Banking and financial services legal market update

Where to begin to summarise the last 12 months in the financial services and banking legal markets? Here is a brief overview from Taylor Root’s perspective.

Jump to each key area:

• Salary hikes
• Sector activity
• Buy-back and counteroffers
• Flexible working
• Sponsorship for foreign lawyers
• Regional candidates
• Advice to candidates
• Summary

Salary hikes
The hiring landscape has been heavily candidate driven with candidates often having several opportunities at any one time. In turn this has resulted in law firms increasing their salaries and flexibility in order to retain their employees. Historically it has been the magic circle and US Law firms who have paid a premium for their NQ’s and associates, however even the mid-tier firms are paying £85K – £100K on base salaries for newly qualified lawyers. This has meant that in-house client’s budgets have had to increase in order to attract the level and calibre of lawyer that they are looking for. If it has not been possible to increase the budget then organisations have had to adapt their requirements, either on the level of experience or background. It would be remiss not to mention the knock-on effect salary increases have had on wider in-house legal teams. A number of our clients have conducted salary benchmarking and reviews and have increased their salaries in line with the market not just for new hires but for existing staff.

Sector activity
During the last year we have seen unprecedented levels of recruitment activity across the permanent and interim financial services and banking markets. This includes private equity, banking, asset management, payments, fintech, insurance and professional services / consultancy with the highest demand at the mid-level often caused by counsel leaving for progression, title and pay and / or more flexibility. There continues to be a particular demand for candidates with strong funds, derivatives, debt capital markets, payments, commercial and corporate backgrounds.

Buy-back and counteroffers
There has also been an increase in ‘buy back offers’ where employers (including law firms) are offering significant counter offers to retain staff who have resigned. This has included a salary increase, retention bonuses, more flexibility and / or a promotion. There is an increased awareness of the difficulty in finding replacement staff post Brexit and post-Covid, and so companies are doing all they can to retain their staff even at resignation stage.

Flexible working
Post-Covid has seen a significant demand for hybrid working. Historically lawyers may have taken a salary reduction to work closer to home or move in-house. Now in the post-pandemic world, all of this has changed as candidates are more likely to take a London based role when they only have to commute one to three days per week as these roles offer a higher salary. A considerable number of clients are struggling to get people back into the office. We have seen companies insisting on three days per week in the office lose out on candidates. A recent survey we conducted showed 94% of lawyers would turn down a role if they were required to be in the office for more than three days a week. Given the increased flexibility post-Covid, the ‘push’ factors have eased for candidates, so unless the new opportunity offers more flexibility, better quality, and progression in terms of pay and title then there is little reason for lawyers to move.

A recent survey we conducted showed 94% of lawyers would turn down a role if they were required to be in the office more than three days a week.

The clients that have had the greatest success hiring and securing candidates in this competitive market have been the ones who have offered the most flexibility (one to two days per week in the office), and flexibility on the level that they are hiring, with an increased willingness to train candidates up and hire from different skill sets. The ability to work remotely overseas for short periods around holidays has been attractive to candidates although it is appreciated that some companies are unable to offer this due to regulatory and / or tax concerns.

Sponsorship for foreign lawyers
Flexibility also extends to a company being willing to support a foreign lawyer through the sponsorship process. The sponsorship process has become much easier in the UK as many lawyers will meet the minimum points-based criteria. Overseas lawyers tend to be more open minded for their first move to London so many companies are willing to offer sponsorship to attract high calibre talent from overseas.

Regional candidates
Some of our clients have looked to hire regional candidates for London based position on London based salaries but only require them in the London office one to two times per month. Only a few employers have been willing to do this but the ones that have, have managed to secure high calibre regional talent by offering a largely remote working role.

Advice to candidates

• In this current market, take advantage of the options available to you and be open minded about your next steps
• Embrace video calls as an opportunity to quickly assess if the skill set and personality/cultural fit is there before investing too much in the interview process
• Where practically possible, ensure that you request at least one in-person interview at any stage of the process, even if there is not a push from the client, as this will help you to get a better sense of personalities and culture more broadly when you are walking through their offices
• Be honest about what you are looking for and don’t be afraid to ask questions.
• If you’re interviewing for several positions, be open with recruiters about where you are at with these processes so that they can be better managed to ensure you get the opportunity to see these through to the end and are able to make an informed decision

Advice to clients

• Look outside the box and be flexible where you can be
• Be clear and honest about what you want
• Minimise delays in your recruitment processes and maintain the momentum, so that candidates feel engaged through the recruitment process
• Ensure that in-person interviews are part of the process at some stage as meeting candidates face to face is an important part of the process for both the employee and candidate

In summary
Moving forward to 2023 with the current economic climate the shortage of candidates looks to continue. Candidates are starting to be naturally cautious with the pending downturn and there has to be significant pull factors for candidates to consider making a move. We are also starting to see the volume of legal roles in-house and the significant increases in salaries, starting to stabilise as we enter the last quarter of 2022.