“Any firm that doesn’t see their staff as their number one asset will not prosper.” – Sheryll Carey, ALPMA NZ committee member.
According to the 2019 ALPMA (Australasian Legal Practice Management Association) NZ Legal Industry Salary & HR Issues Survey, retention and attraction were the biggest challenges for 94% of responding legal firms. The survey provides salary data each year, as well as information on metrics such as bonuses and diversity.
There is a far wider range of careers open to lawyers today than 20 years ago, technology is constantly changing and the increase in double degrees makes candidates more attractive for a wider variety of roles.
One way to address these issues, according to Shane Mackay, General Manager of OCG, recruitment consultants, is to stand out as an employer.
“Although you cannot be everything to all employees you need to ask, ‘How can I be different?’.”
He says some employers are doing this well by picking one or two ways to stand out and be an employer of choice. For example, he points to Perpetual Guardian which has introduced a four-day working week and found that retention and engagement has shot through the roof. “They are the leaders of the pack, but what if other organisations follow their examples? In two years this might just become the norm,” he says.
“So, be authentic. Don’t continually re-create yourself and try to do everything your employees want or you will kill your business. You need balance. If you are a family law firm ask what makes that attractive and go with that.”
Kirsty Spears is the director of McLeod Duminy Careers and specialises in legal recruitment in New Zealand and overseas.
She says the legal profession is generally very conservative and starting salaries are “surprisingly low”. Graduates are paid $40-$50,000 per annum “if they are lucky”, she says.
“Other professions such as accounting or engineering pay a lot more. Law firms compare themselves to other law firms, when they should be comparing themselves to other industries. If you are not paying enough, or are not flexible enough, or not offering attractive benefits then this is a risk.
“I have had a lot of conversations with law firms who seem to be happy to be ‘in the market’. But as they set their own ‘market’ this means that salaries and benefits are often not very exciting. Only a handful of firms compare the salaries they offer to other professions outside the law, but there is no real shift or change in that overall.”
Kirsty Spears says law firms also need to look at their salary bands as legal salaries are stagnating. Moving up a tier looks like a pay rise, but the bands are staying the same.
Shane Mackay says there is also a problem if employers only benchmark remuneration when they are recruiting from outside their organisation, but not when looking at remuneration for current employees. The gap gets quite large quite quickly for current employees (who are on individual employment agreements) who are then forced to look outside the organisation in order to obtain market remuneration.
“The gulf between internal salaries and what the employee may be able to achieve if they go to market soon becomes unpalatable but often employees are unwilling to push the remuneration conversation with their employer. If the employer doesn’t proactively address it themselves the result is undesirable churn exposing the business to the direct and indirect costs of recruitment and onboarding, ie, reduced productivity (and billings), training and management time etc. The actual costs associated with undesirable churn will usually exceed any savings in remuneration made by not benchmarking your internal salaries to market.”
Kirsty Spears says a survey conducted by her company found that the benefits that employees were being offered were very standard and in some cases not benefits at all. The most commonly cited benefits included paying for practising certificates and continuing legal education, providing a cellphone and hosting social functions such as a Christmas party.
“While a party is nice it will not make a difference to whether an employee stays at a firm or not,” she says.
Employers could be innovative in the benefits they offer. For example, a lawyer who is working 12 hours a day might appreciate their employer paying for a cleaner, or My Food Bag or home internet. Other options she suggests include paying extra KiwiSaver (especially for young employees) or paying for dry-cleaning of work clothing and tailoring wellbeing packages (eg, gym membership). Such perks create goodwill and are a minimal cost to an employer compared to an across-the-board pay-rise.
In seminars held for legal employers following the ALPMA survey, discussion also considered training lawyers to be multi-skilled.
“Lawyers love to learn something new. They don’t want to come out of law school and get stuck on one track,” Ms Spears says. “This is a double-whammy opportunity and enables the law firm to ride the peaks and troughs of work a little better, while keeping lawyers motivated.”
However, she says, the number one factor that candidates mention as important is extra leave. Overseas it is standard to offer five, six or seven weeks’ annual leave. Lawyers come back from working overseas and find the four-week statutory entitlement to be a bit of a shock, especially when several days of that must be taken during the Christmas shut-down.
“There is a great emphasis on academics during the recruitment process. After a few years those things are not so indicative of ability and it is often not a fair comparison,” says Kirsty Spears. “Some people have had to work in paid employment while at university and may not have lived at home or may have had other responsibilities while studying. Academic achievement says little about candidates’ other skills or about them overall. While academics can’t be ignored, perhaps some context would be useful. In a tight market they might consider allowing candidates to showcase their current knowledge through additional testing.”
Damian Hanna is an associate director of INSIDE Recruitment and says that for both parties there need to be more transparent and honest recruitment processes. “Ask the right questions about what is important to the organisation. Ideally, try and meet the team by going out for a social function before the hire. More emphasis needs to be put on the cultural fit within the organisation and the team, for both sides.”
Mr Hanna says many young lawyers are often working their ticket in New Zealand to get a prime position overseas. He says technology has made it easier to find and recruit lawyers through websites such as LinkedIn. The bigger problem is when employees decide to leave after a short time to go to firms within New Zealand.
OCG’s Shane Mackay says the legal workforce is changing and young people are more holistic and demand balance early in their careers. For example, they may be interested in climate change and environmental concerns and if you want to be an employer of choice you need to take this into account. “Tell employees what you are doing to be environmentally friendly.”
“At the other end we have an ageing workforce and there is still a lot of prejudice against older candidates. Many people were affected by the global financial crisis. They might have been looking forward to a comfortable retirement, and then had to rethink after the GFC. There is now a whole generation that can’t retire. While they have the same financial drivers to be employed as their younger peers and more experience, they are up against conscious or unconscious bias in the workplace.
“There is often also a perception that older employees are not technologically advanced and are not driven in the same way as their younger colleagues,” he says. “However, research doesn’t support that opinion and they bring a range of other skills, interpersonal maturity and experience to the table. The desire to have interesting work and perhaps have flexibility is a driver across all age groups, it’s certainly not only an issue for older workers.”
Sheryll Carey is the General Manager of Lowndes Jordan and a committee member of the New Zealand chapter of ALPMA.
“I think more firms need to recruit at a graduate level and make a greater commitment to training staff,” she says.
“That will widen the pool in years to come, and also gives firms a chance to offer recruitment after young lawyers return from overseas. Firms also need to evaluate what their culture is and make sure they walk the walk.”
Support and retention
An OCG white paper “Responding to the Changing Workforce” found employers were more in favour of longer tenures than employees were. While most employers agreed that 2-3 years was the right amount of time, 22% of employees considered that 1-2 years’ tenure was acceptable.
Shane Mackay says organisations want employees to stay for at least two years, but if employees think there is not a lot to learn after one year or if an employer has failed to mentor or develop their staff then employees will look to manage and develop their own career path. Employees want and need better managers, internal development and clear career pathways.
“There was a time when jobs were for life, but that changed at least 25 years ago, when organisations became more stakeholder and revenue focused, there was a drive to efficiency, increasingly lean organisations that no longer provided internal career pathways and less time and resources dedicated to individual employee development. The emotional contract and loyalty in the employee/employer relationship diminished and employees learned that to get ahead they needed to manage their own career development. A typical career now spans a portfolio of employers with employees often leaving and returning to an employer multiple times across the course of their career. The old paradigm that once they leave they are dead to you is long gone with enlightened employers.”
The quality of managers is a key to retention. “How many managers, especially in law firms, have been trained to think like managers or are trained to be effective managers? It typically doesn’t happen and with the unrelenting focus on billable hours they have no time to support and develop their people.
“Time-billing is a preoccupation with employers of lawyers and accountants. Young people don’t want that and might decide to leave because of this way of working. The old fashioned ‘I did it, you can’ – attitude needs to go if you are going to attract and retain the best people.”
Damian Hanna believes that employers should give employees clear instructions, and an open door to ask when necessary.
“You need a clear understanding of what that particular employee can do, to ensure they are not given work that is way under or way over their skill level,” he says.
“Recognise effort. Good managers need to know that appreciation is very important. Junior lawyers know that they aren’t going to get everything right, but they don’t want to be made to feel stupid. They need to be respectfully told when something is incorrect, supervised and not made to feel inadequate.
“Junior lawyers also want to know that they are part of something bigger, that their job is important and meaningful and this may mean meeting clients earlier than they normally would.”
Mr Hanna says the workforce is changing and the expectations of younger lawyers are changing, but at all levels employees are now happy to turn down opportunities even in a tight market. He says employees are prepared to take the risk and change jobs within a short period of time. For him the most quoted reason for leaving is the lack of adequate training and the feeling that they have to ‘fly by the seat of their pants’.
Sheryll Carey says issues that have surfaced over the last two years are having an impact on firms’ ability to retain staff.
“In spite of the Bazley report and the #Me Too movement, I still hear of some firms that are slow to change their 20th century ways of thinking. Culture comes from the top and partners must realise that their attitudes and actions shape the firm.
“The cost of replacing staff is huge, not to mention the downtime, so any firm that doesn’t see their staff as their number one asset will not prosper. I don’t think employees’ attitudes to wanting different ways of working is limited to lawyers, but law firms seem to take longer to implement the changes than the corporate world.
“At the end of the day we still have to respond to client demands and urgency never goes away. Certain work types are easier to cater for with regards to flexibility than others, and the size of the team also bears a big weight.”