VESTED INTEREST could be the key for law firms struggling to retain the next generation of lawyers, particularly for small to medium firms competing in the talent stakes with top-tier firms.
Generation Y employees will embrace the financial incentives on offer at incorporated firms, grabbing at the opportunity to hold ownership and equity in their own career paths. At the same time, they will be wedded to their firms from a much earlier age, making them less likely to be picked off by the top-tier firms as they progress in the law.
“Generation Y tends to look at life from a different perspective,” says Carter Newell CEO Dr Peter Ellender. “The old model of the partnership is perhaps one that doesn’t suit them so well in terms of working long and hard to eventually get to the partner level, [whereas] the incorporated approach allows them to get much more involved in the business from an earlier stage,”.
“I think they’ll demand it, firms will be under pressure from generation Y to motivate them and excite them, and that [shareholders options] will be a path that opens up.”
Carter Newell has yet to be incorporated, but Dr Ellender’s hypothesis is already coming to fruition at M+K Lawyers. Managing Director Damian Paul said that his firm is in the process of putting an employee incentive scheme in place.
“For those incorporated practices that see this as an opportunity to issue shares and options to their employees, I think that will certainly have an impact for graduates,” he said.
“It will mean that, depending on how the firm does it, young lawyers will start to access the opportunity to acquire equity in the business a long way before the 10 or 15 years they currently have to wait when they join the big firms.”
Paul believes that incorporation will deliver the competitive edge for firms seeking to attract ambitious young lawyers. “It will attract individuals that would like to have a real ownership interest — real shares, real dividends, and real capital growth — in the business that they work in. You’ve see it in other industries, in law it is only just starting,” he predicted.
The obstacle course for lawyers seeking the financial benefits of partnership has been hastily redrawn, making the destination a matter of a quick hop-skip-jump for talented youngsters, according to Dr Ellender,
“There are firms out there at the moment who are offering shares to associates and senior associates, offering access to an ownership of the business from the associate level. That could well mean that an associate, probably a fourth-year lawyer, could start participating and gradually build up ownership over a period of time, so that in that early period they could well be gaining the [financial] benefit of the overall performance of the firm as well as their own personal achievements,” he said.
Dr Ellender believes that this fast-track approach aligns with the “we want it all, and we want it now” approach of the Gen Y newcomers to the industry,
“The incorporated approach allows them to get much more involved in the business from an earlier stage and therefore will suit generation Y. They are [interested in] getting there quickly and being heavily involved as, perhaps, shareholders, part owners, and they can have an interest in the business from a much quicker perspective — which is much more aligned to way generation Y think about their life and their careers.”