Legal In-House Financial Services
2023
Market Overview London
Contents
03 INTRODUCTION
Over the course of 2023, niche skillsets have continued to be in high demand. We’ve seen lawyers with experience in capital markets, derivatives, funds, banking and finance, corporate and regulatory experience...
05 INVESTMENT MANAGERS,
Following a year of growing legal teams and investment managers hiring legal talent in high volume in 2022, we’ve seen team growth plans slow down... PRIVATE EQUITY & FAMILY OFFICES
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12
07 BANKS
THRIVE SPOTLIGHT: THE RISE OF AI In light of our purpose, which is to enable you to thrive in a changing world, each market overview includes a Thrive Spotlight segment, focusing on recent issues which might...
OUTLOOK FOR 23/24
Following on from 2022, which was one of the busiest years for recruiting legal talent into banks in recent times, we saw a slowdown in the number of legal vacancies within banks...
Despite the decline in numbers of vacancies this year in comparison to 2022, we are expecting appetite to hire to increase over the course of Q4 2023 and Q1 2024...
10 FINTECH/FINANCIAL SERVICES We have seen a significant increase in hiring across the fintech space over the course of 2023 so far. This may come as a surprise to those who expected the market to face a downturn due to... 15 SALARY GUIDE A compass for navigating your career's earning potential.
Market Overview London
2023
Introduction Over the course of 2023, niche skillsets have continued to be in high demand. We’ve seen lawyers with experience in capital markets, derivatives, funds, banking and finance, corporate and regulatory experience (particularly payments and retail), in most demand this year across in- house legal teams within the financial services sector. Nevertheless, we’ve seen a decline in hiring demand this year in comparison to 2022. In the first half of this year, there was a 35% decrease in roles being advertised within the financial services sector in comparison to H2 2022. This is due to a combination of factors mainly in relation to the economic climate, cost cutting strategies such as hiring freezes and fewer transactions taking place due to market conditions reducing demand to grow teams, which we saw
affect both private practice and in-house transactional legal teams. However, given the reduction in the competition scrambling for top legal talent, many financial organisations who are still growing their legal teams have benefited from this state of the market, as strong candidates in processes have had fewer options to consider in comparison to last year. In the transactional space, we saw an increase in the number of excellent candidates moving in-house from top tier firms within private practice as a result of firms over-hiring in 2022 and the reduction of numbers of deals leading to them having to shrink teams.
“In the transactional space, we saw an increase in the number of excellent candidates moving in-house from top-tier private practice firms”
Market Overview London
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2023
Introduction Salary has continued to be a talking point across the legal market when it comes to recruitment this year, with the majority of Magic Circle firms now paying NQ’s £125,000 basic salary and Silver Circle firms paying NQs £100,000+. Most leading financial organisations have increased salary bandings for junior to mid-level hires by an average of £5,000 – £15,000 in order to remain competitive and increase chances of securing the best talent in the market. Hybrid working has remained one of the top considerations for candidates when moving jobs. This year, we’ve increasingly seen more formal policies put in place by organisations in comparison to 2022, when arrangements were not as clear cut. This has offered new joiners more flexibility. On average, we’re seeing lawyers required to spend 2-3 days in the office per week. Organisations requesting for more than 3 days in the office have had to consider limited candidate pools when hiring. “Hybrid working has remained one of the top considerations for candidates when moving jobs.”
In this market overview, we will be discussing legal hiring trends we’ve seen across the financial services sector this year, specifically across banks, investment managers and fintech organisations. Our thrive spotlight feature (page 11) will focus on a key issue we’ve seen change the legal world that has become an increasingly popular topic of discussion amongst lawyers in 2023. We conclude with an outlook for the rest of the year and 2024 alongside our recently updated salary and bonus benchmarking guide for your reference.
Market Overview London
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2023
Investment Managers, Private Equity & Family Offices
Following a year of growing legal teams and investment managers hiring legal talent in high volume in 2022, we’ve seen team growth plans slow down for asset managers in the first half of 2023. Following a year of having to compete for the best legal talent by offering the highest salaries in the in-house legal market, coupled with the economic climate affecting deal volume and market confidence, has meant that many investment managers took a back seat on growing legal teams for cost cutting purposes this year. As such, we found that the majority of the roles within this space were for replacement hires. Of those who were still hiring this year, funds lawyers continued to be highly sought after by investment managers, particularly in the private funds space at the 3+ PQE level, which echoes the legal hiring trends last year. However, we saw an increase in the number of commercial and corporate roles surface this year at asset managers, along with derivatives and structured finance, which were typically at the 3-8 year PQE mark.
“Asset managers have continued to offer extremely competitive salaries, despite the continued rise of private practice salaries”
Market Overview London
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2023
Investment Managers, Private Equity & Family Offices
Asset managers have continued to offer extremely competitive salaries, despite the continued rise of private practice salaries due to the high interest in candidates from Magic Circle and US firms. Those who may not be able to be competitive on the basic salary have been able to make salary packages more attractive with bonus potentials of at least 50% and we are seeing increasing cases of bonus potential falling within the 50-100% range. Those offering the opportunity for lawyers to work on growing sustainable investment strategies have also been able to attract top tier talent in the market as we have seen this become more of a key attraction for lawyers when considering and comparing opportunities. Nevertheless, despite last year offering more promise of investment managers embracing more flexible working, we have found a significant increase of firms “We are seeing increasing cases of bonus potential falling within the 50 -100% range” [1] Tomson Reuters
reducing this and implementing requirements for employees to spend 4-5 days in the office, more than what is considered the standard hybrid model today, which is 2-3 days in the office and the preference of 86% of lawyers[1]. With law firms offering extremely competitive salaries along with better hybrid working models for lawyers, asset managers have increasingly found it difficult to hire when they are behind the curve on flexible working.
Market Overview London
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2023
Banks Following on from 2022, which was one of the busiest years for recruiting legal talent into banks in recent times, we saw a slowdown in the number of legal vacancies within banks during the first half of 2023. This coupled with the political and economic uncertainty faced towards the end of 2022 and early 2023 meant many large banks had hiring freezes. Organisations looking to hire at the beginning of the year were able to benefit from a more candidate-rich market. A combination of limited competition, as well as a slowdown in hiring from private practice due to a drop off in transaction volume at the beginning of the year, led to many lawyers at top firms seeking a move in-house.
As a result, many banks found that they were able to hire high calibre candidates who in other times would have been harder to attract. Regulatory lawyers have been in particularly high demand. With the introduction of the Consumer Duty as well impending changes to the Payment Services Directive, there has been increasing demand for lawyers within the consumer finance market at all experience levels across the banking sector. It has also been a busy start to the year for lawyers with wholesale regulatory experience, with banks looking to recruit into their private wealth and asset management businesses. “A slowdown in hiring from private practice due to a drop off in transaction volume at the beginning of the year, led to many lawyers at top firms seeking a move in- house”
Market Overview London
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2023
Banks
Derivatives lawyers have also remained highly sought after with banks, hiring between 1 and 10 years’ PQE. These are niche skillsets, and with fierce competition to secure these lawyers, the supply is unable to satisfy the demand. Hiring managers who are less willing to compromise on the profiles they’ll consider struggle the most to fill these positions. However, we’ve also seen cases where hiring managers have been prepared to look at bright, well-trained lawyers from other disciplines (e.g. banking and finance) and that flexibility has led to hires who have gone on to be really successful. After a slow start to the year, we gradually saw the recruitment market return to normal activity levels as we progressed through Q2. As the market began to pick up following bonus season, there was increasing demand for more transactional lawyers within the fund finance, real estate finance, derivatives and capital markets space. With more competition for top talent, salary demands increased accordingly.
This led to a similar pattern to what we observed in 2022, with banks having to stretch budgets in order to secure their preferred candidate, leading to a knock on effect of banks struggling to keep new joiner salaries consistent with existing employees. With the market now at a level more typical of what we were seeing last year, it is imperative that banks continue to do what they can to stand out versus their competition. When considering how to attract top talent, the key areas of focus include salary, culture and flexibility. However, as salaries in private practice continue to rise, it is becoming increasingly difficult for banks to compete. One way some in-house legal teams have succeeded in hiring top talent has been adopting a more flexible approach in terms of hybrid/remote working, which has been especially attractive for candidates who live further away from London.
“With the market now at a level more typical of what we were seeing last year, it is imperative that banks continue to do what they can to stand out versus their competition.” 8
Market Overview London
2023
Banks Lawyers based at leading regional firms will be on lower salaries and in some cases, a move to a London-based bank can lead to a salary increase for them. Targeting candidates at these firms have helped reduce the salary related difficulties that banks have faced when hiring over the last couple of years. Lawyers based outside of London at firms with multiple branches across the UK may also have access to high quality work that has been outsourced from London offices due to cost/capacity; a good example of this is within the consumer finance regulatory space where there is little trade off in terms of quality of experience when hiring outside of London, as many top firms in the space are located regionally and provide an excellent alternative to London based lawyers. However, in order to tap into this market, hiring managers must be open to lawyers working in the office fewer days per month. The banks who have been able to offer this have successfully managed to recruit top lawyers whilst remaining inside their previously restrictive budgets. Many banks still embrace the shift towards hybrid working. Over the last few years, we have seen an increasing number of cases where organisations seek to reverse that trend and request their workforce to come in more often.
Nevertheless, the message from candidates has remained very consistent as hybrid working is still a high priority when considering a new role, with many candidates reluctant to consider a role which would reduce their hybrid working options even when an increase in salary is on offer. As such, we have seen banks who have remained consistent in their hybrid working arrangements better able to retain their existing workforce as well as attract new talent.
Market Overview London
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2023
Fintech / Financial Services
This may come as a surprise to those who expected the market to face a downturn due to the implications of the collapse of Silicon Valley Bank and fewer VC funding opportunities for start-ups due to the current economic climate. However, whilst these have impacted the legal recruitment market within the fintech space to some extent, key regulatory changes and extensive international growth plans for some of the bigger players have increased appetite for hiring legal talent this year. We have seen a significant increase in hiring across the fintech space over the course of 2023 so far.
Predominantly, roles we’ve seen within the fintech space have been for regulatory lawyers, particularly those with payments and crypto regulatory experience due to new developments in 2023 such as MiCA, PSD3 and the new Consumer Duty affecting existing banking products. We’ve seen these positions typically be at the 1-5 PQE level. Commercial/Corporate lawyers have also continued to be in high demand by fintechs and we’ve seen hiring has mainly been at the junior end within the 1 – 3 PQE range. It’s also worth mentioning that we had also seen some need for employment and litigation lawyers with the larger fintechs.
“The competition has been fierce for candidates with regulatory skillsets to join in-house legal teams”
Market Overview London
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2023
Fintech / Financial Services
As such, fintech organisations have given the regulatory changes affecting all financial institutions and even companies offering certain financial products, the competition has been fierce for candidates with regulatory skillsets to join in-house legal teams. As such, we saw many hiring managers facing challenges sourcing legal talent. Two factors became a clear contribution to the challenges for fintechs: attracting candidates to join their high growth organisations during the current economic climate, and competing with banks or other established organisations offering more stability and better salary packages. Salaries continue to be a challenge for fintechs, which have historically been known to be on the lower end of the spectrum on salary. However, some of the key players have been able to offer very competitive basic salaries for junior to mid-level lawyers and we’ve seen basic salaries range from £100,000 - £130,000 for the 1 – 5 year PQE level. Consequently, many organisations offering below £100,000 for junior roles have had most difficulty attracting top legal talent.
As a solution, we found some organisations becoming more open on candidate background and PQE level, hiring at a more junior PQE level and offering training or promising better progression prospects in order to attempt talent away from hierarchical structures at banks and larger legal teams. Fintechs are also still offering very competitive benefits which include company wide employee trips, employee shares and fully remote working options. Historically, fintech and payment companies were the ideal for top legal talent as they offered something new and exciting to those who were not as interested in moving to large organisations but, during economic downturns, they struggle to hire due to their uncertainty at a time where everyone is seeking stability. As such, they have had be more open to level of experience and use competitive benefits, salaries and progression prospects to attract talent.
“Some of the key players have been able to offer very competitive basic salaries for junior to mid- level lawyers”
Market Overview London
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2023
Thrive
spotlight:
The Rise of AI In light of our purpose, which is to enable you to thrive in a changing world (find out more here ), each market overview includes a Thrive Spotlight segment, focusing on recent issues which might be affecting the legal world and how you can navigate these changes to ensure you're continuing to thrive. In this edition, the focus will be on artificial intelligence and its impact on the legal market. The subject of artificial intelligence has been a hot topic of conversation with both our clients and candidates so far this year. There is no doubt that following the launch of generative artificial intelligence models, such as ChatGPT, there has been much talk around the potential impacts of the technology. With Lexis Nexis reporting that 89% of lawyers believe that it will have an impact on the legal profession, the big question a lot of lawyers have been asking is how it will affect their role moving forward. In this spotlight, we will explore some of our key takeaways following conversations across the sector and how
the advances in AI technology will impact both employers and their employees’ ability to thrive. What law firms are doing: Having spoken with numerous lawyers on the topic, it has been clear that there are concerns around the impact of AI and what it would mean for their job security. This has led to many people question what might happen if AI technology is able complete tasks that might previously have been completed by a lawyer in a fraction of the time. However, before we get ahead of ourselves it is important to first understand what the approach from law firms has been to the technologies to date.
“Generative AI is perhaps what has caused the biggest stir in the market this year and law firms have also been running trials with the technology. ” 12
Market Overview London
2023
spotlight: The Rise of AI Thrive
To ensure they can thrive through these changes, many law firms now have specialist in-house teams who are looking into how best they can integrate the use of artificial intelligence into their product offerings. Two of the key uses that firms have been exploring are reasoning and generation. Reasoning is a complex process that involves many different AI techniques. For example, when reasoning about a problem, an AI system might use knowledge representation to store and manipulate data, reasoning algorithms to draw conclusions, and learning algorithms to improve its performance over time. Law firms are trialing extractive AI’s which have been trained to recognise certain pieces of data. These tools are being designed to take away a lot of the heavy lifting for lawyers when it comes to document reviews. It’s important to note that these trials are still in their early stages and, although there is a lot of excitement around them, there are still a number of risks associated with their use. One of the main concerns for law firms has been around the privacy of their clients’ data. Generative AI is perhaps what has caused the biggest stir in the market this year and law firms have also been running trials with
the technology. One of the focuses of the trials has been using AI to summarise legislation and so far, the outcomes have been mixed. It has proven to be a very powerful tool but has struggled when it comes to its judgement. There have also been difficulties in the tool’s interpretation of time, which can have ramifications when analysing legislation that evolves over time. However, perhaps the biggest concern with generative AI is its tendency to ‘hallucinate’. An AI hallucination is when a large language model generates false information - these hallucinations can be deviations from external facts, contextual logic or both. Impact on in-house legal teams: It is not just law firms who are considering implementing AI technology; in-house teams can also benefit from its use. The Law Society discussed how AI can boost teams’ efficiency by creating starting templates to build on as well as using the software to support legal research. Aside from their own use of the technology, perhaps the most pertinent question for in- house lawyers is, when will they start seeing the cost saving passed on by law firms to their fees? First and foremost, it is important to remember that many of these technologies are still only being trialled by
Market Overview London
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2023
spotlight: The Rise of AI Thrive
law firms and that it will be some time before we see them being used on a regular basis. Firms have also stated that there will also be a cost associated to their implementation and usage of these systems, such as an increase in their data storage, creation of specific job roles, relevant software licenses and also the environmental costs of using as much data as they would need to. This in turn could potentially mean an increase in external legal spend, or a need to keep more work in-house to mitigate that. What does Chat GPT think? With so many benefits and risks associated with AI, we also wanted to provide an outlook on how AI will impact a lawyer’s ability to thrive in their role and, as we are not experts in the technology, we have turned to Chat GPT to answer this question for us: Artificial intelligence (AI) has the potential to significantly enhance the role of lawyers in the UK, enabling them to thrive in their profession. One key way AI can be utilized is through the automation of repetitive and time-consuming tasks such as legal research and document review. AI- powered software can quickly sift through vast amounts of legal data, statutes, and
case law to provide lawyers with relevant information and precedents, saving them valuable time and effort. Additionally, AI can assist lawyers in analyzing contracts, identifying potential risks, and generating insights based on patterns and trends. Natural language processing capabilities can help lawyers extract critical information from lengthy documents swiftly and accurately. Moreover, AI- powered chatbots and virtual assistants can offer instant responses to common legal inquiries, providing clients with immediate access to legal guidance and support. By leveraging AI, lawyers can streamline their workflows, improve efficiency, and devote more time to higher-level tasks such as strategy development, client counseling, and courtroom advocacy, ultimately enhancing their effectiveness and enabling them to thrive in their roles. Conclusion: It is clear AI is here to stay and teams are already trying to utilise it, but how it can be effectively and safely used by lawyers remains to be seen. Much like with many previous technological advancements, in order for lawyers to thrive, they need to become familiar with the new technology or risk being left behind.
Market Overview London
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2023
Salary guide
PQE | Investment Banking (GBP)
Lower
Average
Upper
NQ
80,000 85,000 95,000 100,000 105,000 115,000 125,000 135,000 140,000
85,000 90,000 100,000 115,000 120,000 125,000 140,000 150,000 160,000
90,000 105,000 110,000 130,000 140,000 145,000 150,000 160,000+ 170,000+
1 year 2 year 3 year 4 year 5 year
6-7 years 8-10 years 10+ years
PQE | Retail/Commercial Banking (GBP)
Lower
Average
Upper
NQ
80,000 85,000 90,000 95,000 100,000 105,000 115,000 120,000 125,000
83,000 90,000 95,000 100,000 105,000 110,000 120,000 125,000 130,000
85,000 95,000 100,000 105,000 115,000 120,000 125,000 135,000 150,000
1 year 2 year 3 year 4 year 5 year
6-7 years 8-10 years 10+ years
PQE | Investment Management (GBP)
Lower
Average
Upper
NQ
80,000 85,000 100,000 110,000 120,000 130,000 140,000 150,000 140,000
90,000 95,000 110,000 120,000 130,000 140,000 150,000 160,000 175,000
95,000 105,000 120,000 130,000 140,000 150,000 160,000 170,000 200,000
1 year 2 year 3 year 4 year 5 year
6-7 years 8-10 years 10+ years
Market Overview London
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2023
Salary guide
Lower 85,000 90,000 100,000 120,000 130,000
PQE | Private Equity/Debt Funds** (GBP)
Upper 110,000 120,000 130,000 150,000 170,000 Discretionary
NQ
1 year 2 year 3 year
4-5 years 6+ years
Discretionary
PQE | Paralegals (GBP)
Lower
Average
Upper
0-1 year 1-2 years 2-4 years 4-6 years 6+ years
35,000 40,000 45,000 50,000 50,000
38,000 45,000 50,000 55,000 60,000
45,000 50,000 55,000 60,000 65,000+
Market Overview London
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2023
Outlook for 23/24
we have already seen an uptick in the level of activity and transactions due to more confidence in the market, which will eventually create higher demand for expanding in-house legal teams supporting on transactions. Particularly, investment managers who have held back on hiring due to the deal teams being quieter are expected to resume hiring in light of this improvement in the market. As such, we expect banking & finance (particularly more specialist areas such as real estate finance, leveraged finance and fund finance) and corporate lawyers being more in demand. Despite the decline in numbers of vacancies this year in comparison to 2022, we are expecting appetite to hire to increase over the course of Q4 2023 and Q1 2024.
We also see lawyers with regulatory expertise to continue to be in high demand over the next 6 months in light of the financial regulations coming into effect this year which may still stretch team capacity, particularly with banks and fintech organisations. Following periods of hiring freezes, we tend to see an increase in vacancies looking to replace headcount due to attrition over that time period. As such, we envisage an increase in volume of hiring for large banks and financial institutions.
Market Overview London
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2023
Get in touch
Thank you for reading our Market Overview – we hope you found it useful. If you’d like to carry on the conversation or receive further information on salary and bonuses tailored to your market, please get in touch - we’ll be happy to help.
Stephanie Brückl Head of Financial Services (In-House) stephaniebruckl@hydrogengroup.com +44 (0) 20 7002 0067
Patrick Waugh Consultant patrickwaugh@hydrogengroup.com +44 (0) 20 3425 3397
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