While it may have shifted, the war for talent hasn’t ended as told by an expert panel at a recent Thomson Reuters Institute forum, and compared to where firms were a few years ago, they’re making progress when it comes to finding answers
NEW YORK — The realm of legal practice is not immune to the sweeping changes that have characterized the labor economy in recent years, but while questions remain, solutions are increasingly at hand. This was the central theme of a recent panel at the Thomson Reuters Institute’s 23rd Annual Law Firm COO & CFO Forum, held last week, where industry experts delved into the challenges and opportunities facing law firms today.
An economist opened the panel by describing a still-tight labor market, particularly for skilled workers, despite a slight rise in overall unemployment. While inflation has generally cooled, wage-based inflation persists, making the search for talent as competitive as ever since the end of 2020.
Compensation: Rewarding excellence
One of the key topics discussed was, not surprisingly, lawyer compensation. The era of double-digit compensation increases may be over but retaining standout talent remains crucial in a competitive market. The focus is now on ensuring that overachievers are properly rewarded and retained.
One panelist highlighted their organization’s dual focus on the what and how as part of their review process and the resulting emphasis on those factors that should be used to enhance compensation. The panelist described their firm’s approach as one that’s anchored in clear financial metrics and three broad parameters: i) resilience in the face of challenges; ii) proficiency in training and adaptability; and iii) confidence in leadership.
In the ongoing competition for top talent, if a law firm fails to grow and accelerate their overperforming lawyers early, there is a tendency to lose them.
These metrics are crucial for evaluating performance and driving the firm’s success, the panelist explained, adding however, that one of the growing challenges they were tackling involved those lawyers who are just starting to grow and overachieve. In the ongoing competition for top talent, if an organization fails to grow and accelerate these overperformers early, there was a tendency to lose them. As such, the panelist said their firm now spend a great deal of time at this point to identify these emerging talents and seek to retain them.
Another panelist discussed the significance of rewarding innovation. They pointed out that support for people who use tools like Alteryx, which empower frequent users to automate repetitive tasks and reduce the time spent on monthly processes, is crucial. This, in turn, enhances employee morale and productivity, and thus firms should promote greater compensation for the people who make it possible.
The shift towards automation and efficiency is particularly relevant in the legal sector, where increased use of artificial intelligence and automation tools is becoming a defining feature in the legal industry. By incentivizing innovation, law firms can not only improve operational efficiency but also create a more dynamic and motivated workforce. Indeed, offering the right incentives to the people who make this happen is thus all the more important, especially in a labor market in which poaching top talent remains a constant threat due to competitors’ ability to offer hybrid and flexible work options.
Flexible work arrangements
As the conversation moved away from compensation and towards other employee benefits, one potential perk in particular came to dominate the discussion: flexible work arrangements.
One panelist noted that while there is a clear need for lawyers to be present in the office on specific days, there is also considerable flexibility available regarding which days these are. The general expectation at their firm was for a minimum of two days in the office, with a goal of three days to facilitate collaboration and teamwork.
Another panelist pointed out that dedicated spaces for teams can really help make in-office days productive. However, they acknowledged that a fully remote culture is not feasible for law firms, which thrive on in-person interactions and spontaneous exchanges of ideas. That panelist said their organization succeeded by merging their offices into a new location, hosting regular lunch events, and cultivating an atmosphere where FOMO (fear of missing out) about office events was a major motivator for attendance.
The still-ongoing “war for talent” is pushing many law firms to seek talent in unconventional locations, leading to cross-geographic teams and frequent teleconferencing.
Yet according to another panelist, the still-ongoing “war for talent” is pushing firms to seek talent in unconventional locations, leading to cross-geographic teams and frequent teleconferencing. This reality raises questions about the necessity of in-office presence, as virtual collaboration becomes increasingly effective and the norm. By having these types of teams in which someone is always remote, it means that even those members in the office spend their days on virtual meetings, raising the question of why they have to take these meetings in the office in the first place.
The panel determined that the hybrid work dilemma remains unresolved in the legal industry and elsewhere, and that the current new normal has legal organizations maintaining a balancing act between luring people into the office and trying to make online work as effective and collaborative as possible.
The pandemic hangover
Prior to the panel’s discussion, Institute, offered a comprehensive view on how the pandemic has affected the labor economy. He noted that the pandemic has fundamentally altered how organizations function and engage with their employees. Issues like quiet quitting, talent retention, and cultural development have become central topics as firms navigate the post-pandemic environment.
Yet, significant progress has been made in tackling these challenges over the past 12 to 24 months, Abbott explained, adding that still more effort is needed to fully comprehend and adjust to the new conditions of the labor market.
While the panel didn’t venture into this territory explicitly, it was difficult to escape the impression that a solution had been found to the hybrid work issue, that the 2 to 3 days in the office with additional work to make sure those who were in the office benefitted from it, had become the solution de jour for law firms. Much like major banks and companies that continue to grumble about this new status quo, many legal organizations merely do not like the answer as much as they may wish they did. However, they are increasingly spending time smoothing down the pain points rather than seeking to overturn the entire paradigm.
For now, the panel’s conversation seemed to cement that this new reality may be here to stay.
For more on what you might have missed at the Thomson Reuters Institute’s 23rd Annual Law Firm COO & CFO Forum, click here.
