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London calling: prizes and pitfalls of making the move to the UK

London calling: prizes and pitfalls of making the move to the UK

Thinking of making the move to London? While the UK legal recruitment market is showing signs of slowly recovering post-GFC, stricter visa controls may hinder the opportunities for budding…

Thinking of making the move to London? While the UK legal recruitment market is showing signs of slowly recovering post-GFC, stricter visa controls may hinder the opportunities for budding Aussie lawyers thinking of making their mark in London. We look at the prospects for young lawyers, and how to prepare for a move.

London Softly Calling: How Aussies are fairing in the UK
London has always been a hotspot for Australian lawyers. Legal professionals from the Antipodes have typically sought to head across to the Old Dart in order to advance their careers while having a little fun on the side. However, opportunities dried up with the arrival of the global financial crisis and many Australian lawyers were forced to stay put.

While the global economy continues to take tentative steps towards recovery following the crisis, a cloud of uncertainty remains over the London market, with threats of a double-dip recession and a recent report by accountancy and business advisory firm BDO finding that business confidence has not risen since the dark days of 2009.

Some analysts say this lack of confidence is linked to the British Government's recent announcements regarding its plans for fiscal tightening - the biggest cuts to be made since World War II according to Bloomberg - which have spooked businesses into making their own large-scale cutbacks.

"If Q4 2010 does indeed turn out to be the start of a double dip, it certainly won't be a merry Christmas for UK businesses," said BDO partner Peter Hemington. "What's so disappointing is that businesses seem to be convincing themselves that things are going to get really tough in 2011, and are deferring new hires and investment decisions as a result. Much of this comes from the hype around the government's spending cuts."

"I don't think you can say that London is booming because it's not. But there are signs of growth and reasonable levels of activity..."

Greg Mulley, partner, Herbert Smith

The widespread focus on reducing business costs during the global financial crisis forced law firms to drastically change their ways. According to new figures released in The Lawyer's UK 200 Annual Report, the average cost per lawyer amongst the top 100 firms declined by three per cent last year from £241,000 ($397,131) to £234,000 ($385,596). Freshfields Bruckhaus Deringer was the most cost-effective firm lowering its costs by 19 per cent.

Despite ongoing market uncertainty, members of the UK legal profession say they are cautiously optimistic about the future. "I don't think you can say that London is booming because it's not. But there are signs of growth and reasonable levels of activity," says Herbert Smith partner Greg Mulley - formerly of Allens Arthur Robinson in Sydney.

On the back of mass redundancies across the London market last year, 2010 saw a gradual increase in activity for many practice areas, requiring firms to once again look for talent and replenish their teams.

The recruitment resurgence

Such cautiously optimistic statements from legal insiders have given Australian lawyers renewed hope that opportunities are emerging, albeit slowly in the UK.

In 2010, Marsden International launched recruitment campaigns in Australia for both Herbert Smith and Allen & Overy - a sign that some firms believe the market is improving.

"[The Herbert Smith and Allen & Overy] campaign is probably just the start of international firms becoming serious about Australia again after the last couple of years which have been really quiet," says Marsden International principal, Jonathan Walmsley.

And while there isn't mass recruitment in every space, London-based Marsden International director Michelle Mills says there are certain teams for which recruitment is firmly back on the agenda. "People are seemingly more confident. We haven't got back to the days of 2005, but the general mood is more confident," she says. "But people are pretty cautious. They're not recruiting massively... so they're still looking very carefully at what their needs are. There is a defined fit that they're going for."

Those needs specifically include refilling the holes left by the redundancies of 2009. "There's definitely a lot more hiring but it's more about hiring to replace," says EA International managing director Michael Bromley.

While London firms are aiming to replace staff lost through redundancy, Taylor Root associate director Karlie Connellan says a significant amount of the recent recruitment activity is also a result of Australians finally returning home after their London stint. She says those who managed to ride out the recession have stayed in their positions and have now chosen to come home as things improve. "Most of the clients we're working for are looking at real vacancies. That's for people who have resigned. And in many cases they're people coming home," she says.

Bromley agrees but adds that a lot of people deciding to move back are doing so because the Australian market is ramping up and not necessarily because London is no longer offering great opportunities.

With improvements in many international markets, there is a concern for many UK firms that staff will look at new opportunities from within and outside the UK.

Slaughter & May executive partner Graham White admits retention of lawyers is currently a high priority for the firm. "After a couple of years in which very few lawyers left the firm because of the fragility of the market and general nervousness about the future of the economy, we are now experiencing a more fluid employment market," he says. "Some of the lawyers who would no doubt in an ordinary market have left over the past two years are now leaving us and there is more competition from other employers both in-house and in private practice. Most people leaving us are not going to our competitors in London - the majority are leaving London or leaving private practice."

Opportunities in a tough market

The London market remains a very competitive space for both local and international candidates as firms set an extremely high standard for talent.

While the London firms have begun looking abroad for talent, international recruitment campaigns are aimed at skimming the cream of the crop in terms of worldwide talent, before looking at the lower tiers of the local market. Such recruitment drives are currently conducted against the backdrop of an extremely competitive UK market, with a scarcity of high-end positions available.

"The firms that are recruiting through us are very serious about hiring but only with really talented [candidates]," Walmsley explains. "The level of lawyers that people at Allen & Overy would ideally like to recruit, or that Herbert Smith would like to recruit, are very hard to find .... It's hard to find those lawyers so we are still in need of really good candidates to send to these firms."


Recruitment experts share their insight on the UK legal sector post-GFC

- Given the salary freezes of the global financial crisis, London salaries have not changed significantly over the past two years.

- In 2010 London salaries were reviewed upwards as they were in Australia, according to Marden International principal Jonathan Walmsley. He says the difference for Australians now, looking at London, is the exchange rate. "To anyone that's now looking at going to London, compared to say 2007, they will actually seem to be worse off but it's only an exchange rate differential rather than salaries actually going down," he says.

- EA International managing director Michael Bromley says one thing that stands out about London is the attractive bonuses on offer, which make the bonuses paid by Australian firms pale in comparison. "The bonuses on offer are a significant part of what your remuneration is going to be. Australian firms pay really poor bonuses," he says. "The salary point might not be hugely different from Sydney to London right now, but you're going to have a great lifestyle on a reasonable amount of money in the UK. Living in London is not hugely more expensive than living in Sydney."

Opportunities in the market are occurring at the associate level, according to Connellan, while at the senior associate and partner level the market is still moving relatively slowly for people coming from Australia or New Zealand. According to Bromley, there will be continued interest in good, mid-level corporate and finance candidates, plus high demand for good, mid-level litigators.

The practice areas experiencing the most growth in 2010, according to Magic Circle partners contacted by Lawyers Weekly, include the finance, litigation, energy and resources sectors, while the competition, telecommunications and technology sectors have also become more active.

"Our finance teams are flat out," says Allen & Overy partner Nicholas Clark. "And that is a combination of what is probably now the tail end, or starting to be the tail end of restructuring deals that have got into difficulty over the cycle of the credit crunch."

Litigation has also been particularly buoyant, especially in the wake of the recession, and while not experiencing a massive increase in activity, mergers and acquisitions and private equity are also doing well. This M&A activity is a result of well-funded companies taking advantage of market opportunities, according to White. However, the highly leveraged, opportunistic M&A activity of previous years has not yet resurfaced. Mulley agrees but adds that the level of M&A activity has outstripped many analyst forecasts.

Accordingly, Mulley said Herbert Smith's London office is looking for people in corporate, finance, employment and litigation. "We're looking for very top quality people here. The biggest need at the moment is in London - it's in corporate," he says. "There is certainly a great element of responding to increased demand in key areas. Large parts of corporate are doing very well, while our finance division and employment practice have both had fantastic years and are in growth mode."

Slaughter & May is also actively recruiting in a number of areas, according to White, particularly in finance, corporate/M&A, competition, IP/IT and dispute resolution. "There is a particular need for lawyers with a couple of years of experience in the relevant fields. We also need to expand our teams, particularly in the financing area where we are very busy," White says.

At the lower level of the market, as the economy improves, major UK firms are retaining a large number of their trainee lawyers, causing a build up in the market for newly qualified lawyers and lessening available opportunities for junior lawyers from Australia.

According to, Linklaters recently revealed that it retained 87 per cent of its September qualifiers, offering jobs to 63 of its 69 trainees, while Slaughter and May posted the highest retention rate amongst the Magic Circle, at 94 per cent. Allen & Overy reported a rate of 81 per cent.

"As for the more junior levels in London, the firms are quite congested," says Mills. "They don't need any more lawyers coming through the system at this stage."

Meanwhile, for non-lawyers in the London market, as the recession lifts some UK firms are now beginning to invest once again in business development and strategy, creating new demand for business development professionals and management consultants - positions which were the first to go when the recession hit. According to London recruitment company Ambition, a handful of firms have already started employing non-lawyers in a bid to boost business, including one of the top ten firms, which recently recruited two ex-lawyers into its business development team.

Bromley says he has noticed a considerable increase in recruitment of non-fee earners such as business development managers as the market improves, providing another positive sign that business is returning to some kind of normality. "That's actually a good indicator of the positive mood within the firms at a general management level," he says. "If you look at the roles available amongst the international law firms there's probably more roles available for business development managers at the moment than there are for just straight associates."

Sponsorships in short supply

Although London firms are looking internationally to scope top talent, their ability to sponsor overseas candidates, including Australian and New Zealand qualified lawyers, has recently been diminished.

In July this year, the British Government introduced a temporary limit on visas for non-EU nationals in preparation for a permanent visa cap to commence in April 2011, lessening the capability of UK firms to recruit the best international talent.

With the final details of the permanent cap to be announced following a 12-week consultation with businesses, the new cap announcement came after recent figures revealed an increase in net immigration, something which the Conservative Party promised to cut during this year's election campaign.

"This government believes that Britain can benefit from migration but not uncontrolled migration," explained UK Home Secretary, Theresa May, upon announcing the visa cap. "I recognise the importance of attracting the brightest and the best to ensure strong economic growth, but unlimited migration places unacceptable pressure on public services."

According to the UK Visa Bureau, the temporary cap applies to all new applicants under tier one (general) and the applications under tier two (general) will be limited by the number of employer sponsorship licences that are issued.

Although only an interim cap at this stage, the visa cap is already significantly impacting the ability of law firms to recruit talent, prompting the UK Law Society to gather feedback from law firms for submissions to both the UK Border Agency and the Migratory Advisory Committee.

Public policy adviser at the Chartered Institute of Personnel and Development (CIPD) and author of a report by CIPD and KMPG, Gerwyn Davies, told the UK Visa Bureau that a visa cap that is imposed too quickly could "choke off" the economic recovery.

"The proposed introduction of a migration cap comes at a time when many employers are still struggling to fill skilled vacancies despite the high unemployment rate," Davies warns. "[A radical cap] could potentially cut off a labour supply and impede growth in UK companies, which will be devastating given that the government's hopes for reducing unemployment hinge solely on the private sector growing jobs."

The new visa regime, coupled with a slowly recovering UK economy, means an already competitive space will be that much tougher for Australian and New Zealand lawyers to break into. "It's a tougher regime with the visa situation at the moment," says Bromley. "Firms are really aware that they only have so many people that they can sponsor under tier two and they are [sponsorships] going to be very precious things."

Connellan agrees and says that although demand is increasing for Australian and New Zealand qualified lawyers, the ability to sponsor those individuals has become quite limited.

"There is a strong preference being shown towards people who have an ancestral visa right or have their own capability of applying to the tier one highly skilled migrant visa, and so whilst firms are open to looking at people coming from our jurisdiction [Australia], there are still barriers that have been placed in front of these people," Connellan explains. "They might have the right PQE, they might come from the right firm, they might have the right skills-set but they don't have the visa."

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