Caught in two minds – firms split on whether to stick or twist in tough market
Recent weeks have presented a somewhat divided picture of the upper echelons of the legal market. On the one hand, against the backdrop of a relentlessly tough market, many of the UK's largest law firms have announced predictably reduced partner promotion rounds – with the magic circle, for example, making up nearly 20% fewer new partners this year than last. On the other, Slaughter and May this week played a strong hand in terms of salaries, with the firm's across-the-board rises for junior lawyers likely to set the bar for its City peers.
May 02, 2013 at 07:00 PM
3 minute read
Recent weeks have presented a somewhat divided picture of the upper echelons of the legal market. On the one hand, against the backdrop of a relentlessly tough market, many of the UK's largest law firms have announced predictably reduced partner promotion rounds – with the magic circle, for example, making up nearly 20% fewer new partners this year than last.
On the other, Slaughter and May this week played a strong hand in terms of salaries, with the firm's across-the-board rises for junior lawyers likely to set the bar for its City peers. The firm's move to raise salaries came despite calls by some clients and recruiters (and, privately at least, some managing partners) to reduce rates, especially as associates will receive hefty rises anyway simply due to progression through the pay bands.
Meanwhile, firms' international strategies are becoming similarly divergent. Hence while some have been retrenching in key markets, such as Shearman & Sterling closing two offices in Germany and many others scaling back in Asia, others seem to be very much in investment mode.
Recent months have seen firms including Addleshaw Goddard, Stephenson Harwood, Berwin Leighton Paisner and Herbert Smith Freehills all announce plans for overseas expansion, with the first three focusing on emerging markets, while Herbert Smith has recently made moves to recover from the failure of its European alliance with its own German launches.
It is clear these are firms that have been somewhat behind the pace of larger City rivals in terms of international expansion, and are now making up for lost time – and if they can get good deals by investing during difficult markets, then why not?
But with some of the moves, it is not always easy to see what they want to achieve, or how they hope to get there. Notably, there seems to be something of a trend to open offices without always following through with significant recruitment – at least initially.
In some locations, firms clearly do not need armies of people on the ground. But in others – say, Hong Kong or Germany – it is harder to see how firms will make inroads without full commitment. That is not to say they need to have vast numbers of lawyers employed on the ground on inflated salaries with nothing to do, but there does need to be some kind of balance.
The firms in question would no doubt argue that in due course, all of the offices will be fully staffed and that it makes sense to start small and build. But there surely needs to be a minimum – at the very least, one partner permanently on the ground at the time of launch in each new office, perhaps.
Otherwise, despite the significant progress these moves may represent in terms of firms' individual strategies, some of the launches are in danger of looking a little meaningless.
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