State of the Sector: A Legal Sector Report


State of the Sector: A Legal Sector Report

In 2021, the legal sector had a record year for hiring, ‘with recruitment surpassing 2019 levels by almost a quarter’ by November, according to People in Law. This trend looks set to continue into 2022, with data from the MHA survey showing that 85% of UK law firms are planning to increase their staff numbers in 2022, and 93% are not currently planning to make any staff reductions. With all this demand for talent, the shortage of qualified staff to fill roles is hardly surprising. Candidate attraction is the top priority for the majority of law firms in 2022, with ‘average salaries across all ranks rising by 5% at a minimum to attract new talent and to adapt to higher inflation’. The same survey found that salaries had been following an upward trajectory in previous years: ‘in 2021, the cost of employing a fee-earning lawyer ranged between £85k and £105k up from between £82k and £95k in 2020.’ They predict that this uplift will be set to continue in 2022, and data from Heat’s own specialist Legal Recruitment team supports this.

Graphic showing legal vacancies vs employment in law jobs

We asked our specialist Legal consultants here at Heat to rank the factors that have had the greatest impact on the current candidate shortage. The results have ranked salaries on offer as the greatest impactor, with the hybrid/remote-work debate coming in close second. Salaries have certainly been increasing exponentially: in fact, data from the MHA survey found that ‘in 2021 the cost of employing a fee earning lawyer ranged between £85k and £105k up from between £82k and £95k in 2020.’ This trend of increase appears set to continue throughout 2022, as salaries continue to rise. It is more important than ever for both candidate retention and attraction for businesses to ensure they are benchmarking salaries accurately and remaining competitive within the current market.

graph showing monthly trends in legal vacancies and jobs

To give further insight into the state of the sector, we then asked our Legal team to share their personal insights on the current hiring climate within the sector, their experiences operating within it over the first quarter and their predictions for the new financial year.


It’s a candidate’s market

“The demand for top talent is still considerably outstripping supply, and I haven’t noticed a significant change within the legal recruitment market since last year. Candidates are becoming increasingly aware of their potential bargaining power and clients are evolving resourcing plans to ensure that they are as agile as possible to ensure that talent can be captured.

The Southwest region will continue to experience a higher proportion of London relocators than previous years as they search for a post pandemic reset towards improved work-life balance. Many will use the opportunity to leverage remote working options so this may not significantly increase the availability of talent in the Southwest region in the short term.”
Chris Bratchel: Senior Recruitment Consultant – Southwest
chris bratchel headshot with green border

graph showing the legal vacancies in England and Wales

Counteroffers increase in popularity

“The biggest challenge in the market so far this year has been the massive rise in counter-offers, as a lot of the time candidates are choosing to stay. The salary and benefits packages on offer are extremely competitive and clients are becoming wise to this. Most firms are now realising that they need to pay well and offer a good combination of flexible working and a generous benefits package in order to secure good candidates and keep them long term. This has massively impacted the market for candidates, as they will notice that they are now being offered what they are worth from the outset by firms they are interviewing with, and they show a will to fight for them if candidates are counter offered.

Clients need to be prepared for the counter offers that seem to be present more and more frequently. Candidates need to be prepared for those counter offers and weigh up whether it’s worth staying at a firm that only offered to pay the salary they were looking for when they’ve decided it’s time to leave. The challenge will be weighing up these pros and cons overall.”
Emma Latchem: Senior Recruitment Consultant – West Midlands
emma latchem headshot smiling with green circle border

“The biggest challenge in the current market is counteroffers. The market has become so busy post-covid, with extremely high demand and good candidates becoming increasingly hard to find. The market will only become busier, and I would advise clients to act fast, as candidates aren’t waiting around. Those that are available are getting snapped up quickly and finding good candidates to fit London clients’ requirements is only getting more difficult.”
Saphora Zayd: Executive Consultant – London
saphora zayd headshot with green border

Post-pandemic impacts

“The volume of candidates that changed positions during the pandemic has led to a shortage in active candidates on the market. As a result, firms across the country are now having to do more to set themselves apart from their competitors to attract the best talent to their business.

Due to a huge increase in popularity, it is fair to say that remote and hybrid working is here to stay! Alongside this, candidates are now looking to join firms that offer more than just good basic salaries. Popular motivations to join a new business include joining those with a reputable EVP, diverse workforce and flexible working.”
Dan Hazzard: Associate Director
dan hazzard headshot with green border

“There has been significant slowdown of movement due to the uncertainty of the year coming out of a pandemic and the crises on multiple fronts; there is uncertainty in various sectors due to the financial issues facing Europe and Brexit plus the instability.
Brian McIntyre: Senior Recruitment Consultant – Northwest
bryan mcintyre with green border

Clients are focusing on retention

“Firms are starting to realise how difficult the market is currently, so are doing everything possible to retain their staff. We are seeing higher salaries, better benefits packages, and promotions being offered as a means of retention, and all of this is making it a lot more difficult to entice candidates to leave if they aren’t already actively seeking a new role.

Both clients and candidates should prepare for the recruitment market to become a lot fiercer in the year ahead, with higher rates and active headhunting from firms. Firms need to offer their best and final offer any time they make an offer to candidates to avoid missing out. Those who aren’t already offering a competitive salary and benefits package should ensure they are benchmarking their offering accurately.
Abbi Davis: Managing Consultant – Southeast
abbi davis headshot with office background

Hardening markets

“There is a lack of candidates in the market across most sectors, and a particular gap in experienced fee earners such as mid-level solicitors. A big impact we have been feeling is the pressure felt by clients who are struggling to recruit and the strain that this puts on their existing staff.

In the year ahead, candidates should expect salaries to be tight, we don’t anticipate much changing this year as companies still look to get even footing. Clients may struggle to attract right candidates unless they are flexible on the packages they’re offering, such as better basic along with back ended incentives such as bonuses. In terms of specific verticals, property will continue to be steady as there is always a need in this field. Economic and political instability will have a huge impact in certain regions, as less affluent areas of the north may struggle with the increasing costs of utilities, and we may see an increase in closure of businesses as a result of this and the potential for rise of “Super Firms.” We’ve already seen a number of huge practices merging and securing market share which inevitably leads to smaller businesses losing their independence.”
Simon Scott: Principal Consultant, Northwest
simon scott headshot with green border

In conclusion

Those trends that ruled the hiring market throughout much of Q1 look set to continue into the year ahead. With candidates in short supply, vacancies on the up, and these many hurdles to contend with, this may seem like a daunting prospect. It’s more important than ever that companies pay attention to the trends in the market and be willing to adapt to keep up.

It’s clear that salaries are on the rise, but companies still have other options to retain their talent. By re-examining their recruitment processes and strategies, as well as reviewing and enhancing their benefits options, companies can make themselves more attractive to candidates who are looking to secure a new position.

For candidates, now has never been a better time to make a move. As we move towards the latter end of the pandemic, and confidence in the stability of jobs grows, candidates are in an extremely healthy position to make a career change that could garner them greater opportunity for growth and success, as well as a host of competitive perks and benefits. Law firms are set to see exponential growth over the coming year, but they will need to bolster their recruitment efforts in order to secure the additional resources to keep up with the growing demand.