as corporate, banking, real estate & construction were particularly affected. Couple this with many firms being unable to retain newly qualified solicitors in the same numbers as they had in previous years and the 12.5 per cent decrease in available training contracts over the last decade, and the result is a “lost generation” of lawyers which has affected the volume of mid-senior level candidates. Furthermore many candidates in the most sought after areas (finance, corporate, commercial technology etc) wish to secure roles IH and won’t consider a move within private practice.
Consequently, as was the case previously pre-recession, we have seen an increasing number of firms actively recruiting candidates with non-UK experience. We don’t have a local office in Australia or New Zealand but we do recruit out of these markets and have seen more candidates coming through in the last year. A number of firms who haven’t previously had a sponsorship license are in the process of applying so again there is competition for these candidates.
We also have a number of clients who are very interested in seeing the details of candidates from Ireland and Scotland. We have a number of Irish and Scottish lawyers on our database at any given time and they are very successful in securing roles in large City firms particularly within corporate, finance and funds.
Salary changes in 2015:
Following 2015’s salary reviews, we saw increases in remuneration unprecedented since the recession, particularly at NQ level. In the current candidate market most firms were conscious of remaining competitive within the market, and wanted to benchmark against their peer firms, with the NQ rate being the headline figure many firms used to publicise their salary intentions.
Whilst this was most obvious at Magic Circle level, some other ambitious firms realized the importance of keeping pace and announced comparable NQ rates (despite possible discrepancies which meant in some cases NQs could be on higher salaries than their lower banded 1pqe colleagues). Most City firms followed suit and NQ remuneration increased by a higher percentage than at any time in the previous six years. This was most obvious in July when Allen & Overy announced an increase of ￡12,000 to ￡78,500 (though the lowest tier of bonus is now incorporated into the annual pay packet). The certainty of such a high basic salary may be game changing, and we wait to see if other firms follow suit next year in an attempt to catch up.
Beyond NQ level the picture is less uniform, and specific figures are harder to obtain as more firms adopted merit based remuneration post NQ level, or at the very least a very broad ranging band making specific benchmarking more challenging.