Culture > strategy

Post-pandemic, the Great Resignation has also continued to loom for businesses of all sizes, partly driven by the disconnection that many professionals feel in the current climate. The legal industry is no exception to this, with research done by the International Bar Association in February this year showing that half of young lawyers are likely to leave their current role in the next five years, with some leaving the profession altogether.

However, firms can combat this by improving their culture. That’s something LOD Australia managing director Paul Cowling said is a “leading factor” in whether people will stay at an organisation or not.

“With the Great Resignation, the biggest competitive differentiator for firms is culture,” he said.

“Firms need to ask themselves what they are offering their staff. Of course, pay is important but people want more — they want to develop their careers, work in interesting areas, and feel like they belong to a great team. Law firm cultures can fall prey to a transactional culture and that’s not a sustainable approach to retaining staff. In short, you need to offer exciting work, career progression, competitive remuneration and a cohesive culture.”

Whilst there is no “list of magic solutions” firms can implement to retain staff, Bowd chief executive Fionn Bowd said that there are a number of elements firms of all sizes can explore, such as increasing salaries, reducing billable targets, introducing profit sharing with non-partners, recognising non-billable targets in more meaningful ways, ensuring the workplace is an “enjoyable place to be” and introducing reduced or flexible hours.

The latter has been implemented recently by both Shine Lawyers and Coutts Lawyers & Conveyancers, which introduced a nine-day fortnight and four-day week option, respectively.

“Firms can no longer treat the employee relationship as something that the firm controls,” Ms Bowd argued.

“They need to live with the discomfort of learning to see the people who work with them as co-creators of the relationship, which means a lot of very unfamiliar ideas and ways of doing things.”

However, a good culture can often be hard to pinpoint for newer lawyers and graduates — as firms offering similar initiatives tend to all blur together without new recruits knowing if the culture has been embellished for recruitment purposes. Staff retention, however, is harder to fake.

“The rubber hits the road when it comes to retention, and firms and particular groups in particular also develop reputations — mostly bad, occasionally good — which tend to be known in the local candidate market for that firm. This is where you see certain groups only having lawyers from ‘somewhere else’ — overseas or interstate, because local lawyers know their reputation,” Ms Bowd explained.

“Aside from attraction and retention though, I’m not sure we really know what it looks like when a firm has the culture right, and what kind of discretionary effort we might see from lawyers if they all felt valued, safe, and happy with their workplace.”

Post-pandemic working culture

Whilst the quitting rate in law firms can be as high as in other white-collar knowledge industries, according to beaton executive chairman Dr George Beaton, “stories abound about staff leaving and then returning to their old firm when they recognise that the grass is not greener on the other side”.

“The supersonic growth of client demand and the big profits being garnered by most law firms are a double-edge sword. Many firms seem to be taking a ‘do whatever it takes’ approach to attracting staff,” he said.

“It’s not just the big four and strategy houses paying signing bonuses and handsomely rewarding the introduction of new staff; law [firms] are doing this too but with less fanfare.”

Particularly as firms continued to make profits throughout the pandemic with staff working from home, Ms Wentworth said that post-pandemic, the expectation is that “firms that do not offer flexibility will struggle to compete for talent”.

“There’s more emphasis on staff perks and culture than before. Firms are having to work harder to become more attractive to staff and pay rises alone are not cutting it,” she added.

“From what we’ve seen over the past few months, more law firms are seeking support from external consultants to create packages for their staff that may include, flexible work arrangements, bonus structures, extended leave, coaching and mentoring offerings and other perks, whilst other firms are going to great lengths to promote themselves within the profession as employers of choice and attract the attention of talent.”

While hybrid working can be a “tricky balancing act”, added Mr Cowling, legal talent is increasingly attracted to organisations that work with interesting clients on exciting matters — but that do so in a flexible way.

“I think the pandemic forced a reckoning for many organisations on what their workplace culture is. We remain laser-focused on our value proposition — giving lawyers high autonomy and the opportunities to work with leading clients,” he said.

“Our culture is aligned to that proposition — we trust our team to deliver, collaborate, work creatively and to be inclusive.”

And especially in terms of post-pandemic working and what candidates now expect from employers, “hybrid working is essential”, agreed Ms Bowd.

“I haven’t seen any evidence that any firm has considered, let alone started to make any serious and significant changes to their culture,” she said.

“Lawyers are exceptionally smart people. They can’t be fooled by a change of wallpaper or a free sandwich. They are also clever enough to know that all the cultural problems that sit within the profession have not suddenly disappeared due to the pandemic.”

Is there a difference between NewLaw, BigLaw and SME and boutique firm culture?

Different cultures within different working environments have meant that those who have worked exclusively at BigLaw firms are making the switch to smaller firms, or leaving private practice altogether.

In-house life has become increasingly popular, with the opportunity for increased flexibility and to be able to have a more varied role too good to pass up on for some. Between 2011 and 2020, the volume of Australian lawyers working in-house almost doubled, marking a rise of 82 per cent — something which Mr Cowling said was due to a number of things.

“Different organisations bring different advantages and disadvantages. We interact daily with lawyers who have typically decided to switch out from BigLaw to try working in-house,” he added.

“They’re seeking better work/life balance and greater control over their hours. Also, the pull factor for many lawyers is a chance to develop non-legal skills and bolster their commercial nous.”

NewLaw firms have typically been the most “upfront” about hybrid working arrangements and more innovative ways of working, increasingly appearing on the Lawyers Weekly Top 25 Attraction Firms ranking.

However, Dr Beaton explained, some BigLaw firms are also “very active” for forward-thinking in terms of their initiatives.

“Maddocks, led by CEO David Newman, are setting the pace with their recently launched range of initiatives to ensure equal pay outcomes. From 1 July 2022 Maddocks is paying superannuation on both the paid and unpaid component of parental leave for up to 12 months; this is in recognition of the large gap between the superannuation savings of Australian men and women,” he said.

“I see SME firms as a mixed bag — some are positively active in their attraction and retention strategies. Others seem to be adopting an ‘it too will pass’ approach.”

Certain boutique firms have doubled down on their culture and hybrid working practices, with Stanley & Co staff offered one-on-one professional coaching, FAL Lawyers encouraging remote working and Travis Schultz & Partners fighting for an “un-corporate environment”, to name a few.

But according to Ms Bowd, some SME firms have continued to opt for a more traditional legal model — one that won’t necessarily outweigh the competition, whether that be NewLaw or BigLaw.

“SME-type firms are in a great deal of danger, based on what I hear from people. In an environment where there are not enough lawyers at any level or area, they are having a great deal of difficulty attracting new staff. They tend to require more physical time in the office (often insisting on full time in the office), and are much less likely to accommodate flexible work requests. Many of them in my view are quite likely to not survive the next five [to] 10 years, unless they move more to the NewLaw way of thinking,” she said.

Yet post-pandemic, NewLaw firms have lost a lot of market differentiation as an employer, according to Ms Bowd, who added that bigger firms still have the upper hand in respect of implementing changes and bringing forward new initiatives.

“Pre-pandemic, NewLaw had a huge advantage over all other firms because they were rooted in flexible practice and usually a trust-based culture. Because of the pandemic, willingly or unwillingly, all other firms have had to learn how to work in a remote environment, and trust and supervise their staff in that environment. This has quite significantly levelled the playing field,” she said.

“[BigLaw firms] have greater profits and more room to move in how they distribute those profits. They don’t realise this but they also have significant growth opportunities, for both profit and revenue, if they improved their client service and market differentiation. They also have the ability to hold themselves and each other to account in terms of cultural issues, and they are big enough to leverage new ways of servicing clients like working in teams to build in more flexibility.”

The future of culture within the profession

Moving forward, firms need to be, at a minimum, increasingly forward-thinking in order to attract graduates into the profession. The pandemic challenged working practices and forced the profession to adapt — and this “shake-up” means that change needs to continue, said Ms Wentworth.

“Remote work has proved to us that we can do our jobs from anywhere and that working from the office was no longer the be all and end all. So, for those who were already looking for an excuse to leave work, they now have proof that they could earn a living working from home so why not do something that you enjoy and fulfills your purpose,” she added.

“Put simply, firms who aren’t working on culture and attraction will crash and burn post pandemic with the balance of power between employer and employee shifting to sit with the employee. Culture is an important piece as it sets the tone for what is rewarded, tolerated and encouraged. For some many lawyers that we coach, the reason cited for leaving a firm has been culture. With more and more lawyers realising that they can work from home either for themselves or another firm, very few are tolerating toxic cultures and more are voting with their feet that we’ve seen before.”

Similarly, Mr Cowling said culture is something firms need to “constantly wrestle with” and that a modern, progressive culture will attract and retain the best talent.

“The legal profession has a long and proud history of attracting the brightest people around. But if the profession fails to keep pace with the workplace innovations in other sectors and professions, it will lose talent. We know from an Australian study by Seek, about 20 per cent of those looking for new work attributed their reason to the fact they were currently doing ‘uninspiring work’,” he explained.

“Repetitive and low-value work, especially for legal professionals, feels increasingly like a waste of time. We need to rethink certain practices.”

In addition to this, firms need to put a “concerted effort” into improving their culture, according to Ms Bowd.

“There is a risk, if not a probability, that firms will do nothing but tinker at the edges, trying small and incremental changes that don’t upset anyone too much to see if they make a difference,” she said.

“This is not going to work. We are on the cusp of a society-wide recalibration about how we work, and law firms are just caught up in that like everyone else. Big changes are needed, or firms won’t survive.”