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Law firms brace for employee "mass exodus"

Law firms brace for employee "mass exodus"

As the global economy improves, law firms will have to re-engage with frustrated employees if they want to avoid a walkout, writes Ben AbbottLaw firms are facing a potential rough start to the…

As the global economy improves, law firms will have to re-engage with frustrated employees if they want to avoid a walkout, writes Ben Abbott

Law firms are facing a potential rough start to the calendar year if predictions of a "mass exodus" of employees across Australia in early 2010 prove to be true.

A recent survey by consultancy Chandler Macleod found 95 per cent of job candidates in Australia were currently in the market for a new job. The survey of 930 employees found 73 per cent of the job market was actively looking for work, while an additional 22 per cent were open to potential opportunity. Meanwhile, 57 per cent of candidates were confident of finding a job within three months.

The legal sector is by no means immune to this job market seachange.

Freehills human resources director Gareth Bennett said there has clearly been a pause in fresh career opportunities for lawyers in the market over the past 12 to 18 months due to economic malaise, causing a "build-up of demand in people wanting to move".

However, top-tier law firms question whether an exodus is imminent, with cut down or frozen recruitment programmes yet to be revived after the financial crisis.

"It's a basic demand and supply equation", Allens Arthur Robinson people and development director Susan Ferrier said. "Not a lot of organisations are recruiting heavily at the moment, so the roles aren't there to go to. I do think, perhaps, there are early signs of better conditions, but it's still too early to tell", she said.

Freehills' Bennett said when business confidence starts to return and law firms begin opening positions, lawyers would have more of an opportunity to pursue new roles.

However, recruiters argue that a jobs growth trend is already well under way.

Legal Personnel general manager Julie Grasso said she has seen a strong increase in jobs briefs from top-tier clients right through to boutiques, in areas that include the hardest hit during the financial crisis - finance and banking, property and corporate.

As economic indicators in Australia pick up, firms are becoming more confident in the transactions they are likely to see as business picks up, and are already looking to bulk up departments they may have downsized during the crisis.

This was evident in December, when Grasso noticed activity was "particularly high compared with most years", and she said the upbeat mood has continued through into January. "There are some roles out there, and that will only increase as the year progresses."

Rather than an exodus as early as February, Grasso is predicting a mid-year post-salary review wave of departures at private practice firms, as lawyers who've had financial rewards stymied by a market-wide salary freeze look for new options.

"Candidates during the crisis were complaining about having salaries frozen, but we were saying not to move if the job was stable," she said. "But I can't see they will stay put if they are not happy with their reviews, which fall mid-year for most firms".

To date, Ferrier said Allens has "started to see a little bit of turnover, but nothing like at the height of the bull market". In mid-2007, the firm experienced a 25 per cent turnover rate, ticking up to 30 per cent in extremely buoyant job categories. Current departures are a result of lawyers looking to travel or pursue further study, rather than moving to competing law firms in Australia or abroad, Ferrier said.

The Chandler Macleod survey found the top reasons for job-seekers eyeing greener pastures were limited career progression opportunities (41 per cent), feeling undervalued (24 per cent), and reduced trust in their employer (18 per cent).

Unfortunately for firms, the legal profession has seen a perfect storm of these problems during the crisis, as internal promotion opportunities dried up, redundancy programs were implemented, and salaries were frozen.

Freehills and Allens have been doing their best to counteract any bad feeling.

Freehills introduced a new "executive counsel" role last year to give a promotion option to lawyers of partner quality, and has since made eight appointments to the newly minted category of lawyer, more often seen overseas. "A lot of firms will be looking to explore roles beyond the traditional structure,' Bennett said.

Allens sought to open communication channels to listen to employees in late 2009. "We've conducted focus groups, bringing groups of lawyers together, to help identify the sorts of things we can do to address the issues lawyers have," Ferrier said.

The results have been revealing. "The majority of employees appreciated we did a pretty good job of managing the firm in turbulent economic conditions, but there is still some frustration over what that has meant for them personally," Ferrier said. She cites a firm-wide salary freeze in place at Allens for the past six months, as well as pared back investment in extras, such as staff entertainment.

Whether lawyers feel undervalued will depend on how they were treated during the downturn, according to Bennett. "Every firm will say people are their greatest resource, but they'll make their own judgements, and if redundancies happened to be the first option, perhaps they won't feel like the greatest resource at all," he said.

Bennett is confident Freehills is well placed for the new year, with the right development strategies, opportunities and pay measures in place. But with the mood as it is, he said "that doesn't mean there won't be a degree of turnover".

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