Sign of the times

It’s long been reported that culture is a big driver for lawyers when it comes to choosing which firm they want to work for; 90% of lawyers surveyed for the Financial Times Innovative Lawyers 2021 report said there are firms they would refuse to work for, regardless of pay, because they believe the working culture would negatively impact their wellbeing. 

The need to address adverse law firm culture has been accelerated by what has been dubbed ‘The Great Resignation’, referring to the higher than usual numbers of people voluntarily leaving their jobs in recent times. It’s explained in various ways: people who had planned to quit their jobs but put it off because of coronavirus (COVID-19) finally feeling confident enough to do so; workers leaving because they are burnt-out after a relentless period of activity; and, more broadly, everything that has happened in the last two years leading some to reconsider what they want from their working lives.

For millennials and generation Z (gen Z), who continue to push existing boundaries and demand change, the crisis is exacerbated. 

Millennials and gen Z don’t run the world. Yet. But they are the future of law firms, and some will soon be running them. Super-confident and entrepreneurial, digital natives and social activists – firms need to recognise the imperative to take their views into account, arguably more than they might have done with previous generations.

Gen Z and millennials hold themselves and others accountable. According to the Deloitte Global 2021 Millennial and Gen Z Survey they’re the people most likely to call out racism and sexism, and to shun companies and employers whose actions conflict with their personal values. 

This is, of course, a generalisation but it describes these generations as, overall, more persistent, more vocal and more likely than others to question, and even upset, the status quo. As such law firms do need to raise their game to appeal to this demographic. How best can law firms do this? 

Throwing money at the problem is not the solution

To date, the response from law firms to improve culture and attract recruits has been disappointing. 

At Obelisk Support, we advocate in our recent report, Legal Reset, that a cultural reset is needed to tackle issues such as inclusion, accessibility, attracting the next generation of lawyers and ensuring the legal profession stands first and foremost for the rule of law, and not just profit. Yet, many of the large law firms appear to think that throwing money at the problem is the solution – resulting in escalating levels of pay for newly qualified (NQ) lawyers. 

NQ lawyer salaries are hitting new heights across the board as top law firms seek to outdo each other in the war for talent. The battle to attract and retain staff is currently the most pressing concern for partners at top 200 UK firms, according to a report by litigation funder, Harbour. 

Clifford Chance recently became the latest to join the pay war among large firms, upping rates for NQ associates to £125,000, spurred on by Herbert Smith Freehills who announced it was increasing its NQ salaries by 14% to £120,000 plus bonus. 

Amid rising client demand and a workforce that is re-evaluating its priorities post-COVID-19, it’s not surprising that firms are hitting the panic button and pushing up salaries to stop the exodus. But while this might entice those starting out in their career, sky-high financial rewards will not meet the challenge of keeping enough experienced lawyers at these firms in the long term. This is a short-term solution that does not deal with the underlying problem.

Associates in 2022 have more options open to them than ever before. They can move in-house, to ‘Big Four’ accountancy firms or to alternative legal services providers offering different working models. Working from home, and hybrid working, mean they are no longer restricted by geography and can more readily consider work outside big cities.

Inflexible flexibility

One core area for the profession to consider is ‘inflexible flexibility’. By that I mean the inflexible approach to hybrid and/or home working that many law firms are offering, perpetuating a culture which is less inclusive and more likely to disadvantage working parents and those with caring responsibilities, for example. 

According to recent research, the number of employment tribunal cases relating to flexible work has doubled as businesses revert to pre-COVID-19 patterns of working. This is reflected in the legal sector as managers voice fears about the erosion of culture and look to mandating fixed hours back in the office.

Lawyers are not being given autonomy on working patterns. Even where flexibility is offered, it’s usually within clear boundaries – perhaps two days at home, three days in the office. People are not being given true flexibility in how and when they get the work done.

Law firms, as ever, should look to the ‘Big Four’ if they want to see what the future might look like. 

Deloitte announced last year that it would let staff decide “when, where and how they work”. Its chief executive, Richard Houston said: “We will let our people choose where they need to be to do their best work, in balance with their professional and personal responsibilities.” 

Clearly such a model requires a significant degree of trust, and change can start small. A fifth of staff at Kent-based law firm Thackray Williams already work part-time. Their new ‘You day’ initiative is aimed at full-time staff – if they can do 10 days of work in nine, they get the last day off. ‘Magic Circle’ law firms Freshfields, Clifford Chance and Linklaters have all allowed their lawyers to work away from the office for up to 50% of the time, while Slaughter and May has allowed its lawyers to work remotely for 40% of the time (20% for juniors), according to the Lexis Nexis Law of Organic Growth report. 

It’s not quite breaking the pattern of inflexible flexibility currently favoured by the profession, but it is a start in the move towards monitoring output rather than input and trusting staff.

I’d encourage firms to think more about how they can monitor outputs over inputs and demonstrate that they trust their staff. You may be pleasantly surprised what you get back. 

Better management

Another area where significant improvements should be made is in how firms equip their leaders. Law firms have always been dogged by a lack of management skills in partnerships that value billable hours and rainmaking over all else. Few are equipped to manage hybrid teams working flexible and varied hours and would rather revert to the status quo. Law firms need to train their managers to focus more on wellbeing, to trust their employees and give them more autonomy. It will come not come naturally. 

As an organisation that has long championed flexible working models, we have seen that to make it work, firms need to show leadership and consistency in their flexible working policies. It should not be left up to individual managers and partners as to how much time their teams spend in the office – there will always be some who object. It will require a change in the culture of organisations that must be driven from the top.

The cost of churn, of recruiting and training new staff, is huge so there is real impetus to get this right, even in times when the market for talent is not so tight.

Equality means paying everyone the same

Now back to the thorny issue of pay. Three-quarters of gen Z law students surveyed last year by Major Lindsey & Africa (tinyurl.com/4a33nbhv) felt that there was a gender pay gap at big law firms and that sexism remains an issue. When it comes to law firm culture, only 55% believed firms and partners cared about associates. Although pay is still the priority when looking at potential employers, benefits including informal mentorship and training also ranked highly. 

New research into the gender pay gap in the legal profession from Next 100 Years and Gapsquare™, found 84% of women in law believe they won’t see true gender pay equality in their working life, while 29% said it won’t happen in the next 100 years. 

Gapsquare’s analysis of the hourly pay rates provided by law firms under the statutory gender pay reporting guidelines for 2022 show a median gender pay gap of 25.4% – a figure that has remained largely unchanged since 2017, when mandatory reporting first came into effect. If this trend continues, the gender pay gap in the legal profession will never close. 

The challenge is significant. When speaking to the Law Society Gazette (tinyurl.com/mw6s62xx) last year, Georgia Dawson, senior partner at Freshfields, highlighted that the legal sector has an ‘ecosystem problem’: “For many years, efforts have focused on improving gender equality, giving individuals the tools to navigate the profession as it currently exists and operates. There have been efforts to improve aspects of the ecosystem, [such as] unconscious bias training.

“[However], we have to recognise not all women have the same experience of work. There are additional barriers for…women of colour or [women with] disabilities. The pandemic has provided us an opportunity to reimagine the practice of law and have the chance to reshape the ecosystem as something fairer for all.”

More accountability is essential. To drive action, management need to be held accountable for the lack of progress in gender equality, hence Freshfields announcing a series of diversity targets, as an example.

Where to start? 

Clearly there is a lot to tackle for law firms. Yet, there are opportunities out there for law firms to instigate change. 

Practical questions law firm leaders might ask themselves as they start the process are: 

• How can we demonstrate that we trust our employees? 
• How can we start to measure outputs over inputs? What are the barriers to us doing this and how can we overcome them? 
• Do we understand what the lawyers of the future want and need from their work? 

None the challenges I have listed are insurmountable. What is important is that law firm leaders realise that the time for change is now and start to challenge themselves to deliver.