2022 was an incredibly busy year for recruitment within the legal sector as the pendulum swung from a client driven market to a strongly candidate focused one. As a result of talent shortages and a fight to retain staff, salaries spiralled to unprecedented levels, particularly at the junior end.

Continued global political and social unrest has led to a much more cautious start to 2023, as concerns about the economic outlook have intensified.

Recruitment activity so far in 2023 has returned to pre-2021 levels, making 2022 look like it might have been a bubble and not an upward trend, as hiring has become more essential only, and pure growth has stagnated. Robert Walters profit warning resulted in a 12% fall in share price suggesting 2023 is proving difficult on an industry wide basis.

2022 private practice salary increases have made transitioning from private practice to in-house an almost untenable compensation drop for some, with the top of market for an NQ at a white shoe law firm now being paid an astronomical £180,000, and their counterparts in the magic-circle £125,000. This has led to an even tighter market within the in-house space and will potentially create two separate talent pools where in-house roles can only be filled by those who are already in-house and private practice trained junior lawyers in-house are gold dust.

As private practice pays to retain staff and the cost of living continues to increase the pull in-house has become less attractive. Exacerbated by the reality that the ‘work-life balance’ argument which was once compelling has become eroded as hours in-house have increased. Short of hiking in-house pay to be competitive and meet private practice levels this issue will continue to affect in-house hiring for the foreseeable future.

Where the smaller nimbler in-house firms can make a difference are the benefits and flexibility, they can offer staff. Though we are seeing a trend, led by the US bulge bracket banks, to a mandated five day in office culture, hybrid working continues to be high on candidate’s agendas, and a purely in-office culture can be a deal breaker for many.

Looking ahead, with the predicted recession avoided, and confidence slowly returning, we are expecting more fluidity in the market, as those who have been staying put decide to make a move and salary inflation normalizes leading to a robust last quarter and a cautiously optimistic forecast for 2024.