One of the key trends we have observed in the finance division here at Totum is the heavier reliance of law firm management teams on their finance departments to provide improved management information and analysis and give more insight into how the business is being run. This is in response to new entrants in the market and a stronger desire to protect market share.
As a result, newly developed commercial finance roles have been born, where business intelligence, pricing and profitability analysis are key. The finance function is now much more accountable for developing strategies around how the firm will tackle these issues and all law firms are keen to hire accountants who bring with them a more strategic, commercial leaning from their previous experience.
Many leading firms have begun adding to their finance teams to find ways to increase efficiency in financial processes. In many of the top UK law firms, the creation of these new roles and, in some cases, new departments to tackle the above issues, has been the most significant development we have observed.
These increasingly commercial skill sets are still relatively new to the legal sector. As more firms start to look for candidates with the right expertise, hiring managers will need to welcome candidates from other professional services businesses in order to bridge the gap. Transferable skills from consulting firms and other partnerships are likely to become increasingly valuable as they will be able to inject fresh blood and new experience into existing finance departments.
With heavy pressure on legal management teams to find ways to reduce costs and overheads, we have seen a significant temptation to decrease headcount in London’s business services teams and an increased interest in the relocation of these roles to outside of the capital. This poses some challenges of its own, however.
The London legal market has always been the most buoyant in terms of candidate talent. Firms that have chosen to relocate to places outside of London that don’t have as strong a legal presence, often face extreme candidate shortages. Locations such as Birmingham, Leeds, Newcastle, Manchester and Bristol/Cardiff benefit from the presence of commercial law firms. Recruiting the right finance professionals in these markets, however, tends to be difficult as many candidates based in London are well established and comfortable in their current firms.
As would be expected, many of these candidates are not that mobile either. They may be unable to relocate to other locations due to family issues, and have been forced to accept redundancy packages instead of following their jobs to new locations. Some firms have even had to abandon their relocation plans due to a lack of candidates with relevant experience in some regions.
Generally speaking, London is always the easiest market to recruit legal finance professionals. The other mentioned locations are difficult, but manageable, depending on specific roles. But locations outside of this tend to be a challenge.
A final point is that whilst the appetite for mergers and acquisitions remains strong, there will be a resulting consolidation of finance teams. This will result in an influx of new candidates entering the market.
What are our predictions for the coming financial year?
It was interesting to see that of all legal business services professionals in 2015, the highest salary increments were awarded to key members of the finance team.
Due to the increased necessity to recruit individuals with commercial finance experience, remuneration has risen sharply in this area. Commercial accountants, business partnering and pricing gurus and financial systems experts have in some cases enjoyed 20% uplifts in their salaries during the past 12 months.
We expect to see the continued development of these roles within most mid-tier and large law firms in 2016. We would also anticipate pricing to remain high on the agenda within boardroom meetings across the country. As a result, specific pricing experts will remain hot property in terms of recruitment – these candidates will be highly sought after.
Firms will have to up their game if they want to retain their top talent as competitor firms look for new ways to attract them. We expect to see an increase in the number of counter-offers presented, as firms look to hold on to their workforce, not lose good staff members to competitors, and avoid the costs related to recruitment and a loss of intellectual property.
In terms of hiring from outside, the market is, as it always has been, very candidate driven. Firms, therefore, need to ensure that they do all they can to keep good candidates engaged during the interview process and especially, in light of an increase in counter offers, between offer stage and when the candidate starts within their firm.
If you would like to chat through any of these issues in greater depth, or would like to know more about our work in the legal finance division at Totum, contact Jessica Sharpe, our head of accountancy and finance.