The legal recruitment market tightened considerably in 2005 and there is no sign of it letting up, industry sources have said. More likely, the scenario will get worse before it gets better.

The upshot is that employers will have to concede some points on their wish-list when searching for talent, and those lawyers that are employed in private practice will be working much harder.

Liz Rooke, Hays Legal national manager, said it would be a “difficult balance to manage”. However, firms were having more success when they were willing to take on candidates who required some training in the area they were sought for.

“We’re not suggesting lawyers completely switch sectors,” she said, but a firm looking for a financial services lawyer, for example, would be remiss to not consider a practitioner returning from the UK because they did not have specific Australian financial services reform experience.

“They have got slightly different experience, but they have shown once that they can move jurisdictions.”

Rooke said the market would get tougher in the traditionally “economic-dependent” areas such as banking and finance, corporate and financial services — areas that were also susceptible to shedding candidates to overseas markets.

“We will be seeing over 2006 a major shift back to mid-level lawyers going overseas and obtaining good positions with top London firms.”

Rachel Duggan, manager of Taylor Root, said 2005 had yielded much talk among Australian firms about sponsoring international candidates, but little action. “That is something they will have to look at more closely.”

Australian firms would be looking more closely at potential candidates in the UK, and increasingly South Africa and Canada, Jonathon Walmsley, Dolman director, said. But the global shortage of lawyers meant the UK would be recruiting Australian lawyers from a more junior level than usual, as well as taking the mid level candidates.

Also, the diminishing prospect of partnership at firms would continue to see senior associates from top and mid-tier firms move into in-house roles. “This all means there will be more opportunities at the top-tier firms for mid-year lawyers to make that step up,” he said.

“I think it’s going to be tough for them. It’s good in the sense that there will be increased workloads and workflows, but there will be fewer staff and fewer talented people to resource deals with.” This would increase the pressure on the lawyers already in the firm. “They will be working longer hours in a more tense environment.”

As such, firms would have to look more closely at their retention policies, and rather than increase benefits for lawyers, which was the trend in 2005, salaries would come under pressure this year. Those lawyers who had remained loyal and were “working their socks off” should be in a commanding position, Walmsley said. “Candidates should be smiling. There are lots of opportunities for them.”

Those opportunities would certainly extend to lawyers returning from their international sabbaticals. Partners were accepting that an international stint was something many of their young lawyers were aspiring to, Duggan said, and their best policy was to make the move a painless one.

“I was speaking to two of my top tier clients this week and they have a number of returners starting with them this month. [Firms] have realised that people are going to move, they just have to make it as easy and painless as possible for them, keep the communication happening and encourage them to come back when their time is up.”

The shortage of candidates would not equate to a drop in standards at law firms, Claire Courtenay, manager of Taylor Root’s banking and finance team, said. “It’s not a shortage of lawyers, it’s a shortage of lawyers of the calibre at the benchmark firms set,” she said. Clients would seek to maintain their high standards, and the challenge would be to find candidates who met them.