A cautious year ahead for legal employers
The next six months look set to be an uncertain time for law firms and legal departments. The buoyant first half of 2007 seems like a distant memory to many as the crisis in the US subprime market continues and employers are unable to predict what the year will bring.
Commentators suggest that the legal market is still relatively confident, and that recruitment and growth remains on the agenda. Whilst certain areas of the law are suffering a slowdown, other areas of the law are predicted to flourish:
- Law firms are gearing up for a rise in litigation, restructuring and insolvency work. Solicitors with these skills are expected to be in high demand towards the latter end of 2008.
- Growth in the energy sector shows no signs of abating, exacerbated by the skills shortage for internationally and commercially focused contract and general commercial solicitors.
- Construction is another sector set to explode in 2008. Spending is at an all-time high with projects such as the Crossrail scheme, Terminal 5 and Leeds’ “Kissing Towers”. Consolidation in the marketplace has led to a reduction in the number of companies tendering for business and the crunch in supply has meant prices are at a 35 year high. Add to this the upcoming 2012 Olympics and a boom in international projects thanks to places such as Dubai, and construction, housing and planning lawyers are set to have a fruitful few years.
Nevertheless, most law firms are hesitant to continue at the same confident pace as this time last year, and the past six months may be indicative of what lies ahead: interim contracts are being reduced in length, activity on large corporate deals is becoming scarcer and the decline in heavyweight equity capital market transactions and leveraged finance work has meant demand for banking lawyers is on the wane. Securitisation lawyers have suffered a real blow – regarded as hot property only 6 months ago, demand has been falling ever since, and only the best talent can afford to remain confident.
Commercial property solicitors face an unsteady year ahead. Whilst the big hitters in real estate continue to grow their teams, not everyone remains so confident. We’ve witnessed a few firms making redundancies and a lack of new opportunities on the horizon has led many to reserve judgement on future hires for the time being. Those in residential property face a similar concern – the introduction of HIPS last year was met with confusion by the public and led to a reduction of properties being put onto the market. Whilst this is no longer an issue now that HIPS applies to all properties, the subsequent rise in interest rates and the stagnation of property prices has contributed to an overall lack of consumer confidence in the market. This has given rise to a ‘wait and see’ policy in terms of recruitment hires.
Even allowing for these tenuous economic conditions, recruitment will remain a key issue for many law firms and in-house legal departments in 2008. Recent years have seen a desperate shortage of quality candidates in many specialisms, particularly corporate and banking. Add to this the ongoing issue with retention and it’s no wonder that many companies are open to good candidates, regardless of the current climate.
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