Most would agree that the past three months could be described as an interesting period in the UK. The lead up to and fall out of the EU Referendum produced a maelstrom of political, economic and social discussions and arguments that I can’t remember being matched for a very long time if ever in my lifetime.
The word “interesting” can be an ominous one, particularly when used to describe an economic climate or the recruitment markets. Generally, Recruiters prefer stability and expectation of growth because it encourages businesses to either quickly replace existing staff when they move on or to grow their headcount to match increases in demand.
Interesting times can often be uncertain ones and this may lead to a slow down in recruitment as businesses assess their requirements with more scrutiny and are more cautious with their hires, particularly when it comes to permanent positions.
There have been some notable trends in the legal finance recruitment sector since the announcement of the referendum which may match what has been happening in the wider recruitment sector or be fairly unique to it. I thought it might be useful to share those observations for anyone in the legal finance world who is either thinking about looking for a new job or considering hiring staff.
The effect of Brexit on the legal finance market
In the lead up to the referendum between April and mid-June there was a slowdown in the number of vacancies the legal finance team received in comparison to the same period in 2015. Although this doesn’t indicate that the possibility of a Brexit vote was a determining factor in the slowdown in job numbers received, the sentiment from many clients during that time was that they were not going to recruit until after the vote had taken place.
However, despite this feedback there was an interesting (there’s that word again) flurry of activity in the two weeks before the 24th June with a spike in new jobs coming in to us. Although there was no clearly defined reason for this, there did seem to be an attitude that business had to continue and some frustration with the lack of action being taken on vacancies causing friction in understaffed teams.
The immediate aftermath of the vote to leave the EU was a subdued couple of weeks. Our conversations with clients were largely ones of disbelief about what had happened (all of our clients are based in London where there seemed to be a particular confidence of voting to Remain) and further uncertainty about whether there would be a direct impact on recruitment in their accounts teams.
Then we started to get busy. There was an influx of roles that had not been released before the end of June that came through and had been deemed business critical and signed off for release to agencies. After the first week of July the rest of the month was our busiest since March with a lot of transactional finance roles and also a number of qualified and part-qualified accountant positions.
The number of new roles being released has slowed down in the last couple of weeks but that has generally been cited as being due to the usual summer holiday impact rather than anything Brexit related.
There is a concern that this spike in job numbers may be the residual work that was on hold and that once the summer holidays are behind us the true impact of the referendum will begin to be seen.
The phrase “business critical” has been used by a lot of clients and sign off for releasing any vacancies is now in many cases being controlled by the most senior individuals in firms. We have heard of some roles within accounts teams due to be released now being put on hold and with a lot of corporate work in law firms being put on hold indefinitely there will be a direct impact on the busyness of business service teams and potentially less recruitment requirements. In many ways we are waiting with bated breath to see what September does bring and to some extent this may define the rest of 2016.
Predictions for the market in Q4
My own expectation of recruitment in the sector in the coming months is fairly optimistic. A good proportion of our clients have very lean accounts teams and losing one member of staff with current workloads requires an immediate replacement to make sure everything gets done. I think that this will inevitably lead to an increase in fixed term contracts and temporary roles to replace leavers whilst uncertainty remains.
Nevertheless, where positions are either more strategic or business facing, firms are less inclined to use the interim option because they want someone committed longer term.
Since the Global Economic Crisis at the end of the last decade there has been a growing trend of hiring commercially-focused accounting staff into specialised roles (Commercial Analysts, Finance Business Managers, pricing specialists, etc.). The increased reliance from fee earning teams on the expertise coming from these individuals and teams is unlikely to diminish and could actually increase in more challenging market conditions.
There are a good proportion of law firm leaders who do not anticipate that the Brexit vote will have a huge impact on their businesses. The robustness of the legal sector is often born of the fact that in times of crisis lawyers’ expertise and opinion is most required and this will see the exit from the EU creating a lot of work in certain parts of the profession.
Finally, with a change in market conditions also comes a need for a different set of skills within the senior management team in firms’ accounts teams which might lead to new opportunities for individuals who have these skills.
These are a few observations of why I think that the legal finance recruitment market is likely to remain quite buoyant albeit with a less busy end to the year when compared to 2015.
There are lots of other factors to be considered and I would welcome any comments from other people on their perspectives. It would be unrealistic to expect such an important event to leave the sector unscathed. Caution, scrutiny and consideration are likely to be keywords for any recruitment requirements in the coming months in the sector but ultimately, where there are unavoidable business needs for additional members of teams to be hired there should remain a fairly steady flow of new opportunities coming through.