By Chris Excell
When it comes to the UK legal market, there are four major trends that are shaping the sector at the current time that we have to take note of:
• The diluting of the Silver Circle. These firms used to be a huge part of the UK legal landscape, but with the exception of both Simmons & Simmons and Taylor Wessing to a certain extent, all other firms who were classified as silver circle have merged with either a US or Australian law firm.
• The rise of the US law firms. London remains at the top of US law firms’ global expansion strategies. They are making a huge splash in terms of salaries (a newly qualified lawyer at a US firm can earn an eye-watering £170k) and many are taking over significant market share from the UK firms.
• Competition from the Big 4. Deloitte, KPMG and EY have all set up legal divisions to take advantage of this lucrative market. It’s a great strategy, as they’ve already got a significant client base ready to service, which puts them at an advantage compared to UK firms, and it’s a huge trend for us to watch.
• The rise of the full-service IP law firm. Law firms are continuing to take this area much more seriously as the IP world goes through significant changes. Many are setting up one-stop shops, with more and more attorneys making the move from private practice to patent and trademark attorney firms.
US firms rock the UK boat
The biggest factor currently shaping the legal market here in the UK is the influence, or should I say dominance, of the US firms. They present an exciting opportunity to those working in the sector and are attracting so much talent, in some cases taking entire teams from UK firms. Allen & Overy lost one of the best IP teams in the world to a US firm. UK firms used to be able to secure most talent – but cash is king, and the US firms are now the dominant players in terms of securing candidates. There is still one area where the Magic Circle firms are matching their US counterparts though, thanks in part to their niche focus and high yields commanded – and that is banking and finance. But overall, US firms are certainly less risk adverse when compared to the UK firms and will often take a chance on markets where there is a possibility of them being a leader. They are more ballsy, and it’s why they are doing so well at the moment.
When a US firm is offering an NQ a starting salary of £170k versus circa £80-90k at a top-rated UK firm, it’s no wonder the UK firms are losing out. The UK firms have responded to salaries from the US firms and increased what they can offer, but it’s nowhere near enough, they just can’t compete. Some have realised this and are focusing on other factors, such as offering a better work/life balance, but that’s not enough for many of those starting out in their careers, who just want to make hay while the sun shines, and who can blame them.
But it’s not just private practice which is losing out on candidates – the in-house market is also less attractive to candidates, who are simply interested in earning big money at the US firms. There is also the view by some that taking the in-house route can stagnate your career after a while.
Brexit continues to pose challenges
As most of the bigger law firms have offices globally, they haven’t been hugely affected by Brexit, or the challenges around the pandemic and resulting restrictions in talent moving across borders. They can simply pull in international resource when needed. However, Brexit has forced some lawyers to look beyond UK firms for new roles, pure and simply because UK firms can no longer do some of the work, such as European/UK patent attorneys. IP is certainly the area most affected by Brexit as IP lawyers from the UK can no longer practice in Europe unless they are European qualified.
But thanks to Brexit, Dublin is experiencing a massive market at the moment – with 8 or 9 law firms having opened offices there recently. Big tech firms are also opening up in Dublin to get around the legalities brought about by Brexit. The market there has simply exploded.
Demand for lawyers high across all practice areas
Despite competition from the US firms and the continued challenges of Brexit, the majority of practice areas in the UK remain extremely busy with high demand for good talent. As many firms have invested in and acquired tech start-ups and other corporate entities during the pandemic, both mergers & acquisitions and private equity have gone through the roof in terms of activity levels.
Demand for employment lawyers continues to remain especially high, with the continued fallout from furlough and restructuring and insolvency is also incredibly busy, as lots of firms have gone out of business following the pandemic. Law firms across the board have had record years and all areas seem to be all systems go.
Anything to secure talent: but at what cost?
With such fierce competition in the UK market for talented lawyers, firms are realising they need to move fast. We’ve seen many firms going around their normal recruitment processes and streamlining them, making their processes 2-3 stages shorter in a bid to secure people. However, a word of warning – this means firms are often skipping their vital due diligence stage, simply to hire someone. This is not something we would ever advise. However much you want to fill a position and secure a candidate, due diligence is a fundamental part of your recruitment process to ensure you don’t have a more costly mistake further down the line.
Golden handshakes and sign-on bonuses are also becoming more common if a firm can’t offer the salaries that people want. In addition, secondments are also being offered to give people the in-house experience they desire. Interestingly, we’re also seeing a rise in the creation of “Talent Retention Teams”, especially among the Big 4 firms. Their job is purely to get people to stay, and KPMG have been one of the first to set up such a team. It’ll be interesting to see how common these become as firms realise that retaining their existing staff is often much easier than attracting new talent.
Partner: more than a title
We’ve seen a big shift in how lawyers view their career paths and what job seekers want from their next role. Traditionally, job seekers have been very focused on just getting to Partner and succeeding in getting that title. But candidates are now asking bigger questions – there’s been a significant shift in their mentality. They want to know how will they take the step up the equity ladder, and what is the route to Partnership, and what comes with the Partnership responsibility once it’s been achieved? It’s no longer just about the badge / title. Getting to be a Partner is one thing, but being a successful Partner is quite another.
Interesting times ahead for the UK legal market
There are interesting times ahead for sure as US firms look to be taking over the world. Their continued dominance in securing UK talent is likely to continue, as more and more open offices here and we see new entrants into the market. We’re also likely to see the Big 4 firms start taking a bigger market share in legal work as they capitalise on their existing client bases and their expanding in-house legal functions. Now with the threat of a looming recession, the energy crisis and recent fall in the Pound, more businesses than ever are likely to struggle, meaning law firms across the board are likely to be busier than ever. The demand from all sides for top talent shows no signs of reducing any time soon, but with the rapid changes we’re witnessing, the more immediate future and what we can expect is very hard to predict.
Get in touch
If you need help with hiring for your legal team or wish to speak to me in confidence about your next move, get in touch. You can contact me on chris.excell@srmrecruitment.com or +44 7595 748826 or connect with me on LinkedIn.
https://www.linkedin.com/in/chrisexcell/
