The Robert Walters first quarter market report predicts a rise in demand for in-house lawyers. Justin Whealing reports
A rebounding M&A market and the continuing energy and resources boom has meant more companies have money to spend recruiting lawyers, according to a recent report.
The Robert Walters Q1 2011 market update, released on 28 April, contains good news for private practice lawyers with three to six years experience who might be looking to move in-house.
The Robert Walters report predicts that with the continued rise in business activity, investment banks, construction and engineering companies, insurance bodies and professional services organisations will all be looking to hire more in-house lawyers.
"There has definitely been an increase in demand for banking and finance lawyers with specific skill sets," said Robert Walters legal recruitment manager Jenny Bermheden. "Lawyers with expertise in equity capital markets, derivatives, structured products and project finance are very much sought after at both the junior and senior level."
Bermheden said that during the global financial crisis, in-house teams with large organisations got "much, much, smaller", but that many large corporates are now recruiting again as the economy continues its recovery.
"In-house teams were so much larger before the GFC hit, where many lawyers were made redundant," she said. "Now they are returning to the market and looking to recruit more people because of the work coming through the door."
Bermheden is also seeing an increased need for in-house lawyers within smaller companies. She said that previously, they might have outsourced all their legal work. However, recent demand pressures have resulted in a need to develop internal legal capabilities and they are now looking to recruit senior lawyers into general counsel positions, with the long-term goal to then build an in-house team around them.
"I am speaking to a lot more smaller companies who might not have needed internal legal counsel before, but are now thinking that due to the market becoming busier, they need legal people on the ground.
"That is why they are looking for senior lawyers with a broad skill set. They can do some corporate advisory work, some litigation, transaction work and general commercial contracts."
The increased recruitment activity in the in-house legal market is also flowing through into private practice, with law firms needing to replenish their stocks as more lawyers start looking at greener corporate pastures.
Marsden Group principal Jonathan Walmsley said that Australian lawyers are in demand from local and international firms.
"With the banks starting to hire again, more lawyers are moving in-house, with turnover meaning that law firms have started hiring again," he says. "Major US and UK firms have also been hiring [in the Australian market] in Asia and London again, creating additional gaps in the Australian market which domestic firms also need to fill."
Walmsley said that lateral partner hires and top-tier activity have picked up markedly in the first part of this year.
"The last six months have really seen a pick-up in top-tier recruiting activity, with the top-end of town standing down the most lawyers during the GFC," he said.
Show me the money
With the in-house market becoming increasingly bullish, Walmsley believes private practice lawyers are in a better bargaining position to demand salary increases than they have been over the last couple of years.
"Mid-tier lawyers are in a particularly strong bargaining positioning, as they will start to attract increasing interest from corporations, banks and large law firms," he said. "I expect that we will see some salary increases this year, particularly because they have been suppressed over the last couple of years, and this year should really be the year that they pick up again."
According to the Robert Walters report, investment banks are the most lucrative sector for in-house lawyers.
A general counsel with an in-house investment bank earns in excess of $280,000, with in-house lawyers with 10 or more years experience earning up to $260,000, and lawyers with up to six years experience expecting salaries of around $225,000.
The next best paid industry is private wealth and superannuation, with retail banking and insurance next.
By comparison, private practice lawyers with 10 or more years experience at top-tier firms can expect to earn in excess of $220,000, lawyers with six to 10 years post-qualified experience (PQE) between $140,000 to $230,000 and lawyers with three to six years PQE $90,000 to $160,000.
Their mid-tier counterparts with more than 10 years experience can expect to earn more than $190,000, while lawyers with six to 10 years PQE will be on salaries between $120,000 to $220,000 and those with three to six years experience can expect to be paid in the range of $85,000 to $150,000.
"There is a lot of expectation on the part of lawyers that salaries will rise this year," Walmsley said. "I think that expectation, and a heavier workload and competition from international firms in Australia and overseas, will drive salary increases."
Walmsley expects to see more firms adopt formal or informal bonus payment schemes to provide them with greater flexibility with their respective salary structures.