The UK has just experienced the mercury reaching 40.3 degrees. Inflation in the UK is running at 9.1% and is set to reach well into double figures in the autumn of 2022. Due to a severe shortage of legal talent, lawyer’s salaries have reached record-breaking levels at all leading law firms, with Akin Gump setting an exchange-driven NQ salary high of £180,000! Clifford Chance are at £125,000 and DLA Piper are at £65,000 in the regions.
The lack of good quality lawyers available has also been exasperated by many internationally qualified solicitors returning home in the pandemic, with only a trickle starting to return this autumn. Market forces in these conditions are difficult to stop and almost inevitably, the dearth of talent has pushed salary levels 30% higher than the previously established market equilibrium level for newly qualified lawyers.
The problem with all this record-breaking unchartered salary territory is knowing what will happen when these salary wars inevitably finish. Will it result in a severe market correction in the other direction with salary band levels ultimately falling back? Will it force employers to consider headcount reductions to manage costs? Or will the uncertain salary turbulence create extreme and unpredictable pay ranges with market winners and losers at opposite ends of the salary spectrum?
As I draft this blog, the first head-to head debate has just taken place between Rishi Sunak and Liz Truss to be our next Prime Minister. Tax cuts, borrowing, and higher spending will directly impact all our lives in different forms, regardless of who wins. In times of uncertainty, decisive judgement will always be remembered.
2022 has seen a strong demand for lawyers within the in-house market. The market has been particularly strong at the junior and mid-level for all commercial, corporate, employment and IT lawyers. The higher salaries in law firms, however, have caused discomfort amongst many companies who are unable to increase salaries to acquire in-house lawyers with the required expertise. Getting approval for exceptionally high salaries in-house can be a highly sensitive issue and breaking pay grades is never taken likely.
Invariably, it comes down to the internal clout on the part of the budget holder. Recently, senior-level roles have been far easier to fill, with plenty of lawyers looking to step up into that elusive General Counsel or Head of Legal role. However, below this level, private practice and in-house lawyers juggling multiple in-house offers has been commonplace in 2022, with those clients demanding 4-5 days in the office struggling to fill their roles. For those companies, industries and CEOs that continue to insist on office attendance for their businesses, I expect peer pressure and dwindling staff numbers will no doubt ultimately force change. A positive of the pandemic has been this irreversible structural change within the workplace.
Lawyers currently looking to make strategic long-term moves in-house could create significant opportunities for themselves in two to three years’ time in terms of career development given the quality of work available right now. Timing is everything in life and now is a good time to leave private practice to move in-house - if partnership is not your end goal.
If you are thinking about moving in-house or changing in-house roles, please contact Brian Littleton for an exploratory conversation on 0203 096 4549 or 0791 929 3315 or at brianlittleton@chadwicknott.co.uk
