Legal, Risk & Compliance
2021 Hong Kong Legal salary report
about 1 month ago by Legal practice / Back to all blogs
2020 proved to be another challenging year for law firms in Hong Kong. In the past year, our team has fielded a multitude of questions surrounding the impact of Covid-19 on Hong Kong’s private practice and compensations within, that this report serves to address.
Law firms in Hong Kong and across Asia had been quick to adopt cost-cutting measures and process streamlining to cushion the adverse financial impact of the pandemic’s disruption to their workflow.
This resulted in immediate impact to the NQ recruitment market for newly qualified lawyers. International firms, especially the US law firms and some of the Magic Circles traditionally hired one to two external NQs for their busier practices such as the corporate M&A/PE, banking and capital markets teams. However, most firms did not have the capacity nor the workflow to retain their trainees in 2020. Many of these trainees ended up joining boutique law firms while keeping their options open to future opportunities within the international law firms.
Despite a conservative NQ recruitment market in the past year, Hong Kong’s legal recruitment industry witnessed a notable volume of strategic lateral hires, particularly in areas of investment funds, fintech, blockchain and banking restructuring. Several prominent partners and teams in the corporate, finance and disputes practices also moved from UK to US law firms. Even during the pandemic, partners with transferrable books of business remained highly sought-after by the white shoes. The hiring process of these senior hires did however take far longer than before, as firms adopted a more cautious approach scrutinising current and predicted books of business and partners’ justifications of bringing over their entire teams.
On top of the conventional team moves, there was also a significant reduction of foreign qualified lawyers recruited into Hong Kong as a result of pandemic-related travel restrictions and political unrest hampering the region’s attractiveness to these lawyers, most of whom come from Singapore, US and the UK.
Finally, 2020 witnessed an interesting rise in the number of new boutique law firms set up in the market, headed by seasoned practitioners . While this opened up more opportunities for lawyers, our legal recruitment team noticed that junior lawyers still prefer to join international law firms because of the structured training programmes offered, especially within UK law firms, as well as proper legal infrastructure and potentially more support in the form of paralegals and secretaries.
Law firms in Hong Kong will adopt a more conservative approach to salary increments and promotion criteria. Firms offering Cravath scale-based compensations will continue to do so, while the ones considering the adoption are re-evaluating their compensation and benefits strategy.
According to PwC, 2020 recorded a 25% growth in total IPO funds raised and the Hong Kong IPO market is expected to boom in 2021. Despite capital markets being one of the core practice groups severely hit after Covid-19 put a number of projects on hold, law firms in Hong Kong expect their capital markets practice to grow, albeit at a slower pace than before, in view of the influx of mainland Chinese companies as well as Singapore-based corporations looking to list in Hong Kong .
As the popularity of international arbitration and alternative mechanisms for resolving disputes continue to grow in Asia, law firms in Hong Kong expect their dispute resolution practice to thrive in 2021. With HKIAC reporting an all-time record of HKD 68.8 billion in disputes filed in 2020, Hong Kong International Arbitration Centre remains one of the top leading international arbitration centres in the region.
Now that markets are recovering, vaccines are in place and air travel reopens, law firms in Hong Kong are optimistic about 2021. The region has had to mitigate one disruption after another in the recent years, but the legal industry’s swift response to Covid-19 and ability to pivot according to client needs ensure the enduring resilience and growth of law firms in the region.
Hong Kong’s retail and real estate industries were notably impacted in the past year while already-growing fintech and e-commerce industries experienced explosive growth with the surge of online activity accelerated by Covid-19.
Hong Kong’s dominance as the region’s financial and fintech stronghold had start-ups, financial institutions and fintech companies expanding and hiring in the region long before the pandemic. The associated risks surrounding digital businesses and Hong Kong’s regulatory landscape has sustained the region’s appetite for lawyers and compliance professionals with technology, data privacy and corporate governance expertise. This will continue in 2021.
Despite a slow start launching in the middle of the global pandemic, virtual banks in Hong Kong will not be backing down in 2021 on their need for lawyers with experience in banking, payments, data privacy and protection.
Virtual banks aside, the region also witnesses demand from Chinese technology and financial institutions eager to bolster legal and regulatory expertise as part of their post-pandemic expansion across key job functions in 2021.
Another hotbed leading the way in legal and compliance recruitment this year is Hong Kong’s insurance industry, where insurTech is rapidly growing and insurance companies are allocating more budget and resources to reinvigorate and digitalise their processes.
Plagued by social unrest and perceptions of instability in the past year, Hong Kong’s legal industry has witnessed a brain drain of lawyers favouring international opportunities and relocation to cities like Singapore.
Companies must proactively address the gravity of this talent outflow with retention strategies that include communicating clear career paths and providing development and international mobility opportunities, where available.
Organisations recruiting amidst Hong Kong’s brain drain should recognise the need to move quickly in the recruitment process and exercise flexibility. For in-house legal positions that typically require mid to senior level lawyers, hiring managers can broaden the candidate pool by considering junior lawyers from the private practice or lawyers with the right expertise who may be new to the Hong Kong market.
2021 will not be a year to drop salaries as candidates in talent short markets have the luxury of choice with multiple offers, often from competing companies. To learn what companies in Hong Kong are paying their lawyers, download our salary report using the form above.
For additional advice and assistance to grow your Legal team in Hong Kong, feel free to contact us. We also welcome your connection to discuss legal career opportunities within Hong Kong and Asia.
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