Are law firms recruiting for the short term?

In the week following The Lawyer's graduate law fair, which was attended by 5,000 young hopefuls, Chris Fogarty asks if law firms have got their recruitment policies right yet

Business is booming for large law firms, young lawyers are in demand and recruitment companies are riding a wave of healthy profits. So is everybody happy? Well, no.

Staff shortages are driving wage bills up, overworked young solicitors are increasingly looking to opt out of the profession and some recruitment firms are bracing themselves for another recession.

The last crash in the legal marketplace ended around two years ago. During that recession, recruitment companies say litigation solicitors were in demand while solicitors who struck deals were not. Now the reverse is true.

As a consequence, there is now a serious shortage of two to four year qualified banking, corporate finance and projects solicitors. The Zarak Macrae Brenner (ZMB) recruitment firm alone currently has 80 vacancies for corporate solicitors. "It's boom time at the moment for recruitment," admits ZMB director Jonathan Brenner.

Market research company Winmark estimates that the top 500 law firms have paid £40m to recruitment agencies in the last 12 months alone.

The staff shortages are such that Commonwealth countries such as Australia, New Zealand, and South Africa are now being plundered of their brightest legal prospects for UK firms.

Badenoch & Clark recruitment consultant Julia Ramsden, who deals with temporary placements, says English firms are seeing the benefit of taking on foreign staff who are looking for experience rather than a set career path.

"People are definitely seeing that it is desirable to have a very good lawyer who you know will not want to break into your partnership structure," says Ramsden.

Yet young English and Welsh solicitors are not missing out, nor is the recruitment boom restricted to London.

Catherine Boyle, managing partner of Leeds-based Cavendish Boyle, says demand in the North for solicitors with two to six years experience is high, and that firms are desperate to hold on to the talent they have.

"Salaries are definitely increasing," says Boyle. And she says this is despite the fact that large law firms informally monitor the going rate in an attempt not to surpass it.

But despite attractive salaries and near unprecedented demand for their services, almost half of young solicitors are desperate to get out of the profession.

According to a recent ZMB survey of 555 assistant solicitors, four in 10 are looking to leave the profession.

Young Solicitors Group (YSG) vice-chair Katie Paxton says the firms have no one to blame but themselves for a shortage of young staff and low morale among those that remain.

Paxton says that during the recession firms looked at the bottom line, and cut back on staff, investment and training. Now they are reaping the result of their own short-sightedness.

Simply increasing wages, argues Paxton, is not the answer to solving deep-seated problems. "A lot of these firms will pay you a good wage, but they want to buy your body and soul," she warns.

The YSG does not begrudge its Commonwealth colleagues for taking work in Britain, but warns that firms are once again using short-term measures rather than undertaking long-term training and investment in local staff.

According to some industry observers, the risk is that the legal profession will slip into a continual building-industry-type boom and bust cycle. The current recruitment binge, in which firms are spending a fortune on recruiting lawyers with bloated pay packets, will be followed by a hole in the accounts and staff lay-offs.

ZMB's Brenner, for one, predicts another crash in the marketplace, citing the increasing recruitment of insolvency lawyers as evidence of changing times ahead.

But White & Case's London executive partner John Bellhouse is confident firms will not make the same mistake again. He says they now are more cautious in their staffing policies. "No one is immune to the cyclical nature of doing business," says Bellhouse. "But I would say all the law firms I know have learnt a lot from the last recession."

Bellhouse's comments are interesting, coming as they do a year after his US firm shocked the profession by paying newly qualified lawyers £45,000 starting salaries.

But both he and recruiters such as Catherine Boyle say young solicitors increasingly want the guarantee of a bright career path rather than just a bulging pay packet.

Dibb Lupton Alsop, which has managed to retain around 90 per cent of its trainees, believes that it is essential for a firm's culture to bring staff through the ranks.

Human resources director Robert Halton says that the company has just begun trialling a mentoring system, where a partner is assigned two or three trainees whose future the partner helps map out.

Yet it is clear some firms still have some way to go to convince young solicitors that they are not ignoring their long-term career prospects in a bid for short-term profit.