Another day another rush of hysterical headlines predicting either the onset of GFC mark 2, the “inevitable” breakup of the EU, or the “hard landing” for Chinese growth! If it’s not banks being depicted as ruthlessly protecting their margins in talking down the economy so they have an excuse not to lower rates when the RBA does, it is self interested pollies looking to score cheap points. To say the media are exaggerating the highs and lows is an understatement – they want to portray the economy as rocks or diamonds, but the reality is somewhere in the middle. Although we at EA are not economists, we are experts in legal recruitment. While there are clearly issues to deal with, our clients are telling us that the reality on the ground is far different from what you might perceive in the MSM. So what is actually happening right now?
Every major international firm has seen an increase in turnover for the first 6 months of the financial year (for example A & O up 11%, Norton Rose up 7%). While many predict the second half to be flat, they are universally busy in Asset and Structured Finance, Restructuring, Litigation, Financial Services and Projects, just to name a few groups. In Asia, most of the growth is in Corporate, and in the Middle East, firms have slowly been recovering and have actively been hiring in Projects, Energy, Finance and Litigation. Couple that with significant increases in firms partner profits (for example £2.2m at Linklaters up from £1.56m at the top of equity) and it is not exactly an ugly picture!
The general sense of conservatism about hiring, which has been particularly evident in the last two years, has limited growth for some time. The flip side to this is that most firms are very lean and have maintained high levels of utilisation, and are therefore much better placed to focus on groups which may become more active again, like Insolvency. Those who have hired for the last two years have done so for a reason – they are hiring to replace. As attrition rates remain at around 15-20%, this will continue.
UK and US funds are driving acquisition and funding growth in Europe, Asia and the Middle East. As the US slowly strengthens, more funds will flow into the EU. There is significant money parked on the sidelines with US funds that will inevitably flow into discounted assets, so even a recession in Europe won’t lead to the same credit crunch that we saw in 2008. Most firms are of the view that the ECB will either significantly drop rates, or undertake some form of QE. Either way, international lawyers tend to work for inbound clients and the flow of money into economies in Europe will actually lead to more work for international firms (but less for the local firms).
Outside of Australia we have placed people and worked with firms hiring Australian and New Zealand lawyers in Amsterdam, Milan, Frankfurt, Paris, Brussels, Jersey, Moscow, London, New York, Cayman, Dubai, Abu Dhabi, Hong Kong, Shanghai, Tokyo and Singapore in 2011 alone.
Not exactly the picture the press are painting, is it?
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