Facing the fire

As city firms have been forced to rein in recruitment and freeze salaries, Victoria MacCallum finds that young solicitors must be flexible

There have been better times to be a City solicitor.

As the stock market goes into free-fall and the business page headlines become more and more the stuff of nightmares, an increasing number of corporate solicitors are packing their bags, leaving the Square Mile and heading for the provinces.

Recruitment consultants openly admit that corporate positions in the City are becoming increasingly difficult to find, meaning that so many bright young lawyers are spreading their wings and looking further afield to cities such as Birmingham, Manchester and Leeds.

'In a boom time, the regions struggle to recruit because people want to stay in the City, and they can usually get their first choice of firm,' explains Joanne Street, senior private practice consultant at Hays ZMB recruiters.

'However, now there is more of a slump in London, people have become more open-minded and many are flocking to the regions.'

Eleanor Campbell, midlands regional manager of Michael Page recruitment, says: 'There's no doubt that the Birmingham market is healthier than down in London.

Some London firms are openly talking about redundancies, whereas up here the word is used very infrequently, and firms are looking to ride out the storm.'

Penny Turndrup, a director of London-based EJ Legal, agrees that good commercial firms outside London are snapping up disillusioned and disenfranchised City slickers.

'The regions are seen as a safe option by many people - they survive the downturn because they have a more substantial base of work than many corporate City firms.'

Although Ms Campbell does worry that the London slump will eventually hit the regions - 'we may just be six months behind the City' - she also maintains that firms have learnt their lessons from the last economic downturn in the early 1990s.

In the dark days of the recession, panicking human resources departments took the axe to their payrolls, pruning off their most junior solicitors and suffering the consequences a few years later.

'In the early 90s, firms let a lot of people go and wished they hadn't when the work picked up again,' says Ms Campbell.

'Now, if there isn't much work around, firms will simply make sure their staff go home on time and cut down their overtime.'

Although firms are loath to let many junior solicitors go for fear of a future shortfall, many practices are now paying the price for their salary hikes of a few years ago.

In happier boom days, the fight to recruit the brightest and the best newly qualifieds meant that salaries at some of the big firms were pushed up to eye-watering levels.

'This generation of newly qualified solicitors are paying the price for the previous salary increases,' explains Ms Street.

'Salaries of 50,000 for newly qualifieds are a real expense for firms, and if there isn't the work around for them to do, firms cannot afford to keep them on for the sake of it.'

Consolidation and caution seem to be the name of the game for firms battening down the hatches.

'The market is more job-driven now, and clients are much more specific about what they want from a candidate,' says Ms Campbell.

'No matter how good the candidate is, firms will only take them on if there is a specific role available for them to fill.'

Other strategies firms have introduced to cope with the market include a dramatic reduction in recruitment.

'The biggest change in the market now compared to a year ago is that the magic circle firms have simply stopped recruiting,' says Nick Root, a founding partner of recruiters Taylor Root.

'This time last year, the big firms would be looking for 40 or 50 people in one intake - now we're lucky if they're after four or five.'

Firms are also desperate to put a cap on their spiralling wages bill, not only by reducing their number of new intakes, but also by freezing pay packets.

Earlier this year, Olswang and US firm Weil Gotshal & Manges scrapped the traditional lock-step schemes and instead introduced performance-related pay for some associates (see [2002] Gazette, 18 July, 10), something Ms Street says 'could never have happened in the boom years'.

However, all is not doom and gloom for the profession.

While most experts agree that junior solicitors may be bearing the brunt of the downturn, the senior market in contrast is flourishing.

'There are lots of opportunities for partners to move around at the moment,' explains Peter Thompson, legal operations director at recruiters Michael Page.

'When the market is slow, as in an economic downturn, people tend to think more about their careers and where they want to be.

It crystallises their thinking, and it's a spur to move on now rather than in three or four years.'

Mr Root specialises in senior positions in industry and banking.

He maintains that it is now acceptable for partners to move firms relatively frequently.

'Any changing market leads people to think about moving - if they don't like their firm's strategy for coping with a downturn, or if they see other firms making larger profits they'll think about leaving.'

Just as partners seem to be immune to the chilly wind of change, so do certain sectors of private practice.

While corporate and IT work have, perhaps unsurprisingly, taken the biggest hits in terms of recruitment, property, litigation and insolvency - for example - have remained strong.

With the stock market plummeting, property has become a more attractive investment proposition for many companies.

Likewise, litigation and insolvency are the traditional winners in any recessionary environment.

By contrast, smaller high street firms seem to be riding the storm out well, with Ms Campbell recording an increased demand in residential conveyancing, private client and legal aid work.

Some of the biggest losers in the current climate appear to be in-house lawyers.

With a number of high-profile companies closing or downscaling - such as Marconi - in-house teams are finding themselves an increasingly expensive commodity.

'At the moment, mergers and acquisitions on a global scale simply aren't happening, and major corporate transactions are thin on the ground,' explains Mr Root.

'So the need for in-house counsel has been reduced dramatically.'

Although experts stress that the City is by no means a disaster area - 'there is recruitment going on, just not in the traditional areas and with the big firms,' says Mr Root - the future does not seem to be particularly rosy for trainees qualifying this year or next.

The City has been braced for some time for a downturn in its fortunes, but events such as the terrorist attacks of 11 September exacerbated the slump and led to a sharper fall in business and hence recruitment.

Ms Street has advice for any worried newly qualified solicitors: 'Be flexible with where you are prepared to move to for work - you can always return to London in a couple of years - and be open-minded in terms of what sector and what firm you want to work for.'