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Interim Market Report 2011 - Legal Market Analysis

Legal
Jun 2009
Dec 2009
Jun 2010
Dec 2010
Jun 2011
New vacancies

27

49

112

101

74

Closing vacancies

13

21

42

49

43

Candidates registering

453

391

379

236

219

Defensive registrations

57%

28%

12%

10%

11%

Overall Salary increase

0%

4%

9%

13%

14%



Given that Barclay Simpson only began to recruit for private practice and in-house commerce lawyers last year, we have restricted this analysis and our commentary in this section to our activities in the financial services sector. We will cover private practice and in-house commerce in the next section. The legal recruitment market was transformed over the course of 2010. The large pool of out of work lawyers that existed at the start of 2010 has been absorbed back into employment. Now, in July 2011, the number of redundant lawyers is not materially higher than in the period leading up to the financial crisis and recession. However, going forward the pattern of demand that has become established in the first six months of 2011 is more typical of what we can expect for the remainder of the year.

Vacancies

The number of new vacancies fell from 101 in the second half of 2010 to 74 in the first half of 2011. The high number of vacancies generated during 2010 was in reaction to the financial crisis. Many financial services groups and particularly the larger utility banks had recruitment freezes and had not recruited externally for almost two years. When the regulatory response to the financial crisis required substantial legal input, the necessary resources were not available internally. However, a significant pool of legal expertise from unemployed lawyers was available. The result was that many banks came to the recruitment market and were able to fill multiple vacancies. This recruitment is now substantially complete and most banks have legal departments that are fully staffed with talented and adaptable lawyers.

The number of outstanding vacancies has fallen from 49 at the end of 2010 to 43 now. The number is higher than expected and there are two reasons for this. Firstly, the number of lawyers available in the recruitment market has declined making it more difficult for companies to recruit. Secondly, many financial services groups are taking a more cautious approach to their recruitment. It is not unusual for additional interviews to be introduced to the recruitment process and for the authority to recruit to be made at a more senior level of management. As a result, recruitment processes in 2011 are now taking longer than in 2010.

Candidate Registrations

The number of candidates registering fell to stand at 219 in the first six months of 2011. Defensive registrations rose marginally from 13% to 14%. Whilst only a fraction of the percentage during the recession, beyond the usual concerns that are always part of the recruitment market, the increase reflects the potential concerns of some lawyers working in investment banking.

The fall in candidate registrations, whilst relatively modest, indicates that lawyers now perceive prospects with their existing employers to have improved. Many financial services groups are providing incentives to retain their better lawyers. The majority of those now registering are simply doing so for career development reasons and do not have the urgency to move that we had previously seen.

Salaries

The salary increase lawyers achieved when changing employer rose to 15% in the first half of 2011. This is indicative of the shortage of lawyers in the recruitment market. Whilst companies are being more cautious in their recruitment processes, there is no longer an abundance unemployed are no longer pools of redundant lawyers who are prepared to accept positions on the same or, in many instances, lower salaries than they had previously been earning. Lawyers now have greater bargaining power. However, given the wider economic backdrop and the headwinds facing the financial services industry, we do not anticipate the percentage moving above its current level of 15% in the foreseeable future. It most likely represents a highpoint.

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