LEGAL & FINANCIAL EXECUTIVE SEARCH AGENCY
L E G A L
MARKET REVIEW
& SALARY SURVEY
2014
INTRODUCTION
GRMSearch is pleased to present its annual market review and salary survey for the financial year in Hong Kong.
We aim to provide our clients and candidates, through the use of this in-depth market review and salary survey, the necessary guidance and advice regarding compensation levels for both private practice and in-house, based on the trends we have seen in Hong Kong’s legal recruitment market.
We will take you through the two sides of the picture, in-house and private practice, comparing the current situation with what we saw last year, and finish with our predictions for the coming year.
All information included in this survey has been fully researched, through the help of our clients and candidates, and of course using our knowledge and understanding of the legal market in Hong Kong. Please bear in mind that, as with all surveys, the results are based on averages, rounded to the nearest HK$1,000 and may therefore differ in individual situations. This survey is to be used as a guide only; please do not hesitate to contact us regarding individual cases.
THE VIEW FROM PRIVATE PRACTICE
WHAT WAS 2013 LIKE FOR JOBS IN THE LEGAL MARKET IN HONG KONG?
2013 was certainly a better year than 2012, with Q3 and Q4 especially busy in private practice. Overall, job openings for associates were up around 20%; still not quite at the level of early 2011, but a definite improvement. Partner hiring was a similar level to 2012, though with less firms rapidly expanding at this level than in 2012.
LOOKING AT THE NUMBER OF HIRES OVER 2013, WHAT DOES THIS SAY ABOUT THE
LEGAL JOB MARKET IN HONG KONG?
We are now seeing a more solid recovery from the global financial crisis, and the subsequent market dip at the end of 2011. However, firms were still cautious about overexpanding and we did not see the “gung ho” approach to hiring large numbers of transactional lawyers that we saw in 2011.
Due to the continuing lack of IPOs in Hong Kong in 2013, we did not see much hiring in equity capital markets teams and encouragingly we did not see as many redundancies as we did in 2012. Corporate lawyers have also seen an increase in M & A work as different partners take advantage of their increased capacity.
Firms are also playing to their strengths in niche areas, including building out specialist areas with high quality talent, as opposed to growing mainstream areas. This means in 2013 we placed a much broader selection of candidates, with a greater number of different firms.
WHAT HAPPENED TO PRIVATE PRACTICE SALARIES IN HONG KONG IN 2013?
WHAT WERE BONUSES LIKE?
Most bonuses were between 1-2 months salary in private practice, although some firms are still not able to reward their lawyers with bonuses at all.
IN REGARDS TO HIRING, WHAT HAVE BEEN THE MOST ACTIVE PRACTICE AREAS
ON THE PRIVATE PRACTICE SIDE IN THE LAST YEAR?
Regulatory investigations, litigation and white collar crime teams (including FCPA) have been looking to grow and a number of openings became available due to losing lawyers from these teams to in-house roles. We have also seen more niche areas, such as insurance litigation, shipping litigation, employment and medico-legal expand.
DID MANY NEW INTERNATIONAL LAW FIRMS MOVE INTO HONG KONG IN 2013?
We saw a number of additions to the Hong Kong market, from both the US and UK, but not the same rush to be here that we have seen in previous years, especially from the US firms. This is in part due to a number of high-profile failures and also due to the fact that a lot of the top tier firms are now well-established here.
IS HONG KONG AS ATTRACTIVE TO NEW FIRMS AS IT WAS PREVIOUSLY?
Hong Kong still remains a key part of many firms’ global and regional aspirations. However, it is no longer a question of arriving here, calling client contacts and expecting work. More and more firms now have to differentiate their offering to clients. Ideally, this is through a more bespoke approach to the work and offering a complete solution. However, many firms have found that the major factor for a lot of clients is price, meaning that very busy law firms, working headline-grabbing deals, are not necessarily as profitable as they would hope.
WHAT ARE THE PREDICTIONS FOR 2014 FOR THE PRIVATE PRACTICE JOB MARKET?
Early indications are that this will be a busy year, with a number of firms already in hiring mode.
WHAT WILL BE THE SPECIFIC GROWTH AREAS?
Litigation and regulatory investigations lawyers will continue to find themselves in high demand. The IPO pipeline seems more positive and there are already a number of openings in this area, though it remains to be seen if there will be a need to actually increase the size of these teams. Debt capital markets, which was busy last year, continues to be so, though this may not be sustainable bearing in mind some of the changes taking place in the PRC. Specialist areas, as mentioned above, are likely to continue to grow.
WHICH JURISDICTIONS ARE SEEING A LOT OF GROWTH?
China, Singapore, Malaysia, Indonesia and Korea looks to be growing more rapidly than some more established jurisdictions. We will still see growth in Hong Kong.
WILL SALARIES RISE?
We are not predicting a huge rise in salaries, as, for the reasons outlined above, many firms are still not seeing the levels of profitability commensurate with the number of billing hours.
WHAT WILL BONUSES LOOK LIKE?
Although there is some flexibility for firms to reward high performers, we are not predicting much of an increase.
WHERE SHOULD AN AMBITIOUS LAWYER BE LOOKING FOR THE BEST CHANCE
TO GET PROMOTED?
Our suggestion is small to mid-sized offices, i.e. a good firm that is still quite small in size in Hong Kong. Here you will have more autonomy to shine, you’ll still have top class work and be working for a brand name, but there will be more space for you to really prove yourself. Ideally choose one that has some existing panel relationships, if possible.
WHAT ARE FIRMS LOOKING FOR IN THEIR LAWYERS?
As well as technical skills, firms are increasingly looking for lawyers with strong business development skills, and, ideally, connections and language skills that can exploit the PRC market.
IS 2014 A GOOD TIME TO MOVE JOBS IN PRIVATE PRACTICE?
It already seems like there will be a broader range of opportunities on offer this year, and, with a lot of the macro-economic uncertainty affecting the markets now resolved, the inherent risks in making such a move should be lower in 2014.
THE VIEW FROM IN-HOUSE
WHAT WAS 2013 LIKE FOR JOBS IN THE IN-HOUSE & COMPLIANCE MARKET IN
HONG KONG?
Most of the transactional in-house legal teams of the international investment banks were not in growth mode in 2013, although the limited number of lawyers that departed at the mid-level were mostly replaced. However, we saw some growth in debt capital markets in-house legal teams, as well as litigation/ regulatory investigations. There were also fewer job cuts than in 2012.
ARE THERE ANY AREAS THAT HAVE BEEN ACTIVE OVER THE PAST YEAR?
A huge growth area in 2013 has been AML, KYC, sanctions and anti-corruption roles. We have seen a massive increase in the size of these teams within the banks, with some teams multiplying in size several times over. There have also been a large number of anti-corruption investigations roles within non-financial MNCs, which have also seen the rise of compliance roles outside of the world of finance. In 2013, as in 2012, we have seen some growth in the legal teams in Chinese banks and less issues in winning replacement headcount. This is partly due to their ambitious growth plans in the international market and again a number of the roles we have filled have been key, senior hires.
We have also seen an increase in demand for in-house employment lawyers, IP counsels and banking/ finance lawyers.
WHAT WERE BONUSES LIKE IN THE IN-HOUSE MARKET FOR 2013?
Bonuses this year in the banks have ranged from zero to around 50% of base salary at mid-level, depending on performance. At the management level, we have seen 50-75% bonuses on the whole. We are still seeing a huge disparity within the legal teams, with lawyers sitting next to one another receiving very differing overall packages. This is also true for pay increases, though on the whole these have been minimal, or non-existent. However, compared to 2012, the average bonuses have increased, with lawyers who received 1 month’s salary in bonus for 2012, typically getting 3-4 months’ salary in bonus. Bonuses in Asian banks have generally been higher, with many mid-level lawyers receiving over 6 months’ worth of salary. As in 2012, in 2013 bonuses within traditional asset managers stayed around 3-5 months’ salary at the mid-level, with some more senior lawyers making above this. Alternative asset managers have paid between 40-100% for mid-senior lawyers and there have been a few sole counsels in rapidly-growing funds making multiples of their base salaries, although the average base salary tends to be lower.
WHY DO PEOPLE TEND TO MOVE IN-HOUSE?
90% of lawyers who move in-house do so to gain a better work/ life balance, either in the form of shorter hours, more predictability, or both. They are also often attracted by the commerciality of the role, working more closely with the business and being part of a deal, as opposed to advising from a distance.
WHAT CAN PEOPLE EXPECT IN TERMS OF SALARY WHEN MOVING IN-HOUSE?
When moving in-house, traditionally candidates have taken a pay cut on their base salaries in recompense for the better lifestyle. The overall package, including bonus, at the banks was at least the same and often considerably more. This is still the case for many lawyers, although some top tier banks may be able to match, or slightly increase Magic Circle salaries. US lawyers will still expect to take a cut for most in-house roles.
Moving into asset management firms nearly always involves some cut in salary, unless it is to an aggressive private equity firm, when the exceptionally challenging hours justify a very generous package.
Outside of the financial sector, a cut of at least around 10-20% can be common when moving in-house, as the roles tend to offer a very good lifestyle.
WHAT ADVICE WOULD YOU GIVE SOMEONE IN PRIVATE PRACTICE LOOKING TO
MOVE IN-HOUSE?
Although 2014 has started well, for those lawyers looking to make the move in-house from private practice, the advice in this market is still to consider each opportunity on its merits as there are still not a huge variety of opportunities available. Even if a role is not ideal, it can act as a good stepping stone to the next in-house role. When negotiating salary, although it is a good idea to ensure as best a package as possible, bear in mind that there is a great deal of competition for each role from equally well-qualified candidates.
WHAT ARE THE PREDICTIONS FOR 2014?
2014 has started strong and we have been instructed on more mandates than any first quarter since 2011. There have already been a number of equity capital markets opportunities in the banks for the first time in a couple of years. The variety of roles on offer is also good, with roles ranging from FCPA investigations
roles in pharmaceutical companies, through to M & A roles in insurance companies, through to derivatives roles in banks. We are predicting that AML and financial crime will again be very busy, as will a lot of core compliance functions. Regulatory and litigation hires will continue to increase and the expansion of the “real economy” should see growth in non-financial services legal teams.
WRITTEN BY BEN COOPER, EXECUTIVE DIRECTOR AT GRMSEARCH
b.cooper@grmsearch.com +852 2836 6382
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PRIVATE PRACTICE SALARY GRAPH
A graphical representation of the salary range for each level of qualification, based on the figures below.
NQ
1PQE
2PQE
3PQE
4PQE
5PQE
6PQE
7PQE
8PQE
New York Law Firms
1,080-1,200k 1,100-1,300k 1,200-1,400k 1,300-1,600k 1,400-1,700k 1,500-1,900k 1,600-2,00k 1,700-2,100k 1,800-2,300kTop Tier International Firms
780-840k 850-924k 880-1,020k 960-1,140k 1,044-1,236k 1,104-1,320k 1,236-1,464k 1,350-1,536k 1,440-1,620kMid Tier International Firms
720-780k 744-840k 816-984k 864-924k 900-1,080k 960-1,200k 1,080-1,320k 1,200-1,440k 1,296-1,560kIN-HOUSE SALARY GRAPH
A graphical representation of the salary range for each level of qualification, based on the figures below.
