What the Budget Means for Legal Recruitment in 2026

As the Chancellor delivered the latest budget, many of us in the legal sector felt a collective exhale. Not because the measures were radical, transformative, or packed with incentives (they weren’t.) But because this budget finally delivered something the profession hasn’t enjoyed for a long time: clarity.

And clarity, in legal recruitment, is one of the most powerful economic drivers of all.

The last eighteen months have been unusual. Those of us who live and breathe the legal market every day have seen a very different reality to the predictable seasonal cycles we were used to. While JMC has remained consistently busy, particularly in the partner market and senior lateral space, the wider industry has quietly been traversing one of the most complex hiring climates of the last decade.

Firms weren’t panicking. They weren’t cutting heads. They weren’t freezing recruitment entirely. But they were thinking harder, moving slower, and asking deeper questions before hiring because the backdrop they were operating within simply wasn’t giving them the stability they needed to move decisively.

A Year Driven by Rumours, Not Reforms

The impact of last year’s budget cannot be understated. It wasn’t just the national insurance hikes, though those certainly didn’t help firms already wrestling with increased salary pressures and rising operational costs. It was the speculations and the “what ifs.”

For months, the City was alive with rumours that the Chancellor was poised to overhaul LLP structure, a move that would have fundamentally altered the financial foundations of partnerships across the legal and professional services world.

Even though the reform never arrived, the rumour was enough and you could feel it. Senior partners who would normally push forward with confidence were instead waiting to see whether the ground beneath them was about to shift. I had countless conversations with managing partners who were ready to hire, expand, or completely reshape their teams but were holding back “until the budget clarifies things.”

The legal sector is built on risk assessment. When the tax treatment of partnership structures appears vulnerable, hesitation is inevitable.

This hesitation was the real story of 2024–2025.

The Market Slowed, But It Didn’t Stop

Despite these hesitations, this was not a collapsing market. Everyone was recalibrating. JMC remained extremely active, largely because our niche in senior-level recruitment is insulated by

long-term strategic planning rather than short-term fluctuations. But across the wider industry, there was a documented decline in hiring volumes.

Most agencies reported a downturn between 15–25% in vacancy creation, particularly at the associate and mid-level. Corporate, real estate, and finance practices, usually the engines of expansion became noticeably quieter. Firms were still hiring, but they were doing so with far more thought, more internal modelling, and more attention to the downstream impact of every decision.

What emerged was a more intentional market, one where business cases were scrutinised more deeply and expansion required more considered rationale. One where candidate quality mattered more than ever

And although that meant fewer total vacancies, it also meant better recruitment. Slower, yes, but smarter.

And Yet… Partner Mobility Surged

Here’s where the story gets interesting.

While associate hiring dipped, the partner market moved in the opposite direction. Recent data shows that partner moves in the City were up between 8–10% compared to the previous year, with several firms recording their busiest lateral hiring periods in a decade.

This divergence is telling.

When markets are unstable, firms often begin at the top: securing revenue leaders, future-proofing succession plans, and strengthening client offerings. Senior talent becomes a priority because partners bring not only expertise but credibility, networks, and immediate commercial impact.

US firms in particular continued their rapid expansion, undeterred by national uncertainty. Their hiring activity, often bold, strategic, and highly competitive, created a ripple effect that pushed UK firms to reassess their own long-term positioning.

The Wider Economic Picture

It wasn’t just legal. Wider business indicators began shifting too.

Recent surveys show that 54% of UK businesses plan to expand in 2026, a significant improvement on the sentiment from the previous year. Transactional pipelines in corporate and private equity began to look healthier. Even the real estate market, one of the harder-hit areas, started showing signs of stabilisation as interest rates levelled off.

When business confidence increases, legal hiring follows. It always has. And you could feel that confidence emerging even before the budget arrived.

The Budget

So, what did this budget actually do?

For many, the most important thing it did was simply not do certain things.

There was no dramatic shift in LLP taxation. No sudden changes to partner profit treatment. No unexpected NI curveballs.

For a sector that had been bracing for impact, the absence of disruption was a profound relief. Sometimes, stability is more valuable than stimulus.

By keeping the LLP structure intact, the Chancellor effectively removed the single largest psychological barrier to hiring that has hung over the City for a year.

That clarity allows firms to:

• Forecast profits accurately
• Finalise long-term hiring plans
• Reassess talent strategies
• Proceed with expansions that had been “waiting for the budget outcome”

In that sense, this budget achieved something quite significant: it restored the conditions for decisiveness.

What This Means for Legal Recruitment in 2026

We are entering a period that could become one of the most fascinating legal recruitment landscapes in recent memory.

Resurgence in Strategic Hiring

The hiring decisions paused in 2024–2025 are now being revisited. Corporate and transactional teams, in particular, are beginning to plan for growth again. While associate hiring may not explode overnight, the pipeline is strengthening.

A Competitive Partner Market

With the LLP threat removed and economic signals improving, firms are already beginning to focus on the lateral opportunities that were previously sidelined. US firms remain aggressive, and their presence continues to apply pressure on UK firms to retain, and attract, top talent.

Succession Planning Accelerates

Many partnerships postponed internal restructuring while the fiscal picture remained unclear. That clarity now exists. As a result, we expect increased movement among:

• Senior associates
• Counsel and legal directors
• Junior partners seeking a clearer runway

Succession planning is one of the biggest drivers of lateral recruitment, and 2026 could be a defining year for it.

Associate Hiring Gradually Recovers

Once workflows stabilise and fee-earner utilisation evens out, firms will need to address gaps created during the cautious hiring cycle. We already see early signs of this starting.

A Market That Has Matured

Perhaps the most interesting development is not the slowdown or the recovery, but the mindset shift that has taken place.

The legal sector of 2026 is more thoughtful, more strategic, and more forward-looking than the market we saw pre-pandemic. Firms are not just hiring because a team is busy; they are hiring to:

• Future-proof their practices
• Strengthen culture
• Create long-term growth pathways
• Increase resilience in a competitive market

Momentum Is Returning And This Time It’s Measured

2025 may be remembered as the year of hesitation but 2026 has all the ingredients to become the year of momentum.

Not frenzied, chaotic, “hire-at-all-costs” momentum. But steady, strategic, sustainable momentum built on clearer foundations.

The budget didn’t ignite a hiring boom, but it did something much more valuable:

It removed the fog.

And when the fog lifts, firms can finally see far enough ahead to move with confidence.

From where I stand, after speaking with hundreds of partners, HR directors, and managing partners across the UK, the message is unmistakable:

The market is ready to move again. And it’s moving with intent.

2026 has the potential to be one of the most strategically compelling periods the legal recruitment world has seen in years.

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The 2026 Effect: The Return of Corporate Law
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