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Pressures of private practice bolstering in-house ranks

Pressures of private practice bolstering in-house ranks

Pressure, lawyer

A report from Mahlab has highlighted the employment trends prompting lawyers of various levels of experience to consider careers in-house.  

Executive search firm Mahlab recently published the Mahlab Report 2017, which analyses trends in the legal employment market.

The report found that as partnership becomes less attractive to private practice lawyers, more are seeking out opportunities in the corporate sector.

“Law firms are pressuring partners to perform, and offering less leeway in the case of a bad year,” according to the report.

“On the flip side, firms are eager to reward successful partners to retain them and ensure they are not poached by another firm. In the aftermath of the Herbert Smith Freehills/White & Case partner poaching and subsequent litigation, the current partner market is turbulent.”

Mahlab said the trend of equity points being trimmed continued this year, with equity partners being moved to fixed draw or salaried partnership. The report also noted some partners are being moved to consultant or counsel status, or encouraged to leave their firm altogether.

“Despite these efforts to cut costs and secure the pie for remaining partners, partner income has generally flattened or fallen this year, particularly in the smaller global firms, who struggle for a place between the big-name global firms and the lower-overhead mid-sized and boutique firms,” according to Mahlab.

These pressures are increasing the movement between private firms and in-house teams, the report said.

“Increasingly, firms find it difficult to engage their senior employees as partnership prospects fade,” Mahlab said.

“Many senior associates remain in the firm, not necessarily from a desire for partnership but because prospects for movement are limited.

“The market has responded favourably, with senior lawyers being regarded as highly attractive candidates for non-executive directorships, CEO and senior government roles. Management consulting, participation in start-ups and quasi-legal roles also attract many lawyers.”

Mahlab found a similar trend for lower-level lawyers, driven by the desire for better work/life balance and the declining attraction of partnership.

“Vacancy rates for junior to mid-level lawyers remain high, with particular demand at the three to six years’ post qualification experience level,” the report said.

“Firms find it hard to differentiate their value proposition to persuade these lawyers to join them. Mid-level lawyers are sceptical about firms’ points of difference and are reluctant to change unless they are unhappy with their current firm.

“Many ‘stay to become SA’, keen to achieve the status and pay increase that comes with promotion, before making a change. At this level, solicitors are inclined to try their hand in an in-house role, seeking more predictable hours [with] no budget pressure or time sheets.”

Corporates are targeting the same talent pool as the private practice firms they retain, while simultaneously offering more and better work to their in-house teams. Mahlab said budget pressures are driving an increase in legal work being performed in-house.

“Corporates are retaining more and better work in-house. The trend is for only very specialised and very large transactions and litigation to be outsourced,” the report said.

“Legally qualified individuals are becoming more deeply embedded in the company, not only in legal and company secretary roles, but also risk, compliance and regulatory.

“As opportunities change and develop in the corporate world, the path to partnership is slower than ever.”

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