People power

Attracting and keeping the right people can be hard for small and medium-sized law firms, which may struggle to compete with larger local firms in terms of remuneration. As the market changes, new factors affecting the legal employment market are coming into play. With them come opportunities for firms to distinguish themselves as attractive places to work. This article explores the new legal employment market, and how law firms can attract and keep the lawyers of the future.

Understanding the impact of change

New entrants to the market

At the time of writing, some 500 alternative business structure (ABS) licences have been granted. The impact of ABSs on the availability of talented job applicants is not yet significant, but it is likely to increase. The best candidates may see an ABS as offering more potential for rapid career progression. For example, in September 2016, PwC announced that it was integrating its legal function into its UK business, to become a fully multi-disciplinary practice. Such a huge employer can offer a highly competitive employment package.

There is also a move towards big companies expanding their in-house capacity, again presenting an interesting alternative source of employment to the best candidates.

The impact of technology

Lawyers are likely to be the trusted human interface between the client and a host of new sources of information and analysis. Algorithms to search data at scale and provide predictive analysis are already available; their potential is only just being explored. Virtual assistants are likely to become a feature of ordinary working life, producing routine templates without human intervention.

 

It is difficult to be certain about the impact of new technology. However, we do know that IT has already made it possible for firms to drive costs down by breaking up legal processes and assigning low-value work to lower-skilled workers. The effect has been to change the profile of job roles in law firms. This pattern of technological innovation and changing roles is set to gain momentum in the near future, as the possibilities created by sophisticated digital resources develop.

Technology has already clearly had an effect on client expectations. The internet means clients are better informed about legal topics, and more discerning about their choice of adviser. Presenting an attractive profile online is important to attract clients, but also prospective employees.

The millennial generation

Millennials are commonly referred to as ‘digital natives’. Recent research by the Harvard Business Review shows that 70 per cent of millennials learn about job opportunities from friends (tinyurl.com/zdcj99n). Their most common form of communication is social media.

Millennials also bring different expectations about work. They expect to change jobs more often than previous generations. Employee loyalty is no longer guaranteed, so retention will become increasingly challenging. Millennials expect more from their workplace than earlier generations – they want a good working environment, a sensible work / life balance and a sense of purpose. Traditional financial incentives will continue to be important, but other factors will also matter. In an age when reputations are made online, the onus will be on legal businesses to reach out and connect with prospective employees.

Get and keep the right people

A recent paper on talent management by Deloitte (tinyurl.com/hq4ltv7) suggests that the range of forces driving innovation in the sector will create a tipping point in workforce structure by 2020, and firms that do not prepare for change will ‘no longer be sustainable’. So what can firms do to prepare themselves? Below are some questions for you and your business, to put you on the right track towards effective recruitment and retention.

Do you prioritise people management?

Your people are central to all commercial possibilities. And the ability to attract and keep good people depends on a firm’s overall approach to the management of people. In the future, people with differing skills, in non-traditional roles, will become commonplace, and will all need to be brought together in common endeavour through leadership and management.

To create a culture which puts people management at the heart of business success, you need to look at each stage of the employment cycle. The goal is to ensure that people are equipped with the skills to deliver your strategic goals. All too often, people skills are only loosely associated with hard business outcomes; in fact, they are crucial in the development of an adaptable, highly motivated and successful workforce, and therefore a successful business.

Are you set up to attract the right people?

When considering who you want to work in the business and how to keep them, the first question should be: what do you need? You then need to look at whether the structure of the business supports that aim. One would expect changing work activities to generate changing roles – for example, the introduction of high-volume work carried out by low-skilled workers generates a demand for leadership and management.

However, the organisational make-up of many law firms often does not change in this way. Of course, there may be no reason for change if traditional structures provide commercially successful client services. However, stagnation in terms of structure preserves old hierarchies and can have an impact on decision-making. It also tends to mean people continue to work in traditional ways, which may not attract the most forward-thinking employees. There is a danger that senior roles, including equity partnership, become less attractive if they bring with them management burdens in addition to fee-earning pressures.

Have you been replicating traditional working structures by ‘back-filling’ positions as they become vacant, rather than thinking through your business requirements and adapting accordingly? Have you embraced new models of working – like home-working or part-time hours – to structure your business appropriately to your workload, and to make your firm attractive as an employer? This will become increasingly important as millennials have more impact in the workplace.

Are you reaching potential new employees in a way which they find easy and makes sense to them – for example, by using social media to drive people towards a vibrant and appealing company website on recruitment?

What skills do you need in the business?

Changes in the legal market and client expectations will mean that the lawyer of the future will need not only technical skills, but also a range of ‘soft’ skills and non-legal technical skills, including:

• entrepreneurship
• communication
• IT competence
• project management
• the ability to relate to client needs and deliver relevant advice and services
• adaptability
• people management.

The recruitment process – and, indeed workplace performance management – needs to incorporate consideration of behaviours. Does this candidate have sufficient self-awareness to be able to manage their conduct in a variety of different, highly pressured environments? Can they demonstrate an ability to embrace change and be adaptable?

New roles will be created in law firms. Many firms already employ specialists in, for example, management, business operations, IT and marketing. These and other functions are likely to be of increasing significance. Have you thought about whether you need people in these roles? If you recruited to them, what impact would it have on your existing structure, and roles within your partnership group? What behaviours would fee-earning colleagues need to demonstrate in order to accommodate new ways of working?

Diversity of approach will be a genuine asset to help firms think from different perspectives and create new ways of delivering services. And by being alive to the value of differing expertise, firms can build a profile as an employer which values diversity and is open to new ideas.

Do you have a compelling reward and recognition package?

Your location, the size of your firm and the type of work you do will all have an impact on how much you can afford to pay. Not all firms can pay magic circle rates; if this includes you, working on the non-financials such as recognition and opportunities for development can go a long way towards closing this gap.

Financial rewards include base pay, variable pay, pensions and benefits. Non-financial rewards include opportunities to develop enhanced skills, career opportunities, recognition, and quality of working life. All of these add up to the total reward package for an individual.

Financial rewards form part of the basic employment package which indicates to an individual that a job is satisfactory. Non-financial rewards, such as the opportunity to develop a niche area of practice or openness to flexible working hours, may be as compelling or even more compelling for some individuals.

Do you offer career progression opportunities?

Creating career progression is an essential element in retaining good people. Communications about opportunities for promotion need to be seen to be fair, open and equitable. In a recent report on the best employers in the legal sector (tinyurl.com/jdmzdjv), more than 2,300 fee-earners, across a spread of UK, City and international firms, rated the importance of prospects for career development at 92 per cent. However, only 74 per cent were satisfied with their current career prospects. And while 86 per cent rated the quality of communication about career development as important, only 68 per cent were satisfied with the quality of communication they received.

In some firms, there are no immediate opportunities for promotion. Different methods of broadening skills, such as project work or secondment, can provide stimulation and development opportunities. Or you could allow people to move on, gain experience elsewhere and come back. That requires confidence in the attractiveness of the firm as a place to work, but can reap huge rewards in terms of injecting new thinking and widening opportunities in the long term.

Do you focus on behaviour as well as performance?

Creating an attractive working culture involves identifying not only what people need to do, but also how they need to do it: what skills and behaviours will inform good performance. This approach will also serve the firm well in terms of compliance with the Solicitors Regulatory Authority’s competency-based approach to professional practice, which is now mandatory.

Defining performance purely in terms of billable hours is unlikely to help you retain good people in the long term. You need to create an environment in which individuals are motivated and able to contribute; failing to deal with difficult issues gets in the way and tends to decrease the impact of investment in people.

Do you demonstrate explicitly in your appraisal and reward processes that positive behaviours (such as respect, collaboration, adherence to your organisational values and so on) are expected of your people?

Why it matters

As pressure on the market increases, firms will need good people with great skills to remain competitive. Many firms have already recognised that attracting and keeping talented people translates into a commercially sustainable business. But while some have recognised this intellectually, this may not have been matched by changes in leadership and management, and the work that gets done on a day-to-day basis. Addressing the mismatch between rhetoric and reality may seem too daunting, too radical, but it is achievable – and essential, in an increasingly competitive legal recruitment market.