Demand for temporary legal talent rises with looming recession

Facing the headwinds of economic turmoil, financial services firms are entering cost-containment mode. How to stay agile in an uncertain climate in a still-competitive recruiting market can be a difficult balancing act, as companies weigh the cost of additional headcount against the implications of slowing hiring. Nonetheless, deals continue to be signed on the dotted line and as a result, corporate demand for top in-house lawyers to help drive business shows no signs of abating – on the contrary, in-house legal recruitment is slackening. intensifies. FS companies are moving quickly to build their internal legal capacity to help weather any potential storms to come.

Leveraging interim legal talent

So how do you solve the problem of increasing internal legal capacity in balance with economic agility? FS firms are increasingly turning to an agile solution: using temporary but talented lawyers.

Usually, secondments could be a viable solution, but senior legal figures from major investment banks have suggested that law firms do not have a surplus of associates available. However, at the same time, these leaders identify a need to expand legal capacity in order to meet the workloads. Although this is a tricky situation, workable solutions exist, as do talented lawyers. To solve this Gordian knot, companies are turning to legal contractors, but for a wider range of reasons than in previous years.

A profitable approach

Traditionally, financial organizations have faced regulations and projects that require specialist legal staff with relevant technical expertise to assist in delivery, such as IBOR, initial margin and ESG-related initiatives. However, searches for suitable permanent candidates for such work are taking longer than ever, putting inflationary pressures on offers, which currently stand at 15-20% year-on-year, upsetting considerably the carefully organized salary scales in London’s leading banking institutions. .

Yet the Major, Lindsey & Africa survey recently found that pay rises for in-house legal teams in London are significantly behind the global rate, with base salaries $60,000 below the global average, as financial services firms in particular struggle to budget for rising salary expectations and the need for expanded legal capacity. This leaves gaps in the skills of legal teams such as derivatives, structured finance and investment funds – all of which are in high demand in today’s London market.

Typically, financial organizations, especially large investment banks, hire consulting firms and professional services firms to deliver projects, but a more cost-effective approach has begun to emerge recently. Banks are increasingly calling on independent specialist lawyers. With the continued rollout of new regulations focused on the PRA and FCA, these interim legal hiring needs will not let up regardless of the economic climate, so companies are always looking for less expensive ways to fill the gaps. skills gaps in services.

Indeed, rather than further stretching permanent team members who already have a full workload, these legal contractors do not require intensive training, can complete projects in shorter timeframes, and can be justified as a cost reduction initiative when the alternative is billable hour. . There is flexibility to extend and terminate the contractor based on project requirements, and financial organizations have full control.

How to get the best legal minds

Ultimately, the need for interim talent expertise will serve its purpose at the end of the project, and these experienced lawyers price themselves accordingly, taking into account gaps between contracts and their perception of their value to the client. ‘organization. In today’s market, there is a large portfolio of interim lawyers in core financial services skill areas (such as banking, funds, derivatives and securities) available for short-term assignments. However, organizations must act quickly to find the best candidates and fend off competitors, aided by traditionally shorter recruiting processes and using recommendations from trusted advisors with deep market knowledge.

In fact, most major financial organizations have also turned to hiring interim lawyers to solve the short-term conundrum of departmental skill gaps and workload inefficiencies caused by unrelated issues. to the project, such as resignations, maternity/paternity leave and sick leave. For those looking to hire on a permanent basis, hiring an interim attorney relieves the pressure of finding a suitable permanent candidate, as contractors are often more immediately available and able to bail out at short notice. Organizations will also have the ability to extend and terminate interim legal staff based on how long it takes to secure a permanent replacement.

Often, many temp attorneys are converted to permanent employment due to a successful acting hire. Major, Lindsey & Africa have partnered with several buying companies this year that have taken a “try before you buy” approach. This has allowed companies to assess whether a candidate is a good fit, justify the company’s hiring need, and save time determining the impact of the future economy on ongoing hiring needs.

Overall, FS firms recognize that hiring outsourcers is a great solution to alleviate the pressure on overworked legal teams. Even with the economic downturn and the recent pandemic, legal recruitment continues to be busy and the workload continues to increase. Flexible legal contractors are quick and efficient relays for legal teams who often don’t need the same approval to hire as permanent employees, with many financial services organizations using different internal budgets to allocate costs. Although hiring legal contractors is not a new phenomenon for most large investment banks when it comes to projects, their motivations for using them are broader than before.

©2022 Major, Lindsey & Africa, an Allegis Group company. All rights reserved.National Law Review, Volume XII, Number 255

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