The war for talent – The rising demand for legal talent collides with lawyers evolving expectations.

The global legal market is in the process of changing in the face of recent and emerging developments. Cost pressures, regulatory changes, the challenges of scale and global footprint, advances in technology, and the expectations of a new generation of lawyers entering the profession are causing a shift in the market.

How leadership teams respond, devise, and implement a smart and timely response to these forces over the next few years will determine who will emerge as winners. Which furthers the question of how law firms and in-house legal teams will position themselves to take advantage of the opportunities that lie ahead despite the challenges – most notably when it comes to attracting and retaining talent?

A combination of the pandemic, Brexit and other more widespread factors have led to skills shortages and talent gaps across different industries. One knock-on effect of this has been greater competitiveness among employers for top potential recruits. This has led to an increasingly candidate driven market where said candidates have begun to expect a different modus operandi from before. Post-pandemic, attracting top talent isn’t just about offering the highest remuneration as candidates are also looking for the right working patterns and flexible working hours with around ½ of legal professionals with 10+ years’ experience now expressing wanting to work remotely at least 2-3 days per week.

Nonetheless, this highly competitive market shows no signs of slowing down. A new national survey from MHA has revealed that 85% of UK law firms are planning to increase staff numbers in 2022. Another recent survey by the Association of Corporate Counsel also found that 32% of in-house general counsels’ plan to recruit more lawyers to their in-house legal department. These circumstances have led to a robust war for talent taking place between private practice and in-house as they try and attract top performers to their teams.

On the frontline is the question of competitive salaries. Salaries were already trending upwards in previous years. In private practice in 2021, the base salary of an NQ in an upper quartile UK law firm ranged between £85k-£105k up from between £82k-£95k in 2020. The pace of change has only markedly increased in 2022 where we’ve seen international firms paying NQ lawyers a base salary of up to £120k. This is further reflected at all levels of seniority within private practice salaries. On the other hand, when it comes to junior in-house talent, base salaries start around £60k-£80k in London, rising to around £110k-£180k for senior legal talent.

With this information taken into consideration, given all the money on offer within private practice, why would a newly qualified – or in fact a lawyer at any level, consider the in-house legal market. However, despite it, we are still seeing a current trend of employees at UK law firms switching sides and going in-house.

This is because whilst there is a lot of money on offer in private practice, many still transition from private practice to in-house for greater job security, flexibility, work-life balance, and better promotion opportunities. The legal in-house function in recent years has evolved.  Companies have changed since the pandemic, with many increasing the size of their legal teams and giving in-house lawyers greater influence—reflecting a more fluid and changing global landscape. Businesses are seeing the advancement of technology, bringing with it new legal responsibilities, so an in-house lawyer can help companies navigate the legal landscape quickly and with ease. In turbulent times it’s important that people can turn to in-house lawyers as trusted advisers, to help them navigate the uncertainties of the next few years and give them some assurance. With the global situation being fast-moving, having an existing legal function that understands the business, its clients and stakeholders is proving more essential than ever. In-house legal functions have been increasingly redrawing the line between what needs to be outsourced and what can be performed within the legal function. Many private practice lawyers express that the hands-on nature of the in-house market is a key factor for why they want to make the move across. The ability to start and finish a project, rather than just advising on one aspect of it, as well as working alongside the business to achieve commercial aims, plays a key factor in decision making. Whilst the salaries may not be as large as in the private practice, the benefits of joining an in-house organization can far outweigh just the salary on offer.

While this all seems very positive for the in-house market there is a rebalancing on the horizon. There is still the salient topic of income, although in-house teams start to pay more for lawyers with three to seven years’ experience, after that, the differential starts to swing the other way and begins to stagnate. All the while equity partners in top law firms are earning incomes that far exceed their peers in in-house roles, save for a few GCs of major listed companies.

Furthermore, in-house lawyers are now getting busier, with pressure for them to do more – on the other side of the fence, many law firms are rethinking the workload of graduates and early career lawyers to make them more sustainable. They have also stepped up their programs focused on employee mental health and wellbeing and increasingly dedicating time to the question of diversity & inclusion.

Either way, if trends persist, the employee value proposition of in-house may become less compelling. With increasing demand, in-house teams have started to build their capacity by hiring more graduates and investing in early career legal and commercial training. However, this may be good news for law firms; after years of training young talent only to lose them to in-house roles, the shoe may comfortably fit on the other foot. In recent years, we have noticed a marked increase in the number of lawyers moving back to private practice after several years in-house, as well a steady flow of legal professionals flooding into other legal functions such as compliance and risk. Furthermore, although, in-house lawyers are increasingly being paid through long term incentive plans or rewarded through share schemes in order to compensate for the competitiveness of salaries in private practice, it remains to be seen whether in-house roles will ever truly be able to compete financially with private practice.

It is important to remember that in these uncertain times, change is inevitable to accommodate a world in flux. As the power play gets settled out between the private practice and in-house sectors, the status quo remains that both are looking to hire, and both boast pros and cons that may suit different individuals at different point in their career – just as it has always been. Nonetheless, the war for talent rages on and the future of the industry may no longer be a hierarchy with private practice at the top as both sides set out to become as attractive as possible for prospective talent.


Written by Imogen Scott, Researcher



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