Strong retention rates among host of factors that show graduate law job market is back.
At the Global Law Summit in February the senior partner of magic circle law firm Allen & Overy spoke of an “absolute explosion of opportunity for young people entering the law”.
David Morley's words – delivered at a session on the future of law at which he appeared alongside 'Tomorrow's Lawyers' author Professor Richard Susskind – come amid a stream of good news for prospective lawyers, including strong spring 2015 trainee retention figures, rising training contract numbers and even a shortage of trainees at some firms.
Perhaps most eye-catching have been the retention rates. So far a host of City law firms, including the entire magic circle, have released their spring trainee retention figures, which commentators gauge as a sign of the corporate legal market's health. And across the board there has been a marked improvement not just on the difficult years of 2009-2013 but, in many cases, a jump on performance from 2014 – which itself was considered a pretty good year.
Leading the way is the London office of New York firm White & Case with a 100% retention rate having kept all 13 of its qualifying trainees. But it is among the magic circle heavyweights – which each hire between 80 and 110 trainees in London each year – where the figures arguably mean most, given the size of the intakes involved.
Allen & Overy is retaining 93% of its spring qualifiers, Linklaters and Clifford Chance 91%, Slaughter and May 88% and Freshfields Bruckhaus Deringer 85%. For three out of five of those firms their latest figures are an improvement on their autumn 2014 results.
Meanwhile, other big firms, such as global giants Herbert Smith Freehills and Norton Rose Fulbright – which offer, respectively, 70 and 55 London training contracts annually – have posted retention rates of 93% and 81%. The firms with smaller trainee intakes have also done well. Reed Smith (which offers 24 London training contracts annually) has kept 93% of its spring qualifiers, Osborne Clark (which offers 20 training contracts annually) has held onto 89% and Trowers & Hamlins (which also offers 20 training contracts annually) is retaining 82% in this latest qualification round.
But it is not just retention rates which have been positive. New figures from the Solicitors Regulation Authority (SRA) show that training contract numbers have risen significantly between 2012 and 2014. The SRA statistics, which take into account the introduction of the new 'periods of recognised training' terminology, show training contracts to have jumped by 4% from 5,290 in 2012 to 5,512 in 2013, and then edged up fractionally to 5,514 in 2014.
The signs are that these increases are set to continue, as last week two large corporate firms announced that they needed more trainees to cope with an uptick of work and launched campaigns to recruit graduates to start this September. This is notable because it represents a break with the traditional City law firm convention of recruiting trainees two years in advance.
The firms in question are national player DWF and global firm K&L Gates. Both have performed strongly over the last couple of years. K&L Gates’ London office increased its revenue by 11% from £40.5m in 2013 to £45m in 2014. Revenue at the firm’s office in the capital is up 60% since 2009. DWF, which took over troubled Manchester firm Cobbetts in 2013, has also been growing quickly, with turnover surging from £143m to £189m last year.
These figures are impressive, but not out of the ordinary, with the magic circle firms all reporting record revenue rises for the 2013-14 financial year. Clifford Chance's revenues rose 7% to £1.36bn, Linklaters by 5% to £1.255bn, Allen & Overy by 2% to £1.230bn and Freshfields Bruckhaus Deringer by 1% to £1.232bn.
Looking ahead, it will be interesting to see if other firms follow DWF and K&L Gates in dipping into the pool of Legal Practice Course (LPC) students, as they did during the recovery from the bursting of the Dotcom Bubble in the early noughties. As London continues to cement its status as the undisputed legal capital of the world – a position underlined by the hosting of the Global Law Summit in the capital – you wouldn't bet against it.
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