Buoyant legal sector battles to keep pace with market confidence

  • Guy Emmerson
  • 01/09/2015
  • 11:00
  • Adecco Group

Turbulent times lie ahead for the UK legal sector if it can’t plug skills gaps and retain top talent, the most recent Badenoch & Clark quarterly update shows.

The update, which summarises our views and predictions on the future of the legal services market in the UK, reveals that talent remains a challenge. Throughout Q2, the legal sector’s strong performance was undermined by skills gaps and drawn out recruitment processes.

The uncertainty surrounding the General Election dampened recruitment confidence, yet with the reviving appetite for expansion and the seasonal upswing in the property market, competition for the best talent is set to become intense across all legal disciplines and throughout all UK regions. Demand for permanent hires increased by 13% in Q2, with City, in-house financial services and regional private practice seeing particularly strong growth.

Yet with expansion comes the pressure to retain and attract top performing candidates. The availability of new opportunities is already driving up wage and package expectations. In our City practice, associate salaries and newly-qualified solicitor salaries have increased. Firms in the regional private practice sector are resorting to flexible, bonus-orientated packages with a higher salary in order to maintain their workforce. Yet for many firms, and those in in-house financial firms in particular, sustaining salary levels in line with expectations will become more challenging.

The picture is even more mixed for the in-house permanent sector. Hires are still recovering from a sluggish start to Q2, given the impact of the General Election and lack of Government direction on key subsidies. Yet promisingly, companies are increasingly hiring into new roles and seeking talent from a broader skills spectrum, as business and commercial acumen increase in value. As in the in-house temporary sector, the challenge for firms will be to match the salary expectations of candidates, who are increasingly drawn to the more profitable private sector. In keeping with this competitive space, firms must therefore work harder to promote their brand to candidates.

Undercutting all of these trends is the speed of recruitment across all sectors. As confidence builds and demand increases, firms are having to speed up their own recruitment practices, as drawn-out interview processes are losing even the most prestigious firms access to top talent. In this candidate-driven market, smaller, more nimble companies are proving more adept at responding to candidate demands and are thus snapping up the best individuals. The resulting gaps mean that temporary hires and locums are increasingly sought after. In the case of the former, an unwillingness to increase wages is exacerbating demand, whilst locums are now charging 25-30% more than they were this time last year.

All in all, the immediate future could be very bright for the legal sector, if firms find sustainable solutions to retention as well as recruitment. For firms, flexibility, decisiveness and investment in strong brand profiling will be crucial to exploiting the favourable market conditions and in securing sustainable growth.