UK & Ireland In-house Market Overview

This is the first year that we have produced an In-house Report for the UK and Ireland to encompass both Banking & Financial Services and Corporate & Commercial. We have compiled this report with data from in-house placements over the past 12 months, as well as the results of our questionnaire sent to our clients and in-house candidates.

Taylor Root has produced an annual salary guide for the UK in-house legal market for the past twenty years. Our salary tables by PQE level for each sector within Banking & Financial Services and Corporate & Commercial are relied on for salary benchmarking internally and externally by both clients and candidates alike.

However, with the backdrop of the global pandemic in 2020, many of our clients within the UK & Ireland markets were in precarious positions and fighting for survival. A large proportion of our clients imposed ‘across-the-board’ salary reductions (some as severe as 40%), utilised the furlough scheme (even for the legal teams) and embarked on redundancy programmes. It therefore felt insensitive for us to send out our annual salary questionnaire, and then to publish salary data, when there were far more pressing issues impacting our clients and candidates. Incidentally, from the sparse recruitment activity that did take place, it was evident that salary levels remained fairly flat across all sectors during 2020. It was clearly not the time to seek a salary increase or move jobs.

Fast forward to 2021 and we could not have witnessed a more extreme comparison between two years. The rebound in both Banking & Financial Services and Corporate & Commercial in the UK and Ireland has been the strongest recovery the in-house legal market has ever experienced. The world has irreversibly changed and, whilst it has been a period of tremendous hardship, there have been many positives to emerge that will potentially reshape the in-house legal market moving forward.

Below are a few key learnings worth highlighting; ?

Candidate Supply and Demand

As the market improved in 2021, so did the demand for talent at the junior-to-mid PQE levels across all sectors. Such demand has driven up base salaries as companies compete for a small pool of millennial candidates, who are aware of the scarcity of their skill set and use this to their full advantage. Furthermore, private practice salaries at this level have continued to soar disproportionately to actual experience, with newly qualified salaries starting at c.￡100,000 for Magic Circle firms and c.￡140,000 for US firms.

Commercial and technology lawyers are (as always) in strong demand and short supply, and often have numerous options both in-house and in private practice. Conversely, there has been an abundance of senior lawyers unexpectedly finding themselves in the market as companies have sought to reduce headcount or salary costs, or where there has been a duplication at the top due to merger activity. With very few senior permanent opportunities, it is not uncommon for displaced senior candidates to opt for an interim position as a stop gap measure. In fact, the calibre of the senior interim market has substantially improved during this period.

?IR35 - Impact on the Interim Market

April 2021 saw the enforcement of IR35 in the private sector, a year later than planned. Due to the delay, many businesses had already started preparing for the changes well in advance of this date and many had already made changes to their hiring processes ahead of the eventual deadline. For this reason, we have been able to notice some patterns emerging in the interim market despite IR35 still technically being in its infancy. As anticipated, the changes have led to a significant increase in the number of fixed-term and daily rate contracts, very few have been on a LTD company basis. In addition, the daily rate contracts we have seen have been shorter contracts with the majority of 12-month contracts in the last year being fixed terms contracts.

Many of the larger institutions have been hiring PAYE contractors exclusively, despite the additional employer costs, due to the increased time and administration involved in IR35 assessments. This has been the case even where a placement might have fallen outside the scope of the rules. In terms of gross pay, we do not believe the introduction of IR35 has directly affected market rates, despite some having suggested that employers might compensate for the increased employee deductions with higher day rates. None of this is to say we have seen the end of LTD company contracts as we have still seen the hiring of LTD company contractors, but this has been more frequently at the senior end of the market. It is also worth noting that we are still in the early stages of the post-IR35 landscape, so it remains to be seen whether and to what extent these trends persist.

?The Interview Process: Speed is of the Essence

One positive upside from the necessity to interview remotely is the efficiency of recruitment processes, with companies now able to quickly mobilise key stakeholders. Equally, candidates can make themselves more easily available at short notice, rather than having to carve out two to three hours for a face-to-face meeting. Companies with protracted interview processes are increasingly missing out because candidates are either getting snapped up quickly or are losing interest in processes where they have to wait for weeks between interview stages.

As normality starts to return to the UK market, there will no doubt be a willingness to incorporate an element of remote interviewing moving forward. Whilst nothing can perfectly replicate face-to-face interaction – and where possible there will always be the preference for at least one meeting in person - virtual interviewing is time efficient and gives you the best chance of competing for talent. It also demonstrates a progressive mindset with a willingness to embrace flexibility and technology advancements.

?Remote Working and Flexibility

We have all had a taste of the freedom and the flexibility that remote working allows. Whilst not everyone will want to work remotely 100% of the time, there is the expectation that some degree of balance will evolve; there seems very little appetite from employees to return to a complete office-based working pattern. Companies who steadfastly refuse to offer any remote working will struggle with both candidate attraction and retention, regardless how attractive other elements of the package might be. The knock-on impact of this is that a large number of our clients are looking to downsize office premises and move to a ‘hot-desking’ arrangement, which indicates a genuine commitment to flexibility.

If you require any bespoke salary advice or benchmarking for you or your team, please do get in touch. Equally, if there is anything you would like to see included in subsequent publications of our In-house Market Report, we would welcome hearing from you. In the meantime, keep safe and thank you for your continued support of Taylor Root. It is very much appreciated.

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