With the world economy facing its greatest challenge since the start of the era of the
truly global market, there is a lot of uncertainty in virtually every business sector. While lawyers play very significant roles in banks and corporations, they do not typically earn money for the businesses. They play supporting roles and thus represent an overhead for the organization. For obvious reasons, at times like these, key cost centres such as legal departments are being closely monitored by senior management.
It is little surprise that a majority of banks and other financial institutions have put the recruitment of lawyers on hold for the time being. There is more activity amongst multinationals, but a significant amount of caution is being exercised with respect to hiring decisions. Unfortunately, this situation promises to remain until the future business outlook becomes a lot more certain.
In spite of the problems, some banks are looking to hire, although usually only for specific needs. Speculative hires are not being made right now. In general terms, there are more such roles in Hong Kong than on the Mainland, with the busiest areas proving to be in private banking and wealth management. This reflects the increased desire to take particular care of portfolios belonging to the most important, wealthiest individuals. When it comes to roles within corporations, we are experiencing stronger demand in the PRC than in Hong Kong.
As belts begin to be tightened as a result of the economic downturn, a significant proportion of businesses, banks included, are seeking to do as much legal work as possible in-house in order to reduce the level of fees being paid to external advisers. Most in-house lawyers remain extremely busy and we have not seen lawyers being laid off by banks or multinationals. If this trend continues, it will offer the possibility of new in-house roles being created in the relatively near future, even without a significant upturn in economic fortunes.
However, both new hires and existing staff must understand that salary increases and potential bonuses are likely to be extremely limited for the foreseeable future. The indications are that, in general, there will be little in terms of pay increases this year. Moreover, bonuses will genuinely have to be earned. The common practice of recent years, whereby significant bonuses have been paid very much as a matter of course, is unlikely to be repeated this year.
A typical consequence of reduced demand and the resulting tough market is that employers tend to become harder to please. With some justification they believe they will be able to find a better or more qualified candidate for the role they are seeking to fill. In Hong Kong and mainland China this often translates to a requirement for a candidate with outstanding Chinese language skills in addition to other prerequisites. Of course, it is also the case that if a department has a reduced headcount, any individual to be recruited must have a broader skill set.
For whichever reason, we are seeing increased demand for candidates with strong Chinese language skills. Within Hong Kong, and particularly among companies with a strong local culture, we are also witnessing increased demand for candidates that are locally qualified. In general, clients are favouring what might be termed more stable candidates; those who have not frequently jumped around from job to job. Again, faced with limited headcount, employers are not keen to experiment with what they might consider potentially risky hires.
From the candidates’ perspective, we continue to see significant interest in moving out of private practice and into in-house roles; that said, there is undoubtedly some degree of apprehension over moving to certain companies or banks. In today’s economic climate, it seems possible that even the very biggest multinational businesses could potentially be only days away from collapse. Accordingly, there is a perceived element of risk in making any move in-house right now. While it is not necessarily preventing candidates from moving, it is certainly making them more cautious. In practical terms, it has meant stronger interest in roles with corporations than in positions in banks. As far as banks are concerned, for the time being candidates appear to feel safer looking at roles with commercial rather than investment banks.
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Law Alliance
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Tel: +852 2521 0306 (Hong Kong)
Email: conorgreene@law-alliance.com
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