Podcast: Brexit getting lawyers home
On this episode of The Lawyers Weekly Show, we look at recruitment trends in the new financial year and the impact Brexit has had on getting Australian lawyers home.
Our host, Lawyers Weekly journalist Lara Bullock, is joined by Taylor Root Australia manager Matt Harris, who sheds light on how lawyers have reacted to their end of financial year bonuses and pay rises.
The number of candidate movement is slightly higher than usual, with more young lawyers interested in making a shift than any other group.
While the full impact and implications of the Brexit vote have yet to be seen, the flow of lawyers from Australia to the UK may reverse as demand in London drops.
Listen to other episodes of The Lawyers Weekly Show:
Episode 6: Drone usage and related legal work reach new heights
Episode 5: Revamping the law firm model
Episode 4: Bringing creativity back to the law
Episode 3: From outback to Martin Place
Episode 2: Is law school teaching enough critical thinking?
Episode 1: Legalising medical marijuana
Intro: Welcome to the Lawyer's Weekly Podcast for an in-depth look at the issues facing the legal profession. This is your host Lara Bullock.
Lara Bullock: Welcome to the Lawyer's Weekly Show. I'm your host Lara Bullock and today we have Matt Harris from Taylor Root, here to talk to us about current recruitment trends. Welcome Matt.
Matt Harris: Hello, nice to see you.
Lara Bullock: You too, so Matt, just to get us started, obviously it's early days but what sort of bonuses and pay rises did lawyers across Australia receive at the end of the 2015/16 financial year?
Matt Harris: It is still quite early days. We're obviously only now three or four weeks past the time when a lot of lawyers received notification of their increases and bonuses and so on. I think when people receive a pay rise it normally takes them a couple of weeks, three weeks, unless they're horrified by their pay rise, it normally takes them a few weeks to let everything sink in and think about what they're going to do. I would say at the moment, the picture we're seeing is quite mixed.
Obviously, and typically, nobody tends to come and see a recruiter if they're happy, so we don't come into contact with many people who had fantastic pay rises, but we've come across candidates so far that I think have had disappointing raises, or raises below their expectations, particularly based on how hard a lot of them have worked over the last 12 months. Anecdotally, candidates who we were talking to prior to 1 July who were considering making a move or considering their options post 1 July, we have had some of those candidates who have been in contact who said actually everything's turned out rather well and they're actually going to stay put.
A couple of candidates who received better than average or better than expected bonuses. There seems to be a picture being painted now of there are some firms who've got it really right and some firms who may have got it really wrong, so the next few weeks will be interesting.
Lara Bullock: Definitely, and does that differ sort of across the types of firms, you know, globals vs boutiques? Are you seeing any trends that fit with the different firms?
Matt Harris: Typically the trends that we see aren't necessarily true in some respects, because the larger the firm, the larger number of lawyers so therefore the larger number of voices that are talking to us. So I can't say yet that the picture we're seeing is particularly accurate, or will carry through all the different types of firm. I think at the moment, to be fair, most of the noise that we're hearing is coming out of the larger firms because they have more lawyers and more voices.
Lara Bullock: Okay, so what about for young lawyers in particular? What are you hearing from them?
Matt Harris: I think most young lawyers, there seems to be two things happening in the market, there seems to be, for whatever reason, quite a lot of very junior lawyers surprisingly who are quite unsettled. We've come across, I think, probably more one year, 18 month PQE lawyers coming to us to discuss their options than probably we have of those lawyers in the three, four, five year category. Some of that has come about recently because there have been a couple of firms who've lost partners, fairly key partners, which is unsettling for a junior lawyer.
As of yet, it seems that most of the potential traffic is at the very junior end with less traffic around sort of that mid-level. The challenge being is that it's more difficult for us to help very junior lawyers because we seem to have more of them, but the majority of the vacancies are still around the three, four, five year mark.
Lara Bullock: Given this, what are you sort of expecting to see over the next few months? Can you give us any predictions?
Matt Harris: Already it seems, there's no question that the next few months there's still going to be an ongoing shortage of junior lawyers and a huge number of vacancies. I would say that the early indications post 1 July from my own perspective as a private practice recruiter, are there seems just to be a little bit more buzz and bubble in the market, a little bit more candidate movement. Now this might just be a symptom of having just received pay reviews, but obviously this is the time of year when a lot of firms will receive their new budgets for the next 12 months, so they're allowed to go out and start again.
There have been obviously lots of partner meetings taking place regarding recruitment for the next 12 months and at the same time, candidates are obviously starting to think about moving around in the market. It's always difficult to know whether this is a true picture of what's going to happen but I would say already the indications are of the second half of 2016 things are a little bit more positive than they were the first half of 2016.
Lara Bullock: Lovely, and then, I guess something else big that's probably impacting the Australian market at the moment is the Brexit and now that we're a few weeks on from that, how has that sort of impacting young lawyers in Australia?
Matt Harris: The impact for young lawyers in Australia remains to be seen to some respects, because I don't know necessarily, I'm no expert, obviously I'm sort of following the press as much as anyone else is, but it seems that the initial impact of the Brexit still isn't actually being felt. The realities of what it means I don't think will be felt for at least another three, six months.
At the moment, certainly anecdotally locally there are candidates we were working with pre-Brexit who were keen to go overseas, keen to go to London in particular who are finding it not only much more difficult but in some cases impossible all of a sudden because demand for transactional lawyers, particularly corporate lawyers, just because of uncertainty at the moment rather than actually anything physical happening, demand has dropped off dramatically. What we have seen interestly, we've seen less of the effects of the Brexit on the local Australian lawyers, but I think very quickly we saw the effects of the Brexit on lawyers based in London.
We had, I personally had a couple of processes running with candidates pre-Brexit, candidates that had received offers in Australia that were considering those offers and it might just have been a coincidence, but the day after it was announced that the UK would be leaving Europe, both candidates accepted their jobs and both candidates are now coming to Australia, one of whom is a returning Aussie and the other one was a UK lawyer considering whether to come to Australia for the first time. They are both definitely on the boat on their way over.
Lara Bullock: Interesting, so we're actually seeing more people leaving the London market as opposed to going there?
Matt Harris: I think what we've seen initially and the conversations we've had with several lawyers who were considering, in the main actually to be frank, coming home to Australia is that they are fast forwarding those plans. There have been several people, and we talk to people all the time, year-in-year-out about their plans. I've personally spoken to a couple of candidates who, in fact, a couple of whom I met in London early this year that were just kicking around the idea of coming home, who are now coming home and wanted to get home either the end of this year or very early next year as opposed to 12 months from now.
I think these, again, it might be anecdotal and it is quite early in the piece, particularly a couple senior associates we've seen, senior associates who went to London maybe with a partner or maybe single that have subsequently now settled down in London, maybe they've got kids on the way and so on, are now looking at the UK as somewhere they'd like to be for the next five years compared to Australia and they're fast forwarding their plans. The early indications are the flow into Australia would improve and the flow out of Australia will decline.
Lara Bullock: Okay, so is that actually a good thing for Australian firms, in that there is a shortage of those mid-level lawyers?
Matt Harris: Sadly, it has to be a good thing for Australian firms that, it sounds an odd thing to say, that the Brexit has happened. I might live to regret those words but as a recruitment consultant who is obviously primarily interested in the flow of staff, if the flow is the direction of the flow has changed overnight that could only be good for firms based in Australia. Obviously the Brexit more broadly, what does that mean to them as a law firm, what does it mean to the global economy is a completely different Matt Harriser but even if in the short term, it stems the flow out of Australia and increases the flow back then that may well be something we've been waiting for locally that will improve candidate flow.
Lara Bullock: Definitely, and so how should Australian law firms sort of go about trying to attract and retain that talent?
Matt Harris: To be frank, I've actually almost immediately after the announcement of the Brexit, I've had two clients who have asked me to significantly crank up the volume of advertising we have running in London to make sure that anybody in London is aware of the fact that there is a much more peaceful haven for them potentially in the shape of Australia. I have one of my major clients, at the end of last week announce that they are going to be sending partners to London.
We're going to work with them on a project to send partners over there later in the year to be on the ground, to meet with local candidates, their own alumni, their own staff that have gone over there but also candidates interested in learning more about them and learning more about Australia more broadly. That's the kind of activities, partner tours of the UK if you like. We've organized lots of them in the past. They were really big sort of 2008, 2009 and before that but that kind of plan to go over there in numbers and bring people home hasn't, we haven't worked on that kind of project in the last few years. That's a fairly major step forward.
Lara Bullock: Fascinating. Are there any other recruitment trends that you're seeing in general anywhere around the world at the moment?
Matt Harris: Difficult to say. At the moment it seems very much the same old story. I think for us locally the trend continues and will continue for some time, that there are vacancies everywhere. Transactional lawyers are in huge demand. Supply is very low and very slow but maybe now, now that people have had a good clear GFC free 12 months at least, they've worked really hard, I think now they'll be looking very closely at the pay rise they've just received and the bonus they've received and if it isn't coming up to par or at least meeting their expectations, they'll at least want to come and talk to someone like me to see what the market is doing generally.
I think the trend of lots of vacancies few candidates will continue but hopefully the candidate side of things is going to start to even the balance even a little bit.
Lara Bullock: Fabulous. Well it sure will be interesting to see how things play out over the next 12 months or so.
Matt Harris: It will.
Lara Bullock: Thanks so much for coming in today Matt. We appreciate it.
Matt Harris: No worries.
Lara Bullock: I'm Lara Bullock and thanks for listening to the Lawyers Weekly Show.