Business critical hires overtake luxury players
Bolstered by regional investment, the Midlands' commercial contracts jobs market has changed post-Brexit vote. James Brewster explains how and why
During the Industrial Revolution, the Midlands was known as a hotbed of exploding industrial capacity as well as a home for free-thinkers and creators. If you speak to some of the older generation you might think that, as a region, our best days are well and truly behind us; a situation that some might say will not recover with the forthcoming exit from the EU. But the Midlands is still home to a variety of thriving and successful industry sectors and exciting times lie ahead.
Birmingham is now a major financial hub; HSBC’s UK head office is in the city and Deutsche Bank has also expanded its presence here. Accountancy firms PwC and KPMG both have their largest offices outside of London in Birmingham and Deloitte has also made substantial investment into its Brindleyplace offices in recognition of its thriving Midlands practice.
Birmingham is in the midst of a huge regeneration programme, including the Eastside development and Paradise Birmingham. Such large scale projects and infrastructure are going to result in continuing investment. The Midlands is, without doubt, one of the most exciting investment opportunities in Europe; just last year the Department for International Trade outlined 33 regeneration projects worth £14.4bn.
Arguably, the Midlands was the birth place of the automotive industry. It might have changed a little since the days of MG Rover in Longbridge but it is still playing a major part. In September 2016, the Department for Business, Energy and Industrial Strategy announced that the region’s automotive sector was set to receive a £45m boost, creating thousands more highly-skilled jobs in the engineering and advance manufacturing sectors. It included £35m from central government and £10.5m from local organisations. The money was to be dedicated to a new automotive business zone in Whitley, near Coventry.
Many projects around the region have looked at ways of using traditional car-making skills in advanced technologies. Figures released in January revealed 2016 was the ‘Year of the Jaguar’ as the car maker banked record-breaking sales. Sister brand Land Rover sales were up too by almost 20 per cent.
The Midlands is also home to many modern and innovative energy and tech companies. In May 2016 the government launched a new fund designed to drive cutting-edge research, innovation, and skills in the area. It included £60m to help establish a new Energy Research Accelerator to help grow the region’s high-tech, high-skilled economy. Traditional skills are being adapted too with manufacturing on the rise again, but it’s been given a hi-tech upgrade. The region’s creative scene is thriving and is building a solid reputation as one of the most exciting destinations in the country for tech companies. With digital employment expected to continue to grow, the Midlands is well-positioned to further enhance its role as not only a historical technological centre but also a modern one.
With all of this in mind, specialist commercial contracts lawyers are in particular demand as they provide critical advice on a wide range of commercial arrangements – including robust contracts – that manage risk and allow growing organisations to operate effectively. In short, lawyers are providing the expert assistance underpinning much of the region’s current growth.
The need for law firms to develop their own talent and also recruit new lawyers with commercial contracts experience remains high on the agenda, as Jayne Hussey, partner at Mills & Reeve, Birmingham, explained: ‘The sectors that are keeping our Midlands commercial team particularly busy include automotive and engineering, energy, and technology. All of this means we’re focussed on both retaining and developing our own talent and continuing to seek to recruit talented lawyers.’
This was reiterated by my colleague Victoria Moore, who is a director of BCL Legal’s Midlands commerce and industry recruitment department: ‘Commercial contract lawyers are in significant demand in the manufacturing, energy, retail, FMCG, transport, and B2B sectors. Since the recession, we have seen a year-on-year increase in recruitment into Midlands businesses – 30 per cent of which has been new roles. Our view is that Brexit has not affected the in-house commercial legal market; if anything there has been an increase in commercial legal activity post the referendum. Businesses on the whole continue to perform well and there is an increasing trend to place huge value on the input of an internal legal function.’
In the run up to the referendum there was plenty of talk about an inevitable recession should we vote to leave the EU. I worked in legal recruitment through the last recession and during the six months that followed the vote one thing became very clear: we never came close to a legal jobs market that bore any resemblance to that of 2009/10. However, we did see a down turn in the number of vacancies, particularly within transactional areas like commercial contracts. It is important that we look at what roles were shelved, what roles were left unaffected, and why.
In 2015, there was a high volume of commercial solicitor vacancies within private practice law firms. Firms were often so keen to recruit that PQE level was widened as was salary. There seemed to be a never-ending stream of vacancies, budgetary sign off was a given, and firms were extremely opportunistic. The difference between what was a business critical/specific vacancy and what was a luxury hire was very blurred. It seemed everything was available and with no end in sight. The market was very candidate driven which meant firms were often in competition with one another as there weren’t enough solicitors to go around.
What we saw in the immediate aftermath of the referendum was that a percentage of vacancies disappeared and suddenly the confidence to recruit was rocked, but only with certain firms, and it was the luxury hire vacancies that slipped off the radar. And this is the key thing to note: luxury hires are by definition a pure ‘luxury’ – we don’t necessarily need them because we can survive without them but we’ll have them anyway just because we can. The vacancies that remained in the second half of 2016 – and continue to come onto the market in 2017 – are roles that are business critical and without filling them, firms may face the prospect of losing clients as a result of not hiring the required extra resource to cope with demand.
Brexit hasn’t yet stopped the Midlands economy from growing – it is still very busy. Brexit has added a new element of risk and where there is risk, advice is needed, but it hasn’t stopped commercial deals being done.
This view is supported by Mills & Reeve’s Hussey: ‘For us, the Midlands legal services market place remains buoyant and we haven’t yet seen any negative impact as a result of the EU membership referendum result. If anything, the autumn of 2016 was one of the busiest we’ve seen for a number of years. On the commercial contracts side, not only are commercial deals continuing to be done, but we’re also seeing clients looking for “advisory style” input as they turn their attention towards the possible impact of Brexit on the contracts they are entering into.’
This was backed up by Angharad Warren, an associate in my team at BCL Legal, who commented: ‘For us as private practice legal recruiters, commercial contracts are a busy but challenging area at the moment. Demand for experienced commercial solicitors – particularly those with an IT/IP focus – is far outstripping supply due to vast swathes of commercial lawyers moving in-house. As a result, firms are increasingly thinking “outside of the box” and have greater flexibility when hiring into their commercial teams, whether it be a candidates’ academics, firm background, or experience. Switched on firms are recognising that flexible working arrangements such as agile and part-time working can help them attract and – more importantly – retain the best talent.’
In terms of the number of vacancies across the region, the hotspot is still very much on the transactional side. The work is there, confidence is high, so despite a level of wider economic uncertainty, recruitment has pushed on full steam ahead. We are working with top tier, mid tier, national, small, and niche practices that have already identified a need for additional recruits – teams are incredibly busy and squeezing resource internally is no longer a viable option.
So the final question is: with demand for talented commercial lawyers with commercial contracts experience high among firms across the region, has this had an impact on salary levels?
Well, salaries in many cases have increased within the larger and mid-sized firms in Birmingham city centre, with newly qualified solicitors commonly being offered around £40,000 per annum. The picture is obviously different outside of the city centre with NQ salaries ranging from around £28,000 to £35,000, but it’s important to note that they are on the rise. The senior associate level within the smaller of the region’s firms is around the £40,000 mark; however, one or two of the larger medium-sized practices in the Black Country will pay just a few thousand pounds less than their top tier Birmingham colleagues.
In summary, as the country emerges from the Brexit result, many feared the market would suffer. However, there is an air of optimism, and although it is still early in the year there are enough signs that 2017 will show continued improvement.
James Brewster is managing director of BCL Legal’s Birmingham Private Practice team