With the World economy currently facing its greatest challenge since the advent of the era of a truly global market, there is a massive amount of uncertainty around in virtually every business sector. While lawyers play very significant roles in banks and corporations, they do not typically earn money for the businesses. They play supporting roles and thus represent an overhead for the organization. For obvious reasons, at times like these, key cost centres, such as legal departments, are being closely monitored by senior management.

It will come as little surprise that a majority of banks and other financial institutions have put the recruitment of lawyers on hold for the time being. There is more activity amongst multi-nationals, but a significant amount of caution is undoubtedly still being exercised with respect to hiring decisions. Unfortunately, this situation promises to remain until the future business outlook becomes a great deal more certain.

In spite of the problems, some banks are still looking to hire, although usually only for very specific needs. Speculative hires are simply not being made right now. In general terms, there are more such roles in Hong Kong than on the Mainland, with the busiest areas proving to be private banking and wealth management. This reflects the increased desire, in these challenging times, to take particular care of those portfolios belonging to the most important, wealthiest individuals. When it comes to roles within corporations, we are currently experiencing stronger demand in the PRC than in Hong Kong.

As belts begin to be tightened as a result of the economic downturn, a significant proportion of businesses, banks included, are seeking to do as much legal work as possible in-house in order to reduce the level of fees being paid to external advisors. Accordingly, most in-house lawyers remain extremely busy and we have not seen lawyers being laid off by banks or MNC's. If this trend continues, it will offer the possibility of new in-house roles being created in the relatively near future, even without a significant upturn in economic fortunes.

However, both new hires and existing staff are going to have to understand that salary increases and potential bonuses are likely to be extremely limited for the foreseeable future. The indications we are receiving are that, in general terms, there will be little in terms of pay increases this year. Moreover, bonuses will genuinely have to be earned. The common practice of recent years, whereby significant bonuses have been paid very much as a matter of course, is unlikely to be repeated this year.

A typical consequence of reduced demand and thus a tough market is that employers tend to become significantly harder to please. In other words, and with some justification, they believe they will be able to find a better or more qualified candidate for the role they are seeking to fill. In the Hong Kong and China market, this often translates to a requirement for a candidate with outstanding Chinese language skills in addition to the other prerequisites for the job. Of course, it is also the case that if a department has a reduced headcount, it can simply become essential for any individual to be recruited to have a broader skill set.

For whichever reason, we are undoubtedly seeing increased demand for candidates with strong Chinese language skills. Within the Hong Kong market, and particularly amongst those companies with a strong local culture, we are also witnessing increased demand for candidates that are locally qualified. In general terms, clients are currently favouring what one might term "more stable" candidates; those who have not jumped around from job to job on a regular basis. Again, faced with limited headcount, employers are not keen to experiment with what they might consider potentially risky hires.

From the perspective of candidates, we continue to see significant interest in moving out of practice and into suitable in-house roles. That said, there is undoubtedly some degree of apprehension over moving to certain companies or banks at this moment in time. In the current economic climate, it seems possible that even the very biggest multi-national businesses could potentially be only days away from collapse. Accordingly, there is a perceived element of risk in making any move in-house right now. While it is not necessarily preventing candidates from moving, it is certainly making them more cautious. In practical terms, it has meant stronger interest in roles with corporations than in positions in banks. So far as banks are concerned, for the time being, candidates appear to feel safer looking at roles with commercial rather than investment banks.