Legal recruitment in Australia is undergoing profound change due to the entrance of global firms, our two-speed economy and a continuing hangover from the GFC. Leanne Mezrani asks recruiters for their insights on what is driving the job market in 2012.

1 Supply and demand

The numbers say it all. Mining employed an extra 58,100 people during the past year, according to the Australian Bureau of Statistics. At the other end of the scale, construction cut back 58,600 jobs, while accommodation and food services, and manufacturing and retail, each shed around 20,000 jobs.

The swings and roundabouts of the two-speed economy are reflected in the legal recruitment market, says John Naiman, CEO of recruiter Naiman Clarke.

He claims the “pockets where demand is strong” for lawyers are, unsurprisingly, in the mining and resources industries. Recruitment in Perth and parts of Queensland, in particular, is on an upswing.

In contrast, a slowdown of business activity is weakening the market for lawyers and legal professionals on the eastern seaboard, says Naiman, who believes Sydney has not yet recovered from the GFC.

The bad news for these weaker markets is that the divide between the mining industry and businesses in the slow lane will widen further in coming years, a Deloitte Access Economics report has found.

Growth in resources investment will see spending on engineering construction rise by 47 per cent this financial year to almost $80 billion, and climb to $100 billion in 2013-14, the report predicts.

But investment in the highest-employing industries, including the housing sector, will shrink 2.1 per cent to a value of $70 billion in 2011-12.

2 Skills loss widens gap

Recruiters in subdued cities like Sydney and Melbourne are still feeling the after-effects of the GFC, Naiman continues.

A skills gap is emerging, which is the result of the forced or voluntary exit of lawyers from the legal profession during the downturn.

“There was a noticeable reduction in the intake of graduates in law firms in the first two years of the GFC,” he says. “When you add that number to the lawyers who were let go or left the profession to pursue other things, a noticeable skills gap is creeping up.”

Naiman predicts that it will be increasingly difficult to find candidates with four to six years’ experience over the next 12 to 24 months.

But this may be tempered by a slight increase in graduate intakes – particularly in Brisbane – and returning confidence among lawyers to pursue career opportunities in other firms or organisations, he adds.

“We’ve seen more movement in the market now than in the last couple of years ... lawyers are no longer so reticent to move.”

3 In-house counsel keep it casual

For the in-house recruitment market, the GFC hangover has given rise to more contract work, according to Lisa Gazis, managing director of Mahlab Recruitment.

She says businesses value in-house counsel but cost pressures are preventing new hires. The result is a rise in demand for short-term contract work, which is being met by lawyers interested in working for a particular brand, or private practice lawyers who want to test the in-house waters.

While some contracts can be six or 12 months long, Gazis has also noticed a growing number of two-year appointments, particularly in the fast-moving consumer goods (FMCG), energy and resources, and property development industries.

“Businesses want to build up their teams to weave their way through the challenging regulatory environment but they can’t necessarily add full-time staff because of cost pressures,” she says.

With a wave of regulatory reform over the past 12 months in areas such as carbon, executive remuneration and mining, companies have good reason to beef up their in-house legal teams.

4 Growing globals

If you’re not interested in making the move in-house, you may be one of a growing number of domestic lawyers looking at opportunities in the newly-merged international firms, says Matt Harris, the head of private practice recruitment for Taylor Root Australia.

He is regularly fielding enquiries from lawyers with two to five years’ experience who are seeking work in newly-merged firms like King & Wood Mallesons and Ashurst.

Candidates see firms with global tie-ups as providing “a passport to another place in the world at some point down the track” he points out.

“We haven’t heard of or seen an exodus of unhappy staff [from merged firms], but what we have seen is a sense of excitement from domestic candidates about the opportunity to work in a more international, multicultural and cosmopolitan environment.”

Merged firms are also attracting senior lawyers interested in cross-border deals and other international work, he adds.

Naiman is also talking to lawyers with global aspirations. But he warns that some of his clients at both partner and associate level have been unprepared for the reality of working in those firms.

“I suspect some of the partners in the global firms are not meeting the billing requirements and are quietly being prompted to look elsewhere.”

Other partners have told Naiman they are leaving merged firms because they prefer to maintain a local focus – and mid tiers are reaping the benefits.

“Some partners do not want to be part of the large, international, Magic Circle partnership structure ... and mid tiers, like Maddocks and HWL Ebsworth, are picking up high-calibre lawyers,” he says.

Herbert Smith is the latest global law firm to enter Australia. Freehills announced the merger with the UK firm on 28 June. The merged firm is set to commence trading under its new name, Herbert Smith Freehills, on 1 October.

5 European debt crisis causing caution

Those seeking work in newly-merged firms will have to compete for coveted positions with Australian and foreign lawyers escaping the European debt crisis.

“We’re either moving Australians home from overseas – from London back to Australia – or [have] English lawyers looking to come to Australia for the first time,” says Harris.

Australian firms adopted a relatively cautious approach to recruitment in 2011 as the European debt crisis left many uncertain about how the Australian economy would hold up. Some recruiters are predicting similar conservatism in 2012.

Naiman believes the impact of Europe’s debt crisis on recruitment is most noticeable in the banking and finance sector, as business confidence declines, along with demand for legal services.

“When there is a loosening of funds we’ll see more demand in this area,” he says.

Harris also admits Europe’s financial woes have slowed movement between firms, with some lawyers staying put for now. But, he quickly adds, the impact has been minor.

6 Different strokes for different folks

Senior lawyers are looking for a clear progression path, strong leadership and an inclusive collegiate environment, reveals Naiman. Junior lawyers, however, are looking for partner and client access.

“[Junior lawyers] want a good mix of work, to be kept busy – but not too busy – and to receive acknowledgement for their contribution,” he says.

“Work-life balance, partner mentorship, or lack thereof, and firm brand also come up regularly.”

Salary is a motivator for about half of Naiman Clarke’s clients. Taylor Root’s private practice clients, on the other hand, are not as concerned about pay packages, reveals Harris.

“They’re not chasing the money, they’re chasing the opportunity,” he says. “More money is a nice added extra, but it’s not why people come to see us.”

Stuart Ablethorpe, who manages in-house, private practice and general counsel recruitment at Hudson, disagrees that salary is not a key motivator. He claims money is driving more lawyers to make a career move.

“Salary is becoming more and more part of the decision for candidates to move across.”

He adds that mid-tier firms must pay top-tier premium salaries in order to attract and retain quality lawyers.

“It’s not enough now just to offer work-life balance or greater client contact, which has been your traditional pulling points.”

His view is supported by Hudson’s Legal Salary and Employment Insights 2012 report. The survey found 19 per cent of employees surveyed said they would stay at their current firm if offered better career opportunities and 13.5 per cent would stay for a work culture that would make them happier.

But the biggest motivating factor — cited by more than a third (36.4%) of respondents – was an increase in salary.

So, maybe it is all about the money after all...