Law Firm Perspectives For 2022 (Middle East, US & UK)

Overview:

As we emerge from the worst part of the pandemic, law firms have moved towards some semblance of normality whilst still facing some challenges. One of the main topics of my recent conversations is the huge demand in the corporate M&A, Funds and Banking and Finance practice areas. This has led to the increase of associate hiring quite aggressively on a global scale. ?

The hiring surge has been accompanied by dramatic increases in associate compensation, resulting in significant growth for firms. With this huge hiring surge, the effects have also tempered a dramatic rise in associate turnover, with firms seeing their associate turnover rates increase to record levels. This has also led to firms finding themselves locked into an expensive talent war already complicated by unprecedented problems of retaining the talent already within the firm. This may be one of the biggest post-pandemic challenges of recruiting and retaining associates throughout 2022.?

As firms face the challenges of hiring, training and retaining associates and other professional staff, it’s important to remember that employee satisfaction with a position comes primarily from factors other than compensation. Job satisfaction depends on intangible factors like experiencing the feeling of value and personal satisfaction, believing that you are contributing to something larger than yourself.?

There are a few ways that innovative law firms have been addressing these.

The road to the new normal:

The new work environment that is emerging from the post COVID era is distinctively different from anything that firms have encountered before. It is a safe assumption that adapting successfully to these changes is one of the biggest challenges of 2022.

The three highest risks to profitability all involve talent and intense competition reflected in the current raging talent war. These risks include:

1. Lawyer recruitment and retention?
2. Poaching of staff by competitors?
3. Increasing associate salaries

Over the last few months, law firms globally have increased associate compensation along with bonuses. This dramatic increase in compensation has placed law firms under growing economic pressure. Increasing numbers of younger associates appear more focused on meaning and purpose rather than just simply having a job. It has become apparent that in order to succeed in this new war for talent, it is likely that firms will need to focus on these issues as on compensation levels.?

From recent discussions with associates, many have advised they would consider leaving their firm for a better work/life balance. Young professionals are placing more explicit emphasis on work/life balance, mental well being, leisure and other activities outside work than is evident in previous generations especially as men now take more active roles in child-rearing.

The Retention Factors:?

Firms are responding to the retention crisis in a variety of ways. Almost all firms have ratcheted up the competition, added special bonuses or implemented signing or referral bonuses.?

There have been recent cases of some law firms contacting their recently departed lawyers asking them to come back offering high profile work and mentoring along with the shorter timeline for promotions. Most firms have taken a range of steps to provide critical support to both legal and professional staff upon returning to the office.?

Recognising that the pandemic has caused an increase in chronic stress, anxiety, depression and trauma, many firms have established counselling, happiness and wellness programs to assist staff in their return.?

There are also a wide variety of social and recreational activities planned by many firms to ease the transition and to rebuild the firm culture. All of these efforts are important and necessary but are likely not sufficient to bend the curve on the rising turnover rate that law firms are experiencing.?

Achieving that goal has required firms to reimagine their structures and operations in the post-pandemic world to provide the real glue that is necessary to bind people to organisations – feelings of value and meaning in their work, feeling appreciated and recognised, having opportunities for growth and personal satisfaction - believing they are contributing to something larger than themselves.

The Hybrid Work Model:

One of the enduring effects of the COVID pandemic is the hybrid work model combining both remote works with some amount of office time. In terms of the appropriate hybrid mix, there seems to be some emerging consensus that most firms will probably require about 3 days a week for most lawyers across the UK Gulf and US.?

Going from a remote or office-centric workplace to a hybrid arrangement is a major culture shock and leaders must give a lot of thought to how they will create bonds between people and maintain and shape the company’s culture. They must reach out and create ways for people to get together, seizing opportunities for in-person interaction whenever possible.?

Leaders will have to learn how to build trust through meeting objectives not the sight of someone sitting in front of a screen. To deal effectively with these challenges – firms will need to provide different and more effective mechanisms for supervision and oversight, training support, and the development of firm culture and comradely.

Staying Operationally Flexible:

In spring 2020 the legal industry successfully migrated to a remote working environment with surprising agility and in an astonishingly short period.? The pandemic conclusively demonstrated that remote working can be done successfully and disruptions were less serious than previously expected. Secondly, the pandemic showed remote working does not necessarily result in lower productivity and broadened the acceptance of the role of technology in the effective delivery of legal services.?

For the near term, law firms need to pay particular attention to helping their lawyers recover from what has been a traumatic and life-changing experience since the onset of the pandemic. What emerges in this process will be different from what firms had in place before.?

The pandemic forced most people to reflect on their lives in new ways, and it resulted in many people altering their values, reassessing work/life balance, and rethinking their professional commitments. Law firms are finding ways to align these changes in a manner that can support and enhance each firm's basic strategy which will be key to making these changes happen.?

Overall, based on these recent conversations with both partners and associates, no single course of action will be appropriate for all law firms due to numerous factors. The firms that can maintain a resilient long-term perspective while moving aggressively on near term priorities will be best positioned to prosper as we all exit out of the pandemic.?

Do get in touch if you have any questions or would like to discuss further.