HR in law: How can top law firms attract and retain staff?

When trainees joined top law firms in the past, they knew exactly what they were signing up to: long hours, hard work and an excellent salary. Around the age of 30, they would be offered an equity partnership, cementing their profile until they retired in their mid-50s.

But that career path can no longer be taken for granted. The Pricewaterhouse­Coopers (PwC) Law Survey 2006 found that the amount of time it takes for lawyers to go from new recruits to full equity partners in a top 10 law firm has increased from an average of eight years to 11 over the past five years. The most common age to be offered a partnership is now 35.

According to Matthew Thorogood, partner, HR services group at PwC, the reason for this is simple.

“The main resistance to making people partners earlier is the dilution of equity for the existing partners. They want to maintain and increase the profit per partner.”

Statistics back this up. While average fee income has risen by 48% in the past three years for the top 25 firms, average partner numbers have increased by just 11%. And 50% of the top 25 firms reduced their equity partner numbers in 2006.

But there are also signs that young lawyers today do not aspire to partnership as they once did, and are now more attracted to alternative positions in larger US law firms, in-house positions or even careers outside the law.

A separate survey by legal journal The Lawyer and polling organisation YouGov found that just 37% of assistant solicitors in the nine biggest firms – those with turnover in excess of £250m a year – had the ambition to become a partner.

“People look and see what partners have to do and they don’t fancy it,” says John Lucy, head of HR at Herbert Smith, one of those top nine firms. “They aren’t prepared to make that level of commitment. They want half-decent remuneration that will still give them the lifestyle they want.”

Huge challenges

Andy Keith, senior HR manager of the corporate finance division at law firm SJ Berwin agrees: “The carrot of partnership is no longer attractive to graduates and trainees, and that’s been the case for the last five years or so. It’s just too far away.”

This throws up huge challenges for law firms wanting to retain their top talent. Michael Bennett, chairman of the HR in Law association, and chief administration officer (Europe) at K&L Gates, believes the key to keeping staff lies in creating a culture where trainee lawyers and associates – qualified lawyers below partner level – can openly discuss their career aspirations and get feedback on how they are doing.

“Sometimes the messages are not what you want to hear, but it enables you to be flexible and to meet the needs of both parties,” he says, adding that the onus is on the law firms to find ways of working within the new environment.

Some of the top 10 firms are innovative in how they tackle this. Herbert Smith, for example, uses a combination of development centres and personal mentors to encourage young lawyers to think about their long-term careers earlier. It has also just created an ‘on-council’ role designed to be a long-term career option for those who either don’t want partnership or who are unlikely to be offered equity status.

“These people are often very good technically, but they don’t have the roundedness required to make partner,” explains Lucy. “It allows us to shape their role to reflect their interests and the needs of the practice.” Those appointed to on-council roles are eligible for bonuses of up to 40% of their salary, although equity is reserved for partners.

Top-five law firm Allen & Overy has followed suit, as well as introducing hefty pay rises and a generous bonus scheme (see case study below), while other firms are simply throwing money at the situation.

PwC’s survey discovered that 79% of top 100 firms now pay bonuses to all fee-earners – up from 68% in 2005. However, this can actually have the opposite effect to that intended, warns Thorogood.

“It’s not attractive if you’re the star performer in the office and the person sitting next to you is a poor performer, yet you both get the same bonus,” he says.

As a result, more firms are moving to schemes that recognise an individual’s impact based on chargeable hours and measures such as balanced scorecard.

According to Robin Hames, technical development manager at employee benefits consultancy PIFC, firms also need to be more imaginative in the benefits they offer.

“The more traditional methods, such as pensions and life insurance, are less popular because when you are young you don’t think you’re ever going to get old or die,” says Hames. He urges firms to consider offering non-financial bonuses such as extra holidays, help with a deposit for a house or more freedom over the hours they work.

Flexible working

This flexible work option is already becoming more common, says Chris Lynch, HR director at Baker & McKenzie. The PwC survey confirms this: every top 25 firm and 80% of smaller firms now offer employees the chance to work a shorter day.

Tina Two, UK director of HR and development at law firm K&L Gates, gives the example of two members of staff that have taken advantage of flexible working at her firm – one is a young lawyer who was also a promising rower, and the other had a husband who was relocated to Zurich. These staff may otherwise have been lost, she says.

The firm has also introduced a reduced-hours equity partner scheme, meaning even full equity partners – the ones who have a reputation for working the longest hours – can address the issue of work-life balance.

“Flexible working is easier in some areas than others,” Two says. “But it’s not impossible in any area.”

The challenge for HR teams now is to recognise the changes in what young lawyers really want and respond to them. Ultimately, the legal sector is built on knowledge, and the holders of that knowledge need to be nurtured. “Law is a people business,” says SJ Berwin’s Andy Keith. “Every evening, the main asset of a firm walks out of the door and comes back the next morning. Let’s empower those individuals to manage their own careers.”

Case study: Allen & Overy

Allen & Overy is considered to be one of the elite ‘magic circle’ law firms – an informal term to describe what are regarded as London’s five top law firms.

Its HR department has spent the past 18 months trying to find new ways of retaining its young lawyers. This has included lengthy consultation with associates and the implementation of a new performance management tool, according to its HR director Genevieve Tennant. “It’s about opening up the debate and lowering the barriers between partners and staff,” she says.

Late last year, it also announced it was awarding all its London associates and trainees a 15% pay rise while simultaneously replacing its fixed bonus scheme with a new system based on length of service and performance.

Associates with less than two years’ post-qualification experience (PQE) will receive a flat bonus – payable at the end of that period – but those with five to seven years’ experience could take home an extra £48,000, based on last year’s figure.

The firm is also in the process of recruiting for its first ‘on-council’ lawyers – a specially created role that indicates seniority but doesn’t include equity – and eventually intends to have up to 25 such positions in the London office.

“This is the first time we’ve said there is officially a long-term option for you that isn’t partnership,” says Tennant.

“For those people, there really is an improvement in access to management and financial information, as well as a very large salary,” she explains. “The response so far has been very positive.”

More information

HR in Law


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