After increased hiring activity in 2010, when firms began to hire new lawyers and expand their in-house teams, 2011 was a year which focused more on consolidation. Towards the end of last year, however, many companies battled with redundancies, which meant an exceptionally quiet year end for legal recruitment.

Where’s the growth?

Looking ahead, we are not predicting a huge amount of growth within the banking sector for lawyers. This is particularly true of the investment banking sector, where growth is likely to be very limited and thus the need for legal support inevitably decreases. Therefore whatever growth there may be is more likely to be in the private wealth management area, or potentially in certain ‘buy-side’ areas.

Specialist areas such as derivatives and structured products will always be in demand as these require rare skill-sets, so we are predicting needs in these areas, but primarily replacements. One area that is in demand is trade finance. Given that a lot of banking/finance lawyers were cut during the GFC and the field is now growing, banks are finding it difficult to fill these positions.

On the flip side, we anticipate that IPO and M&A teams are unlikely to grow too much, even though there may be a fair amount of M&A activity. In the case of IPOs, there is never as much growth on the in-house side as there is in private practice – particularly as a lot of the work can be very volume-driven and repetitive.

Lawyers at risk

Over the past year there have been retrenchments over various different functions of in-house counsel in Hong Kong. Although there is not necessarily one specific area which has been particularly affected, it is quite often a case of seniority. Retrenching expensive senior lawyers and replacing them with more junior lawyers saves the firm money.

The majority of these lay-offs have taken place in global markets such as derivatives, equities and fixed income. These are areas that are shrinking to an extent and a lot of the work focuses on flow traded products that do not necessarily require a senior lawyer, therefore making it easy for banks to replace them with junior lawyers.

Consider compliance

If an in-house candidate has been made redundant, it is important for the lawyer to keep his or her options open and be broadminded in terms of package and employer. Organisations with similar roles may also be looking to make cuts, so a candidate should always try to be as flexible as possible, and perhaps consider looking towards compliance as well as legal.

Candidates reluctant to make the change should be aware that in general, although traditionally salary disparities between legal and compliance roles tended to be between 20 to 30 per cent, wages are now becoming more comparable, particularly at the mid- to senior-level.

There is a common misconception that moving from legal into compliance would be highly difficult given that compliance professionals come from a very small pool. However, a lot of banks want to attract lawyers into these compliance roles and, bearing in mind that they are bringing with them specialist skills, they may even offer salary increments to entice candidates. The skill-sets required to make this move would be regulatory knowledge and product knowledge of whichever area they are going into.

Shrinking legal bonuses

With regards to bonuses, there has been a general drop of around 20 to 40 per cent from last year. Some top-tier banks are only paying between one and three month bonuses, even at a senior level, whereas a very small number are paying around six months. However, what we are seeing is greater polarisation within teams – high-performers may not suffer too much of a loss, and may even receive slightly more than last year, while lower-performers may take quite a hefty cut.

There are still jobs

Broadly speaking, this sector tends to be a candidate-led market as it is very specialist. Although there is a shortage of jobs, mid-level candidates with skill-sets that are in high demand can find opportunities. Compliance is an area where we potentially see some growth in teams as institutions become more concerned about regulatory risk. This means compliance professionals with particular expertise, as well as lawyers with transferable skills, may encounter attractive opportunities in 2012.

Ben Cooper is the head of in-house legal and compliance search, Asia Pacific, CML.