Demand for talent in London’s partner hiring market is set to continue this year, but will be hampered by “strong headwinds” in an uncertain market, two leading recruitment agencies have predicted in their most recent reports on the state of the industry.
The lateral hiring market is likely to cool off in the second half of 2022, according to recruitment agency Edwards Gibson, as a number of factors have created what the agency calls “incredibly strong headwinds” for firms.
In the agency’s latest bi-monthly report on partner hires across the industry, it listed several reasons why firms may experience difficulties in the months ahead, including the Russia-Ukraine conflict and the tapering off of COVID-related savings.
Many firms significantly boosted their cash reserves over the course of the pandemic by drastically reducing their expenditure on travel expenses and other costs.
The report also lists the halting of debt-fuelled government stimulus, pending tax rises, and global inflation rising to levels unseen for 30 years – and warns that even the best managed law firms will struggle to maintain profitability.
But demand for talent is still expected to continue. Fellow recruitment firm Fox Rodney’s end of year report on partner moves for 2021 forecast a continued focus in 2022 on hiring in a range of transactional practices, especially private equity, M&A and finance.
This prediction did come with the caveat that firms may be impacted by higher inflation and subsequent slower flow of moves.
Fox Rodney also noted that that last two years had seen very strong results for most firms, with the result that many were “hungry for further growth”.
As well as predicting an increase in demand for team hires, Fox Rodney also forecasted that U.S., U.K. and international firms in London will continue to grow their disputes practices, with U.S. firms seeking to get a foothold in the market, and U.K. and international firms increasing their revenues from disputes.
Last month, Shearman & Sterling added a disputes partner to its London office, with the arrival of Matthew Skinner, who joined from the Singapore office of Jones Day.
Fox Rodney also said that retaining key talent could be as important for many firms as adding new faces, with counter-offers and buy backs likely to continue being a feature of the market throughout the year.
Increases in inflation, global market volatility, and the impact of war in Ukraine have all served to dampen optimism, with several firms opting for more cautious approaches. In January, Mishcon de Reya confirmed it was temporarily shelving plans for its much-trailed IPO.
Law.com spoke to several partners who expect IPO work to dry up in the near future, as capital markets feel the consequences of Russia’s continuing invasion of Ukraine.
Data from Refinitiv shows that in Janaury and February this year, the proceeds of IPOs dropped 98%, to $93.7 million, compared with the same period last year when the figure stood at $3.9 billion.