Attracting and Retaining Talent in the Post-Recession ... · Attracting and Retaining Talent in the...

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CAROLINE POYNTON Attracting and Retaining Talent in the Post-Recession Legal Profession IN ASSOCIATION WITH PUBLISHED BY

Transcript of Attracting and Retaining Talent in the Post-Recession ... · Attracting and Retaining Talent in the...

Page 1: Attracting and Retaining Talent in the Post-Recession ... · Attracting and Retaining Talent in the Post-Recession Legal Profession iX How are client expectations impacting talent

Caroline Poynton

Attracting and Retaining Talent in the Post-Recession Legal Profession

in assoCiation with Published by

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Attracting and Retaining Talent in the Post-Recession Legal Professionis published by ark Group

UK/EUROPE OFFICEark Group ltdPaulton house8 shepherdess walklondon n1 7lbunited Kingdomtel +44 (0)20 7490 0049 Fax +44 (0)20 7324 [email protected]

NORTH AMERICA OFFICE ark Group usa4408 n. rockwood drivesuite 150Peoria il 61614tel +1 309 495 2853Fax +1 309 495 [email protected]

ASIA/PACIFIC OFFICEark Group australia Pty ltdMain level83 walker streetnorth sydney nswaustralia 2060tel +61 1300 550 662Fax +61 1300 550 [email protected]

editorstephanie ramasamy [email protected]

head of contentanna shaw [email protected]

Managing directorJennifer Guy [email protected]

uK/europe marketing enquiriesrobyn Macé[email protected]

us marketing enquiriesdaniel smallwood [email protected]

asia/Pacific marketing enquiriessteve oesterreich [email protected]

isbn: 978-1-907787-14-0 (hard copy) 978-1-907787-15-7 (PdF)

Copyrightthe copyright of all material appearing within this publication is reserved by the author and ark Conferences 2010. it may not be reproduced, duplicated or copied by any means without the prior written consent of the publisher.

arK1474

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Caroline Poynton

Attracting and Retaining Talent in the Post-Recession Legal Profession

in assoCiation withPublished by

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Contents

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Contents

Executive summary ............................................................................................................VII

About the author................................................................................................................XI

Acknowledgements ..........................................................................................................XIII

Part One: Attracting and Retaining Talent – Best Practice

Chapter 1: Attracting and retaining lawyers within a changing legal landscape .................. 1The impact of recession ......................................................................................................... 2The recessionary impact on clients ......................................................................................... 3Recessionary impact on the partnership model ........................................................................ 4

Chapter 2: Engaging the modern lawyer and the rise of flexible working ............................ 7The impact of recession on workforce engagement ................................................................. 7The other way ..................................................................................................................... 10Flexible working, changing business models and the client factor............................................ 10A changing mindset ............................................................................................................ 11The challenge for larger firms .............................................................................................. 13A split in the legal market? .................................................................................................. 14Optim Legal: Challenging the traditional partnership model ................................................. 15

Chapter 3: Talent management strategies ........................................................................ 17Career frameworks ............................................................................................................. 19Performance-related pay ...................................................................................................... 20Turning the recession into a talent-management opportunity .................................................. 21

Chapter 4: The leadership and communication challenge ................................................. 25The leadership engagement challenge for law firms ............................................................... 26Overcoming the hurdles ...................................................................................................... 27The HR role ........................................................................................................................ 28The ongoing leadership challenge ........................................................................................ 29

Chapter 5: The road ahead .............................................................................................. 33The changing legal model ................................................................................................... 33The changing mindset of the younger generation .................................................................. 35

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Contents

The current response of the legal profession ......................................................................... 36

Part Two: Expert Analyses and Case Studies

Expert analysis 1: Energise – The shifting sands of law firm talent management ............... 39Factors affecting engagement in law .................................................................................... 39The law firm model ............................................................................................................. 40Impact of the downturn ....................................................................................................... 40Generational changes in values and beliefs .......................................................................... 41Definition of talent .............................................................................................................. 42Lawyer mindset ................................................................................................................... 42Predictions for the future ...................................................................................................... 42

Expert analysis 2: First Counsel – Insights from a legal recruiter ....................................... 45The impact of recession ....................................................................................................... 45The recovery ....................................................................................................................... 45The road ahead .................................................................................................................. 47

Case study 1: Field Fisher Waterhouse – Translating business goals into people strategies .............................................................................................................. 49

Developing new people strategies ........................................................................................ 49The need for new resource models ....................................................................................... 50Aligning talent management and development ...................................................................... 51Focused lateral hiring .......................................................................................................... 52Greater engagement ........................................................................................................... 52Living the values ................................................................................................................. 53

Case study 2: Freshfields Bruckhaus Deringer – The challenges of attracting and retaining talent in a global law firm ................................................................................. 55

Case study 3: Lewis Silkin – Flexibility equals engagement and commitment..................... 59

Case study 4: Linklaters – Retaining and engaging talented lawyers post-recession .......... 65What is the deal?................................................................................................................ 65So how are we tackling this? ............................................................................................... 66

Case study 5: Norton Rose – The innovative approach to cost cutting ............................... 69Being flexible ...................................................................................................................... 69Not an easy way out ........................................................................................................... 70Implications of the scheme .................................................................................................. 71

Case study 6: Simmons & Simmons – Getting a head start on change .............................. 73The Simmons & Simmons trainee MBA ................................................................................. 73Building firm-wide business skills .......................................................................................... 74

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Changing structures ............................................................................................................ 74Managing change through coaching .................................................................................... 75Ensuring engagement .......................................................................................................... 76

Case study 7: TLT LLP – Opportunity knocks ...................................................................... 77The importance of investment .............................................................................................. 77Implications for talent management ...................................................................................... 78Engaging staff in the investment proposition .......................................................................... 79Aligning long-term strategies to rewards ............................................................................... 79The path to growth ............................................................................................................. 79

Case study 8: Berwin Leighton Paisner – Taking the road less travelled ............................. 81Critical communication ....................................................................................................... 81‘Lawyers on Demand’ .......................................................................................................... 82Leadership and recovery ...................................................................................................... 83

Index ............................................................................................................................... 85

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THE RECESSION hit the legal profession hard. Although redundancy tables show a varied response to the tough climate, all suffered. The largest City firms engaged in extensive redundancy programmes impacting hundreds of employees, although lawyers in smaller firms were far from immune. Many commentators have been quick to point out that the published redundancy figures far from reflect the true numbers of lawyers that found themselves out of a job during the downturn.

As we now continue to pull out of the recession (although the economic landscape still remains uncertain), many firms will be hoping that the recession was little more than a blip on the radar of profitable growth. Some firms have indicated that the legal environment is now returning to ‘normal’ by lifting the salary freezes that have been in place since the start of the recession. Eversheds – a firm that reportedly made 735 redundancies – is now paying staff a bonus of £1,000 each, after hitting its profit targets,1 a move that we will likely see replicated by other firms as conditions continue to improve.

For firms that were forward thinking, the recession may have proved an opportunity to conduct a firm-wide restructuring that was well overdue. No doubt there will also be recession survivors who are only too glad to reap the rewards of their now far more ‘streamlined’ firms. But as the job market improves, firms face a dangerous time when early optimism that all is back to normal should be combined with a large dose of caution.

In the midst of recession, employees are less likely to go hunting for jobs that are not there; instead they are likely to hunker down and hope for the best. If anything, firms are likely to witness an increase in engagement and loyalty as staff do everything in their power to avoid redundancy.2 It may not seem like it to an embattled leadership team, but it is the employer that has all the power in recessionary times. With a recovery, though, there is a power shift. Law firms that need to capitalise on the opportunities presented by rapidly improving market conditions may find that they have a resource vacuum – requiring a rush to recruit and a rapid return to the ‘war for talent’. And for those firms that were deemed to have treated their people badly, this may prove to be a more difficult task than expected – not only in terms of attracting new people, but also in preventing existing staff from jumping ship. Sure, many a lawyer will be bribed with the promise of a significant salary hike and we may see a period of spiralling salaries/bonuses as firms compete for the talent they need. But for others, the promise of money will not compensate for the ill-treatment they felt they and/or their colleagues received during the bad times. And people have a long memory for bad experiences.

In addition, recessionary troubles hit in the midst of a more fundamental shift that may compound the post-downturn problem of managing talent: younger lawyers want a different kind of legal career. Partnership

Executive summary

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does not have the allure it once had. According to a recent Legal Week survey, only 37 per cent of assistant respondents claimed to be interested in partnership. And numerous studies show that the younger generation differs to their predecessors in valuing work/life balance and flexibility more than the financially rewarding but long, and arduous path to partnership. Nor do many associates today expect to remain with their firms for a lifetime. The rise in lateral hiring among all firms only reflects a parallel willingness among lawyers to shift jobs. Loyalty to one firm is a thing of the past. And so may be the partnership model.

Within this there remains the client equation. Whatever a law firm decides to do internally to attract and retain talent, it must always balance this with client expectations. And they are also changing. Long have clients bemoaned the billable hour, which little reflects the value of the services clients receive from their law firms. Their calls for alternative fee arrangements are already forcing many firms to reconsider their fee structures, a trend that is only likely to rise in future. And if fee structures finally change, so will the working culture and processes of the typical lawyer. To date, the lawyers that have been most rewarded are those that have been able to hit and exceed their billable-hour targets. In future, a talented lawyer may mean the one most able to negotiate alternative fees to clients, and demonstrate value. Will these two lawyers be one and the same? The jury is still out.

The UK Legal Services Act 2007 (LSA) will add to the demands of this changing legal landscape, calling into question the very model of legal service delivery. The LSA promises a whole new understanding of legal business – with the possibility of non-lawyer ownership, challenging firms to become more innovative and

commercially-minded in the way they deliver services to clients. Combined with a rise in legal process outsourcing (LPO) where commoditised legal work is cost-effectively outsourced to third-party providers, the question arises as to what the future law firm will look like. How can law firms effectively manage their talent in such a changing environment? How should law firms be developing and training their lawyers for the future of law? What does engagement and motivation mean to a changing generation of lawyers with very different career expectations? And to what extent will the recession prove a catalyst or accelerator for change as firms realise that they can no longer retain talent and conduct business along pre-recession lines?

This Ark Group report Attracting and Retaining Talent in the Post-Recession Legal Profession examines these issues and more, including:

The impact of the recession on �satisfaction levels among lawyers – as the job market improves, employees’ true loyalty will be tested for the first time. Will those firms that appeared to protect their staff through the recession fare better now than those that ‘streamlined’ their businesses through redundancy?In a world of lateral hires and where �lawyers regularly move to new firms, to what extent does employee engagement and loyalty matter?With many lawyers no longer tempted �by the promise of partnership, how can firms hope to attract and retain the best talent?Even for those wanting partnership, the �path is becoming harder, with many firms cutting the numbers of equity partners. What hope is there for the aspiring partner in the modern law firm?

Executive Summary

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How are client expectations impacting �talent management in the legal profession? Does their interpretation of talent differ to that of the traditional law firm?Where does the recession fit within �the bigger picture of change in the legal services model? Will it further accelerate the changes that were already happening? andWhat will the future successful lawyer �look like and how are firms preparing the way for the lawyers of the future?

There will be lawyers and law firms that are happy to have survived the recession, and who will be looking forward to everything returning to normal. But the introductory comments attest to another group of lawyers who are far from satisfied with the status quo – and their voices appear to be growing amid a whole generation of lawyers who want something different from both their legal careers and their law firms. How law firms balance the expectations of these different groups to ensure that the majority are engaged and motivated may well make the difference between post-recession success or failure.

References

‘Eversheds staff bag £1k as firm achieves 1.

profit targets’, The Lawyer, 26 July 2010.

‘Engaged tone’, 2. The Lawyer, 31 August 2009.

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About the author

CAROLINE POyNTON is a business journalist, with particular expertise in the legal sector. Before going into freelance journalism in July 2007, she was for six years editor of Managing Partner magazine, an Ark Group publication dedicated to senior management in the legal profession. Since working as a freelance journalist, she has written numerous features, as well as in-depth reports, not only on the legal profession, but also on corporate communications and business management generally. She has also worked as a freelance editor on publications including Ark Group’s FD Legal and the KermaPartners Quarterly, a publication published by management consultancy KermaPartners. She has published several reports with Ark Group, including Business Continuity and Disaster Recovery for Law Firms (2008), Managing the Evolution of Libraries and Information Services (2008) and Delivering Business-Critical Knowledge Management (2009).

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Acknowledgements

THE AUTHOR would like to thank the many kind contributors to this report, whether for their general support or specific guidance. In particular, many thanks to those who contributed case studies or expert analyses to the report – Rachel Brushfield, Chris Cayley, Neville Eisenberg, Kevin Hogarth, Ian Jeffery, Charlie Keeling, David Pester, Lak Purewal, Caroline Rawes and Nigel Spencer.