The founders of Hydrogen Group, the quoted professional recruitment firm, threw up a timely observation for City employment lawyers this week.

I asked Ian Temple and Tim Smeaton, Hydrogen's executive chairman and chief operating officer respectively, what direction they saw the market for bankers taking over the next while. They said that the big investment banks had brought forward their annual reviews by a couple of months.

This is not the annual individual assessments that are standard practice at most financial institutions. But rather, the global reviews of practice areas covering staff numbers, past performance and predictions of future revenues. It is when the banks ask themselves where they need to hire to stay ahead of the game and where they must fire to prevent falling behind.

Usually these annual reviews kick off in November and December, about four weeks before the banks announce their fourth quarter numbers, when they have a pretty good handle on the year just past and on the 12 months ahead. But after several banks' third quarter numbers showed dreadful performance on the debt side (Goldman Sachs, Lehman Brothers, Morgan Stanley and Bear Stearns produced their third quarter numbers last week; the other big banks have yet to do so), they have decided to bite the bullet early.

This is cold comfort to anyone who makes their money out of debt products. Six months ago, anyone involved in Collaterised Debt Obligations (CDOs) was hot property; they may now be feeling the chill. The debt markets remain closed and could stay shut for some time. Many in mortgage-backed securities are certain to be out in the cold.

Judging by the experience of previous financial cycles, banks prefer to cull staff rather than keep them on the sidelines, knowing they can easily re-hire when markets re-open. Credit Suisse this week announced it would shed 150 jobs, mostly in New York but some in London. UBS is cutting more than 100, Lehman over 2,000. Again, the cuts in most cases will be in the US, where the sub-prime mortgage market has collapsed. But with debt packaged and repackaged on a global scale, London bankers will not be immune from any cut back in numbers.

A quick call round City employment lawyers to check on business confirmed these fears. Most have seen an increase in inquiries from concerned bankers over the past couple of weeks. Several large firms admit to "informal discussions" with heads of human resources.

One partner at a large full-service law firm recalled how he was called into a European bank in early 2002 and spent two weeks sitting in a room waiting for bankers to file in and sign off "clean edge agreements" — contracts signed off by them and their bosses in which each agreed not to sue the other after a lump-sum redundancy pay-off. The lawyer supervised 250 "leavers". Something similar could happen this time around.

Charles Ferguson of Ferguson solicitors — a firm with a string of actions already underway against Nomura International relating to a shake up over a year ago — confirmed there has been an increase in the number of bankers checking on their legal position, just in case their employment status takes a turn for the worse.

The lawyers at Pinsent Masons must have been reading my mind. I returned from lunch with Hydrogen to find a large package sitting on my desk. Inside was an iPod. The firm has just launched HR Network TV, a series of video bulletins updating the latest changes in employment law, business practice and risk management. Subscribers can download the programmes to their iPods for an annual fee of £2,000 and not even trouble their company’s IT network.

If it all sounds a bit racy, it’s because Pinsent Masons, as with other large firms, are in for some fast-paced action in the employment arena in the coming year. Since the last round of job cuts in 2001-02, employees have become far more aware of their rights, helped by a string of high profile, big money sex and race discrimination law suits. Stephanie Villalba may have lost her £7 million sex discrimination and victimisation case but she may have encouraged other high-flying female bankers to resort to the courts when they get passed over or pushed out.

Last year Claire Bright, who once managed £140 billion of assets for HBOS, sued the bank for £11 million in a sex discrimination, bullying and victimisation claim. She dropped the allegations shortly before the first public hearing — but not before the bank’s reputation had taken a hit in the national press.

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