According to Taylor Root’s Legal: Banking & Financial Services Market Update & Salary Guide 2012/2013, the B&F space is languishing in a continuous period of low activity.
The survey featured the responses of more than 120 general counsels and in-house legal heads in the banking, investment banking, managed funds, superannuation, insurance and wealth management sectors.
Taylor Root manager Brian Rollo told said that the biggest worry for in-house lawyers is the length of time the B&F legal market has been stuck in this current rut, adding that the sector is the least active it’s been since late 2008.
“It’s undeniable that it’s been a very flat year for the sector generally,” said Rollo. “The most worrying thing has been the sustained period of time which the B&F legal market has been slow for. Apart from occasional brief busy periods, the sector has been slow for the last 18 months and more.”
He added that at this point it’s difficult to tell if conditions will change dramatically in the first quarter of 2013, but said there should at least be the usual seasonal pick-up in February, just to what extent remains uncertain.
The survey found that only 20 per cent of respondents actually recruited any lawyers into their in-house team in the last 12 months, compared to more than 50 per cent in the previous year.
“The hires which have been made have been business-critical or replacement hires, which is exactly what you would expect when most businesses in the sector have been consolidating or restructuring,” said Rollo.
Significantly, only five per cent of those surveyed reported a net increase in the numbers of lawyers within their team. This compares to more than 45 per cent of companies increasing numbers in FY 2011-12 and has been the most significant shift in the supply-demand dynamic, particularly within the banking sector itself.
The drop is significant as there is a difference between hiring lawyers as replacements or as part of a restructure, versus taking on new lawyers for growth roles or an increased workload, said Rollo.
“This statistic is important as it shows that although there were a significant number of businesses who did hire lawyers this year, probably only a small number of them were driven by growth,” he said.
Regulatory, commercial and product work within the sector has been the most active, according to the survey, while transactional banking & financial markets work is the area that has been hit hardest.
Rollo said there are mixed messages coming from clients: some think that things may gradually improve in the New Year, given the length of time that businesses have been in consolidation mode, while others feel that the lingering issues that are restricting growth in the sector globally are still problematic enough to keep things flat for now.
“I think lawyers working in-house in the sector are probably more accepting that things are as they are and are quite realistic - most people we speak to are philosophical about the situation and accept that it's a matter of riding out this period, which could feasibly improve in the first half of next year,” he said.
The report also showed that there has been a larger number of reverse moves back to private practice over the last 12 months than in previous years.
“It has happened due to the lack of new senior in-house opportunities for lawyers who are looking for career progression right now, and who are therefore feeling that given there have been more opportunities in private practice this year they can at least take that option now to continue to progress and increase their salary levels,” said Rollo.
The reduction in opportunities in-house this year will no doubt have had some impact on the number of people looking to move in-house, he added.
In relation to in-house salaries in the B&F sector, the key trend in the survey is that the retail financial services sector, which includes wealth management and super, has been increasing salaries at a slightly higher rate this year than the banking and investment banking sectors.
“Again this makes sense when you look at the supply and demand for lawyers in these sub-sectors - there aren't enough transactional banking roles around to drive salaries up,” said Rollo.
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