2017: The Year Of The “Upside Down” and Stranger Things Are Still To Come…
Many of you will be familiar with the entertaining 80s tribute Netflix show taking the world by storm: “Stranger Things”. It is a retro classic filled with unexpected twists, turns, threats of impending doom, narrow escapes from (spoiler alert) alternative “upside down” dimensions, “demodogs”, “demogorgons” and “shadow monsters” followed by of course, the inevitable happy ending. In many ways, it mirrors at least some of the themes Chadwick Nott has seen in legal recruitment this year and many we expect to see in 2018.
The "Upside Down" World
Traditionally, a legal recruitment business would expect a strong first half to the calendar year built on the foundations of a very busy January, which would then buffer the business for the slower months around summer and Christmas in the second half. 2017 quite literally turned this model upside down.
Due to Brexit, US elections and the wider global economic and political uncertainty that existed, we saw law firms start 2017 holding back on associate recruitment, waiting to see where the dust would settle. As a result, our recruitment activity figures were down in comparison to previous years and by the time we reached July, we were already bracing ourselves for a challenging end-of-year result.
But in true TV show style, against all odds The Great British Legal Market and our heroic team of consultants battled back against “demodog” level market forces to finish 2017 on a high:
The Brexit decision and the resulting uncertainty about London’s ongoing position as Europe’s capital for finance, corporate and capital markets transactions all culminated in an initial slow-down in associate and paralegal recruitment while law firms took stock. But encouragingly, deal flow in the first half of the year was stronger than expected prompting firms to start recruiting again particularly in corporate, real estate, finance, employment and regulatory fields while litigation has remained stable.
The rise of flexible working options in London for PSL/knowledge management roles and flexible fee-earner positions with virtual/dispersed law firms has provided an exciting area of growth in 2017 for our Alternative Careers and PSL team which has seen a sharp rise in demand for skilled PSL, corporate, regulatory and real estate lawyers.
Mergers, firm collapses, new performance-based partnership structures and high profile team moves also continued to dominate headlines in London in 2017 as US firms continue to put pressure on the UK law firm established guard to hold on to their top talent.
Political and economic uncertainty led to a quiet start in 2017 with numerous companies holding fire on their recruitment plans. This trend was reversed in the second quarter as companies chose to bite the bullet and complete their necessary legal in-house recruitment. By the second half of the year, demand for commercial contracts was extremely high with a growing need for financial services, regulatory and risk & compliance experience. We also expect to see more flexible consultancy and long term contracts on offer as we enter the New Year particularly in busy industry sectors such as IT, insurance, financial services, transport, construction and infrastructure.
The offshore legal market has endured an incredibly challenging year on many levels. After the 35th America’s Cup showcased the stunning beauty of Bermuda, few could forget the contrasting images that followed shortly after of the devastating hurricane damage to the British Virgin Islands, one of the premier offshore law firm centres in the Caribbean. Shortly following these tragic events, the offshore world was again put under the media spotlight with the leaked “Paradise Papers” and accompanying BBC Panorama series which re-ignited a growing political and social distaste for offshore tax-avoidance by the rich and global corporates.
Despite all of this, the offshore law firm market remains buoyant doing some exceptional work for clients across the Channel Islands, Bermuda, British Virgin Islands and Cayman with a strong need still for talented solicitors with corporate, finance, funds, trusts or private client experience.
INTERIM AND TEMPORARY WORK
2017 saw a change in the nature of interim and temporary work. With the introduction of Artificial Intelligence into the due diligence process, document review projects are now shorter, but the need for skilled lawyers to assess the nuances of the information being monitored is still extremely high. Our consultants saw a steady flow of instructions for interim lawyers in private practice, in-house and the public sector with a strong demand in London for document review projects at law firms and LPOs requiring foreign language skills such as Russian, German, French and Spanish.
The traditional locum market in the regions has also been boosted by the “near-shoring” of many London City law firms into more affordable national centres such as Cardiff, Birmingham and Manchester. Public Sector contract work is also extremely buoyant across the country and an exciting growth area for Chadwick Nott in 2018.
The North continues to be a growing hub of activity for legal work particularly in Leeds, Liverpool and Manchester. Brexit hasn’t had a negative impact locally on transactions as yet and in fact, there has been a significant rise in overseas investors getting involved in deals across the North mainly due to the drop in sterling. There has also been some exciting “north-shoring” with firms like Freshfields now housing their legal services and document review teams out of Manchester.
With the region experiencing a shortage of talent as a result of the incoming work we have seen salaries increase in high demand practice areas such as real estate, corporate, commercial, IT, IP, data protection, regulatory and financial services. Employment law and litigation vacancies have also come to the fore since the removal of Employment Tribunal fees in July. We expect this trend to continue into 2018.
Our specialist Insurance recruitment team covering the North West, Yorkshire and London experienced a year of uncertainty as personal injury practices across the country wait to get a timetable for implementation of proposed whiplash reform, small claims track limit rises and fixed costs in clinical negligence work. However, despite these grey areas, firms have remained busy and there has been some aggressive expansion from national firms in the North and London. The busiest areas of insurance recruitment continue to be clinical negligence/healthcare and personal injury for both paralegals and solicitors.
The London market has shifted its focus to high value complex injury and clinical negligence work with firms offering enticing packages for solicitors to relocate from the regions into London. In the regions, high value work is still undertaken but we have also seen a number of national firms move lower value, high volume work into centralised hubs in Manchester, Liverpool and Leeds creating a significant number of jobs at the paralegal level.
THE SOUTH WEST
Our market-leading recruitment team in Bristol has been less affected by Brexit uncertainty and has enjoyed another strong year working with our Bristol, South Wales and South West law firm clients. Competition has been fierce for solicitor and paralegal talent in 2017 in these regions putting pressure on firms at all levels to offer higher salary levels and more flexible working options particularly for real estate, corporate, insurance, commercial IT & IP, construction and residential conveyancing solicitors.
2017 also marked the rise of insurance litigation as the new battleground in Bristol with established Bristol names like Womble Bond Dickinson, DAC Beachcroft, CMS Cameron McKenna and Beale & Co facing increased competition from RPC and Simmons & Simmons, and this is expected to intensify further with the news that Clyde & Co are going to be the latest City firm to open a Bristol office.
THE SOUTH EAST
Much like the South West, the South East market has shown great resilience despite wider economic uncertainty with a continued and consistent demand for talented private client, real estate, finance, corporate, risk & compliance and commercial lawyers. Firms are also being more creative in this candidate-short market, training up paralegals to bring them through as NQs to satisfy junior level needs and offering more flexible working arrangements to attract experienced talent.
The Midlands has been one of the busiest legal markets in the country in 2017 with a consistently high level of demand throughout the year for commercial real estate, residential property, commercial, IT, technology and data protection experience. We have also seen a growing interest in construction solicitors while private client, employment and litigation needs have remained relatively steady.
Birmingham has had less merger activity to speak of in 2017 and in terms of salaries, the rates in Birmingham still sit slightly lower than other major centres despite some attractive bonus schemes and flexible working options. Watch this space though as law firms look to separate themselves from the bidding crowd in 2018.
THE DEMOGORGON OF 2018…
There will be many elements challenging our legal system and creating new streams of legal advice in 2018, not least the ‘gig’ economy and disruptive AI technology, but my “Demogorgon” for 2018 is GDPR.
The new GDPR legislation coming into force in May 2018 is a monster piece of legislation. It will have huge ramifications for any business holding personal information and will inevitably create a whirlwind of new data protection legal issues for law firms across the country to grapple with. With the threat of fines totalling up to 4% of global turnover up to €20 million for any company in breach, it is hard to overstate how many businesses will be scrambling to secure sound legal advice to ensure compliance over the next 6 months. Our consultants are already working on in-house and fee-earner roles seeking data protection experience. We expect that trend to gain momentum rapidly across all of our legal recruitment sectors in 2018.
THE SHADOW MONSTER
There can be only one so powerful, so all-encompassing and so all-enveloping that it affects everything and everyone we know. The Shadow Monster is Brexit.
If you thought GDPR was big, Brexit is simply omnipresent. Definitely a discussion for another blog, but how Brexit unfolds will touch every part of our legal framework from our privileged position in London as the heart of financial services legal advice in Europe, to which courts govern us, our human rights, our immigration laws, our competition and trade laws, our health & safety laws, our environmental & planning laws and every aspect of our employment laws.
Much like the challenge faced by our heroes in Stranger Things, we can’t actually identify the beast we are dealing with yet, so while change is hurtling its way towards every part of our legal system, what form it will take is still completely unknown. One thing, however, is certain: Brexit will create one of the biggest explosions of legal work ever seen in the UK.
Get your BMX bikes and walkie-talkies ready…
For a confidential discussion about legal recruitment in 2018 in your area or to discuss joining us, please contact our team at www.chadwicknott.co.uk.