Articles
QA David Buckley The power really lies with the candidates
In our latest Q&A, David Buckley, a partner with leading recruitment firm Taylor Root, discusses the power shift occurring in the legal recruitment market and why the big international firms do not have a mortgage on attracting the top talent.
In broad terms, what have you been witnessing in legal recruitment in the past couple of years?
Why did the market change so rapidly?
“The vast majority of law firms were already working with very lean teams. There had been such low volumes of recruitment through 2013 and early 2014 that any uptick in work has resulted in them being under-resourced. We are also, once again, experiencing huge demand for lawyers from overseas, particularly the United Kingdom. Like Australia, post-GFC, firms went through (a few years) of very low graduate and trainee lawyer recruitment, resulting in the current global shortage of lawyers with two to six years’ experience. Law firms look to Australia and New Zealand to supply high-quality legal candidates.”
So, suddenly, lawyers have got some choice and bargaining power again. Is that right?
“Yes, it has flipped really quickly. Even a small increase in work and deals has meant that the firms haven’t been able to do what they need to do with their existing resources. That’s across most practice areas, but it’s particularly keenly felt in the transactional areas such as banking and corporate, projects, construction and so forth.”
In such an environment, what are smart firms doing to get the best talent?
“Unfortunately, they can’t really do a huge amount differently. They will have their own ideas in connection with their brand and value proposition, but how the firms differentiate themselves on that score can be difficult to identify from an external candidate’s perspective. Often it comes down to rewards and opportunity. Actually, there’s been a real dislocation in terms of salaries, too, since 2009. Historically, you’d find the bigger firms would band together in terms of what they would pay lawyers at various post-admission levels, but in recent times this has changed. Some firms in some years gave pay reviews and some didn’t. It has now resulted in a big disparity between what firms will pay for the same level and quality of lawyer from firm to firm.”
You mentioned the UK – it sounds as though a lot of younger lawyers, in particular, are keen to head there again.
“That’s right because they haven’t been able to do that for many years and this is their first opportunity. But it’s not just the junior lawyers – if you were a four, five- or six-year lawyer, the opportunity to go and work overseas was almost a rite of passage pre-GFC and it just hasn’t been available in recent years. And they’re thinking it’s now or never. So that’s a really significant drain on local supply.”
Which international markets are actively chasing Australian lawyers?
“The UK is probably the busiest, but Singapore, Hong Kong, New York, the Middle East – they’re all much, much busier than they were 12 months ago and the power really lies with the candidates who have those in-demand skills.”
What impact has the arrival of the major multinational law firms had on the recruitment market in Australia?
“We’re in the second phase of that cycle. Two or three years ago, that conversation probably would have produced a lot of excitement. These new entrants looked and potentially offered something different. Many lawyers have had first or second-hand experience of exactly what the international firms can offer. This option isn’t for everyone. For example, an associate-level job working at (one of the major multinational firms) isn’t necessarily viewed as being more attractive than working for (a respected national firm such as) Minter Ellison or Clayton Utz just because they’re an international firm now. For partner-level lawyers, it becomes even more complicated for a variety of reasons, including financial and strategic considerations. To summarise, I think the jury is still out to a degree as to how successful the various start-ups and mergers have been, but it hasn’t had a major impact on recruitment decision-making.”
In some reports, you have mentioned that boutique firms can match the salaries of the big internationals firms anyway. Is that correct?
“That’s right. It goes back to what I said about the dislocation in terms of what the bigger firms were paying. Some boutique firms can surprise candidates by paying really competitively and also they can provide a lot better life and work balance. The expectation is that you’re not going to be working uncontrollable hours and you’ve got a bit more control over your weekend or your evenings. So, yes, there is a legitimate proposition that these firms can now compete far better on a financial and professional basis. Certainly, they provide a very different proposition to five or six years ago.”
How do the cycles work? Can we expect this candidate-short period to last?
“I don’t think we’re just going to turn full circle as we have over the last 20 years. We’ve just entered a completely different phase in the way law firms have to operate. The rise of alternative legal practices – with firms such as Axiom and AdventBalance and Lawyers on Demand in the UK, and various other forms of alternative legal practices – seem to be here to stay. It means that the law firms have to think a little longer and harder in terms of how they’re servicing their clients, the value they’re delivering and the means by which they do this.”
Speaking of power shifts, in-house lawyers have enjoyed a growing reputation in the past five years or so. How is that sector of the recruitment market faring?
“There is a steady demand for good lawyers to go in-house. But it’s relevant to differentiate on a sector by sector basis. If you look, say, at banking and financial services, that’s been very busy over the past 18 months and a lot of that is driven by regulatory work. That’s driving a lot of recruitment with the big commercial and investment banks, but also the more retail-facing financial services businesses have to be well-resourced for regulatory purposes as well. Then with the commerce and industry clients – the corporate clients, the technology clients and the retail clients – that’s been reasonably steady over the past three or four years. There haven’t been wholesale changes during that time; there’s just been steady demand for quality lawyers. I wouldn’t say there has been a conscious decision to increase the size of the in-house legal functions over the past couple of years. If anything, the purse strings have been reasonably tightly held. So there hasn’t been a strategic shift to say ‘we’re going to take as much work as we can away from the law firms and bring it all in-house’.”
You mentioned that law firms can’t really differentiate their recruitment offer that much from other firms. But what are lawyers demanding?
“If you’re a lawyer in practice and you want to stay in practice and pursue a traditional partnership path, I don’t think it’s changed in a generation – what’s relevant and what these lawyers demand is ‘how quickly can I progress, how can I realistically make partner?’. The motivation is still there for many lawyers who want to stay in the law firm environment, but what the law firms are doing to enable this is more pertinent. They have to think about retention and development strategies far more carefully to compete and differentiate.”
Taylor Root is a leading international legal recruitment firm which operates in four principal markets, namely private practice; in-house banking and financial services; in-house commerce and industry, and compliance. Apart from offices in Sydney and Melbourne, it has international offices in Hong Kong, Singapore, Dubai, Munich, Düsseldorf and London.
www.taylorroot.com/australia