In Legal Talent Rebalancing – Part 1 – Valuing Time, I discuss time versus compensation, cost to re-staff, and why throwing money at a problem never works long term.
True wealth is a combination of good health and discretionary time.
Anyone fortunate enough to enjoy these benefits prior to the global pandemic has been treasuring them even more during the past two years.
The realization that health plus time equals wealth is why we will see work style evolutions – and, in some cases, revolutions – permeate the global legal services market starting this year.
For example, over the past couple of years some individuals have been working full-time, part-time, or intermittently within law firm and corporate legal department offices. Starting now and continuing throughout this year, many people who have primarily been working remotely are being encouraged to return to their office environment in a scheduled hybrid form while others are being mandated to return full time.
As a result, it’s fair to expect pushback, negotiations, compromise and in some cases, departures. This is because people working in all areas of a law firm or legal department will elect to choose for themselves how they will work and for whom, and will weigh the value of time against compensation.
Corporate legal departments often have a flatter or more streamlined structure so may not experience a total talent upheaval. But the culmination of ongoing changes to how we work now and in the years to come may eventually cause many bottom-weighted, pyramid-structured traditional law firms to become unbalanced and upend like icebergs.
It’s said that law firms do well in good times and bad. So it should come as no surprise that a deluge of work has been pouring into many law firms since the pandemic was declared March 11, 2020 by the World Health Organization. As a result, these firms have never been busier or wealthier.
From an overall financial perspective, the expansive profit margins of some of these firms can be credited to furloughing or eliminating various positions during the pandemic, thereby saving on salaries as well as operating costs.
But this is nothing new; it’s happened before.
We saw similar cost cutting in 2008 when, during the worst financial crisis since the Great Depression, law firm talent ranging from professional to administrative were – as the backhanded expression goes – invited to leave. Early in that process, some people were cleaved off in groups. Later on, they disappeared in ones and twos. Some of those who left eventually landed at other firms or in-house while others chose to work outside the legal field.
Anyone who had to re-staff after the financial fallout of 2008 knows the high cost in terms of time and money to replace talent as well as train and retain them.
Yet, here we go again. But perhaps this time, recovery will take a different form.
Common wisdom tells us that nothing lasts forever. This includes the current high activity and profitability levels of many law firms. While the good times continue, firms with burgeoning war chests are paying huge salaries and bonuses to attract new talent to do the work.
For some of this talent – legal and otherwise – big money is attractive and will be nice while it lasts as long as they don’t die at their desks, wherever those desks may be. Then again, choosing to live to work for a limited number of years may pay off debts and provide a decent nest egg.
Still, this means playing the short game. That’s because while you can make more money, you can’t make more time.
Throwing money at a problem never works, especially long term. Exhaustion at all levels and disciplines within traditionally structured, hard-driving law firms in particular is a very real and serious problem. It always has been. But after the last couple of intensely stressful years, burnout has become magnified. And exhaustion is cyclical; people are tired of being tired.
This is when law firms with a conscience and desire for longevity will employ consideration and compromise to keep their best people. They’ll ask questions, listen carefully, share ideas, keep an open mind, confirm understanding, and accommodate. And key to the whole process: they will communicate clearly and consistently, and in different ways to different audiences.
Otherwise, departures can be expected to extend well beyond lawyer ranks into operational pillars, such as marketing, business development, IT, finance, HR, administration, etc.
History tells us that these areas are often where first cuts happen in budget restructures. That’s because in most law firms, people who generate revenue by billing clients are often more highly valued due to being fee-earners while those who populate a firm’s operational structures are often considered overhead.
The irony is that those deemed “overhead” are often the same people who carry institutional knowledge of how a firm operates. Whether these people are internal employees or external contractors, good luck running your business without them.
The legal services market along with the rest of the working world was already changing prior to the pandemic. In the last two years, change has accelerated exponentially and with the speed of summer lightning.
Right now, we can seize the opportunity to turn this moment into a movement.
Rebalancing how law firms, legal services providers and corporate law departments operate internally and are supported externally will provide forward momentum to keep those working within and with them happy and retained, now and in the future.
In Legal Talent Rebalancing – Part 2 – Valuing People, I examine burnout, outsourcing, succession planning, and how rebalancing work production between internal and external experts is a future-proof market strategy.