As we begin the new financial year, it seems Spring is indeed in the air for the legal market in Hong Kong. The past couple of years have seen several challenges, including a sluggish IPO market, uncertainty in the Chinese equities market, and some would say, an overpopulation of lawyers in Hong Kong. However, we are now experiencing one of the more bullish financial markets we have seen in recent years, and this has been reflected in the appetite for growth in law firms and in-house legal teams. ong
As a search firm, we have seen more new mandates this year than we have for the past 5 years or more, and this high demand for lawyers is reflected in the pay rises and bonuses paid out to legal professionals this year. On the whole, financial institution legal teams enjoyed higher bonuses compared to last year, some significantly, although a few banks were closer to the same level, or slightly down. More US law firms have now followed Cravath and adopted the higher level of compensation, and we have seen a number of “mid-tier” firms begin paying rates equivalent to Magic Circle, or above.
PRC law firms are beginning to attract high-profile lawyers from international firms; offering attractive remuneration, and the chance to keep a greater share of billings for equity partners. This, combined with the network of clients from which partners can gain referrals, has meant a few notable partner and team moves to PRC firms in the past year. The same is true of PRC financial institutions. Historically, they have paid significantly lower base salaries, but with a much higher percentage of bonus than their international counterparts. However, we are now seeing lawyers moving from top tier banks and law firms into PRC institutions for similar, or better base salaries, and 50-100% bonuses in some cases. This, in turn, has raised the profile of legal within these institutions, meaning that the environment in these legal teams is beginning to become more akin to the international banks.
In terms of work-flow, firms have seen a great deal of demand for regulatory advice, and have responded by setting up, or growing non-contentious regulatory teams, including a particular demand for FinTech expertise. Other areas that are very busy include leveraged finance and debt financing for special situations, and private investments. The IPO market, although lower in value, has been busy for some firms representing companies wanting to list on the Hong Kong Exchange, meaning a number of top tier capital markets practices have now begun hiring larger numbers of lawyers from smaller, local firms. With the recent change in the Listings Rules, it is hoped that this market should pick up from April onwards. M & A remains very busy, with lawyers that have strong Chinese skills in very high demand.
Overall, there is an air of optimism and positivity in the air that has been lacking, or inconsistent, in the past 5-7 years. Long may it continue and let’s hope for a very successful 2018 for the legal profession!
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