In this interview with Asia Law Portal, Rob Green, CEO of GRM, provides his analysis of the past 12 months in legal recruitment in Hong Kong, and what we might expect for the rest of the year.
Given the past 12 months, how has Hong Kong’s legal job market faired?
Hong Kong’s legal job market has had a rough ride in the past 12 months. Whilst it’s certainly not been a bumper year, it also hasn’t been the worst year we’ve seen.
There’s been a lot of growth at the senior level and a drop in Associate hiring towards Q3 and Q4 last year, growth in the compliance sector and insolvency/restructuring, tech and fin-tech have grown rapidly.
Law is one of the areas of business that is integrated into every aspect of a client, so it is pretty resilient to market forces.
Firms who are well diversified and well-financed have continued with strategic hiring, but the volumes are down year on year.
What are your predictions moving forward for the coming year, given the virus the world is battling and the slowdown in the global economy?
One of the most sensible quotes I have read (via an article by Chris Brooks of St James’s Place Investments) has come from BlueBay (A Fixed income fund manager) who stated,
“In our own assessment, we are inclined to believe that in the weeks and months to come, everyone will learn to live with the existence of COVID-19 as a fact of life,”
“Everyone will calm down and carry on and life will return to normal. However, to reach this point, there probably needs to be more hysteria in the short term until policymakers and public opinion begins to adjust.
Financial markets will try to be forward-looking, but at the moment there is just too little visibility and therefore current levels of volatility may persist for a time with risk reduction the order of the day”.
This was a quote made a few weeks back and appears to be coming true, somewhat.
Luckily the firms we work with are robust and well-capitalized, so will stick to their strategies through thick and thin.
Firms that take themselves out of the recruitment market now risk losing top-class talent to their braver competitors – who will be x10 stronger when the market inevitably picks up again because of strategic and sensible hiring strategies through the downturn.
You may think “of course you would say that”, but I’ve seen this before, those that “buy” or in this case grow when markets are in a dip, benefit hugely when they go back up again.
Downtimes are often the best time to upskill your teams and departments, grow when others are not, bring in the best talent so you have stronger foundations when the markets inevitably rise again.
In the 2019 article in the Harvard Business Review, entitled “The Definitive Guide to Recruiting in Good Times and Bad, we must learn from the past when it comes to recruiting through a downturn.
“..even before things (the economy) turned a corner in 2003, the smarter and abler companies—having cleaned house and discovered what was missing from their talent pools—took advantage of the buyer’s market and began staffing for the future.
COVID will be no different, it becomes a buyers’ market and the best firms always continue to hire with an eye on the future
Bond investor Howard Marks’s recent note “Nobody Knows II”, he opined about the Coronavirus and its impact on markets – a statement stood out in which he referred to the substantial market moves over the last 25 years.
“Every one of them was gut-wrenching. And they were followed by recoveries that produced significant gains for stalwart investors”.
Those that stay calm, strong and on point when it comes to their strategy, whilst also treating the virus with the respect it deserves, will win the day.
In the coming months, we believe we will see an increased stimulus from China means the deal-flow will mainly be from there as opposed to the US and Eurozone.
There will be an Associate hiring freeze in some firms, apart from Chinese law firms and those with strong Chinese client bases and layoffs will be limited to firms that potentially weren’t doing so well before the dip or have poor performing staff that they need to trim.
Potentially firms that only specialise in one or two areas of law may also suffer – now is the time to diversify, by hiring in a fee earner with an existing and transferable practice.
We may see some firms call for capital from Partners, but they should be careful not to do this too soon, for fear of the message that is sent to the market and their client base.
Our indicators say that roles will continue to be created in firms that have clients in sectors that will grow throughout the crisis (tech, fin-tech for sure).
We will see an increase in hiring Partners but huge scrutiny over their transferable client base and the value of that base going into 2021/22 and an increase in hiring rainmaker Counsel’s into Partner roles at their new firm, but with additional scrutiny on what they are bringing.
We will see some firms hire to diversify their revenue streams and practice areas.
As in 2009, the cleverest and bravest of firms will continue to strategically hire, adding strong fee earners, with a transferable client base, that can strengthen the business longer term.
Working from home is now already the new normal – from the clients we’ve surveyed, 80% of staff are showing they can handle it, stay motivated, and achieve a great deal.
And news headlines, shared social media messages and the virus will continue to spook people, but it will become something we will all learn to live with and deal with. Life will be a little sad for a while and we will all continue to be personally affected, but it will pass and we will heal, and then we will prosper.
Longer-term, we believe we will definitely see a downsizing of office space, more working from home/remotely, this latest crash will see a lot lower cost bases and salaries and more emphasis on profit share.
We will all have to be creative in these difficult times.
For more information, please contact Rob Green, CEO of GRM