The brave new world for newly qualified lawyers
In 2018, roughly 300 lawyers in the City moved upon qualification: more than the entirety of Kirkland & Ellis’ London fee-earning staff. This migration represents a paradigm shift in lawyers’ attitudes towards their professional career, as lower retention rates and intense law firm recruitment signal the end of the one-firm-for-life model championed before the collapse of Lehman Brothers over a decade ago. What are the reasons for this? Our Senior Resourcer, Lewis Hedges highlights the common themes emerging.
US-headquartered firms are major hirers at the newly-qualified level; their business model of small or non-existent training contract programmes necessitates a lateral hiring spree at the junior end. This is reflected in the data: roughly one third of the trainees SSQ spoke to over the last year moved to a US firm upon qualification. This move also filters down through the entire market: while half of those moving to US firms were from the magic circle, one in five came from mid-market UK firms. In these latter cases, the move is often due to a legal specialism in which there is a dearth of both candidates and firms with strength in the area – oil and gas projects, or aviation finance, for example. In such moves, the candidate is often moving from a UK firm specialising in that work, to a US boutique undertaking similar, higher value mandates.
For the vast majority of these cases, the motivation seems clear: working on similar deals, at comparable (though likely slightly worse) hours, for an extra £30,000 a year or more. Many lawyers who have undertaken the move report that the leaner deal teams result in greater partner contact and increased autonomy on individual matters. This often gives junior lawyers a greater diet of more intellectually stimulating work, allowing them to gain more useful experience than their magic circle counterparts.
Though it regularly draws headlines, a focus on US law firms with their sky-high salaries obfuscates the rich diversity of movement to other firms. For example, roughly 15% of trainees who leave magic circle firms on qualification actually move to a different magic circle firm. With a broadly similar culture, team structure and calibre of work, these moves are often borne out of necessity; trainees are looking to qualify into their preferred area rather than accept their second choice internally. These moves tend to be into more ancillary practices such as tax or employment, where roles upon qualification are much more sensitive to internal pressures and market forces.
The last major destination for newly-qualified lawyers is out of private practice altogether; roughly 10% of trainees make the move in-house upon qualification. The reasons for this are often very specific: a niche market focus, or an exciting new product or brand tempting them away. However, these lawyers are almost entirely united by a desire to move away from the billable hours target culture inherent to private practice. A move in-house often frees up lawyers from these constraints, giving them a broader role encompassing more commercial aspects of a business.
Whether these trends continue will be heavily dependent on macro-economic factors far beyond the control of both trainees and their employers. As firms and clients prepare for the possibility of a no-deal Brexit, the potential impact on the movement of trainees upon qualification is likely to remain focussed on mid-market UK firms. This is because full service City firms are often best-placed to absorb such market shocks, by shifting resources to their restructuring practices, focussing their finance work on distressed debt plays, and pushing for more reorganisation mandates within their corporate team. The US firms too, with their substantial private equity client base, could well see an uptick in activity as their clients seek to acquire undervalued assets as sterling continues to depreciate. Mid-market UK firms, with a focus on domestic corporate work, will likely feel the full effect of any negative market shock. Trainees at such firms should seriously be considering their external options, if only as back-up opportunities in a worst-case scenario.
It is in such uncertain times that a relationship with a recruiter is more important than ever. If you are a trainee approaching qualification, staying up to date on the market through a recruiter will help you to safeguard your ideal career trajectory. Even if you do decide to remain with your current firm you will establish an invaluable contact for the future. In so doing, you will be able to stay informed on opportunities suiting your background and career aims, and ultimately make a move at the right time for you. Through regular updates, you will be able to build a nuanced and comprehensive picture of the legal market over time in your chosen specialism, and effectively assess the merits of any particular opportunity as and when it might arise. Therefore, as the era of a lifelong employer comes to an end, does it not make sense to keep an open dialogue with a recruiter?