Marketplace Update: July 2022

It’s results season, with firms proudly trumpeting their impressive financials off the back of a productive 2021/2022 year and US firms who are mid-year continuing unabated in their lateral hiring. Yet whispers of a slowdown have started, with geopolitical issues which would seem to support a gloomy economic forecast in the coming months. Will the whispers rise in volume? Allen & Overy is the first Magic Circle firm to freeze associate pay hikes, even in the face of higher paying competitor firms, specifically citing a worsening economic climate. Is this a sign of things to come?

As Summer arrives, here are some of the main priorities on law firm agendas for the forthcoming quarter:

• Mergers are completed and merger partners sought, particularly with firms able to show themselves in the best financial light following the Covid years with consistently high revenues. Merging to create a stronger platform is an obvious route for firms wanting to make themselves more resilient if a slowdown materialises, take more market share and manage costs created by increased regulatory burden and overheads;
• Partner demand remains high, growth for law firms is on the cards for every City firm – be that international hires and strengthening offices abroad to building on domestic teams in London and the regions – and hiring continues across all practice areas;
• With Summer comes the introduction by some of remote working for the Summer and Friday afternoons off, but there are also indications that more office working post-Summer is already being quietly encouraged, with free meals, afternoon teas and other benefits available for those who make it in. The general push to keeping the workforce engaged and in situ remains, given the recruitment market remains competitive so there are currently carrots being dangled. If the economic forecast worsens, and recruitment is impacted, will these incentives disappear or has the world of workforce benefits changed permanently?